Photo: Associated Press
A meeting was held in Berlin on 27 August, hosted by German Chancellor Friedrich Merz. It was attended by the leaders of Germany, Denmark, Austria, Finland, the Netherlands and Sweden. The countries agreed to present a united front in negotiations on the EU’s new multiannual financial framework.
In a joint statement, they called for the budget to be modernised, the structure of fund allocation to be revised, and its total volume to be reduced by ‘several hundred billion euros’ compared with the European Commission’s proposal. They identified security and defence, competitiveness, migration and European sovereignty as priority areas.
“The message from the assembled heads of government, alarmed by the state of the EU’s finances, was unequivocal: a two-trillion-euro EU budget is out of the question!”, – Ryszard Czarnecki comments passionately on the outcome of the meeting of the ‘club of penny-pinchers’, as he calls them, in the pages of the Polish publication Do Rzeczy.
Almost €1.9 trillion has already proved too much
In July 2025, the European Commission proposed a multiannual EU budget for 2028–2034 totalling nearly €2 trillion. In current prices, the exact amount of the proposal is around €1.893 trillion. This corresponds to approximately 1.35 per cent of the EU countries’ combined gross national income.
For the countries that are the largest net contributors to the EU’s general budget, even this level of expenditure proved excessive.
In a joint statement, they emphasised that the future budget must remain financially sustainable, with moderate growth. At the same time, they argued that cuts should affect all major areas of expenditure, not just individual programmes.
The Berlin meeting was yet another manifestation of the conflict between countries keen to increase funding for common European priorities and those that contribute more to the budget than they receive directly from it. Logos Press has previously reported on these contradictions.
At the same time, Europe needs major investment
The paradox of the current situation is that the dispute over budget cuts is taking place at the same time as Europe’s need for investment is growing. And what is even more alarming, the Polish publication notes, is the rise in the EU’s debt burden. “The latest reports from the Luxembourg-based European Court of Auditors clearly indicate that the EU’s financial situation is the most challenging in its entire history,” the author states.
Against this backdrop, *Do Rzeczy* argues that the additional annual investment of €750–800 billion to boost the EU’s competitiveness – as mentioned in a report by former European Central Bank President Mario Draghi – is not only impossible to fund but would also be detrimental to Europe, according to the article’s author. This is because they would not merely increase Europe’s overall debt, but would lead the EU to financial disaster.
‘The fact that people in Washington are still laughing at these efforts (to be competitive – LP) is only half the problem. Worse still, the proponents of the idea of getting up to their ears in debt and, teetering on the brink of bankruptcy, setting out in pursuit of America (and China), are vigorously pushing the Old World towards economic disaster,” warns Ryszard Czarnecki.
Given that the EU faces a dual challenge – simultaneously increasing investment whilst ensuring that the financing of these expenditures does not lead to an excessive debt burden – the Polish publication considers this impossible. And given the stance of the ‘frugal club’, it considers it right to focus not on increasing expenditure and running up debts, but on optimising spending and selecting priorities more scrupulously.
EU debt has indeed risen significantly
The rise in expenditure has been accompanied by an increase in borrowing at EU level. According to the European Court of Auditors, the EU’s total debt at the end of 2024 reached €601.3 billion, compared with €458.5 billion a year earlier. The main reason for the increase was borrowing under the NextGenerationEU programme.
The Court of Auditors warns that by 2027, the EU’s outstanding debt could exceed €900 billion — almost ten times the 2020 level, prior to the launch of NextGenerationEU. At the same time, the bulk of repayments will be deferred to subsequent years.
Debt servicing costs are creating additional pressure. According to the European Court of Auditors’ estimates, due to changes in interest rates, total interest expenditure under the current EU budget for 2021–2027 could amount to around €30 billion – roughly double the European Commission’s initial estimate of €14.9 billion.
This does not mean that the EU is on the brink of bankruptcy. But the structure of its finances is indeed changing: for the first time on such a scale, the Union is using joint borrowing to finance major pan-European programmes, and the obligations to repay these will affect future budgets.
Between ‘austerity’ and new debt
It is precisely in this regard that the main dividing line in the current budgetary negotiations within the EU lies.
The net contributor countries are advocating a reduction in the overall budget and a rejection of any further increase in joint debt. The European Commission, for its part, is proposing nearly €2 trillion over seven years, justifying the scale of the budget by the need to simultaneously fund competitiveness, security, defence, energy, migration and other areas.
That said, the EU budget itself is relatively small compared with the Union’s economy: annual expenditure under the multiannual budget amounts to approximately 1 per cent of the member states’ combined gross national income. The key issue, therefore, lies not so much in the absolute size of the budget as in determining which expenditure should be jointly funded at European level and how to attract the necessary investment without unduly increasing the debt burden.
For Moldova, this debate is of direct relevance. The future EU budget will determine the amount of funding available for cohesion programmes, infrastructure, reforms and other areas linked to enlargement and European integration. The tighter the budgetary constraints within the Union prove to be, the fiercer the competition will be between the various areas of European funding.
For the time being, there is no basis for talking about the ‘bankruptcy of the EU’, as the author emotionally puts it in the Polish publication. However, the financial debate surrounding the 2028–2034 budget shows that the era when new European priorities could be relatively easily supported by additional resources is indeed coming to an end.
Brussels will now have to choose between increasing expenditure, cutting existing programmes and new forms of borrowing – or seek a combination of all three solutions.
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