“The longer things go on, the less bold any changes to the budget will be,” said an EU diplomat, granted anonymity to speak frankly. “The clock is ticking.”
If a leaders reach a deal on that timetable, it would be unusually fast by EU standards. Any breakthrough will depend on how much governments are willing to compromise.
Talks on the budget are always tortuous, with wealthier governments in Northern Europe reluctant to pay more into the budget and skeptical about handing the European Commission more powers to impose taxes. Countries in Southern and Eastern Europe, by contrast, tend to back a bigger budget and broadly oppose cuts to farm subsidies and regional funding, traditionally the two biggest sections of the cash pot.
To complicate matters further, the EU is due to start repaying €25 billion a year from 2028 on the joint debt it issued to cushion the economic fallout from the Covid pandemic. And there’s increasing pressure to connect the budget to geopolitics, with the Iran war potentially limiting how much the bloc will have to spend.
Kata Tüttő, the president of the Committee of the Regions, told POLITICO she “could imagine” some countries calling for a smaller budget, but insisted that was unworkable when the economic impact of the Iran conflict is “still … about around 1 per cent of the European GDP,” rather than a much larger share.
All for one?
The war has also tested the EU’s crisis planning, with Cyprus among those calling for clarity on how the bloc’s mutual assistance clause would work if one of its members was threatened.