Five countries want smaller growth of next EU budget, Spain offers ideas

By Jan Strupczewski

BRUSSELS, Sept 18 (Reuters) - Germany, Denmark, Finland, the Netherlands and Austria said on Friday the European Union's budget for 2028-2034 must be "several hundred billion euros" smaller than the €2 trillion proposed by the European Commission, drawing battle lines before EU budget talks come to a head in the next three months.

The leaders of the five countries, among the biggest net contributors to the budget, wrote in a joint op-ed in Politico that EU taxpayers cannot keep paying more to pay for both old and new priorities.

"It (the budget) is too focused on subsidies and transfers allocated largely in advance, leaving too little room for what Europe urgently needs: common investment in security and defence, competitiveness, innovation, and the fight against irregular migration," the five leaders said.

Net beneficiaries of the EU budget are concerned that would reduce EU funds for farmers and for equalising standards of living between the poorer and richer regions of Europe -- a major political concern before parliamentary elections next year in France, Italy, Spain, Poland, Greece, Finland, Slovakia and Estonia.  

The European Commission has proposed the budget should amount to €2 trillion or 1.26% of EU Gross National Income (GNI), of which some 168 billion, or 0.11% of GNI, is to service the EU's borrowing for the post-pandemic recovery fund. The five leaders called the proposed nominal increase of around 60% over the 2021-2027 budget "simply not realistic."

"This is why we call for a balanced cut to the Commission’s proposal of several hundred billioneuros," they said.

To help find a solution, Spain proposed to change the repayment schedule of part of the EU post-pandemic borrowing, linking it to economic growth and spreading it out over a longer period. This, according to Spanish Economy Minister Carlos Cuerpo, would free up some €70 billion.

"An annual payment of about 0.06% of EU GDP would retire the debt by 2058, the deadline agreed by member states," Cuerpo said.

EU governments will discuss the next EU budget at summits in October, November and December in an effort to get a deal before the end of the year.

(Reporting by Jan Strupczewski; Editing by Toby Chopra)