Netherlands joins Germany in EU budget overhaul demands

The Netherlands and four other countries have joined Germany’s demand that the European Union cut “hundreds of billions” in planned spending, or they will not support the bloc’s next seven-year budget. Specifically, the countries want to spend more on Defense and innovative businesses, and less on subsidizing farmers and poorer regions, the Financial Times reported.

The 2028-2034 EU budget “must be fundamentally reformed,” said the letter, signed by German Chancellor Friedrich Merz, Dutch Prime Minister Rob Jetten, and the leaders of Sweden, Denmark, Austria, and Finland. The six countries account for about 40 percent of EU budget revenues, which are largely financed by contributions from member states.

The six countries want to shift resources to defense to reflect the growing security challenges. They also want more money for innovative companies to strengthen industries against Chinese and American competition. To fund this, they want to cut spending on supporting farmers and poorer regions, which have traditionally absorbed about two-thirds of the EU budget.

“Unless the budget is cut by hundreds of billions, there won’t be an agreement this year,” a diplomat from one of the signatories told FT. The budget requires unanimous agreement from all 27 EU member states. In June, the EU leaders agreed to reach a deal on the budget by the end of 2026, before elections in France, Italy, Spain, and Poland, which could complicate the negotiations.

Ireland, which currently holds the rotating EU presidency, now faces a difficult task of securing that deal. Directly opposed to the six countries demanding reforms is a group of 17 countries that want to increase spending on farmers and poorer regions. These countries, which include Spain and Italy, also think that the overall budget should exceed the proposed €2 trillion, with some also pushing for the EU to issue more joint debt to finance the higher spending.

A spokesperson for European Council president António Costa told FT that all the EU leaders agreed to reach a deal before the end of this year. The spokesperson said the goal remains to “close the gap” between the opposing groups and reach “a balanced overall agreement” by the end of the year.