Costa Launches EU Budget Sprint Ahead of 2027 Elections

European Council President Antonio Costa launched a high-stakes diplomatic tour across EU capitals on 25 August, aiming to reconcile deepening divisions among the 27 member states over the next multiannual financial framework for 2028–2034. The tour runs through 17 September and arrives at a pivotal moment: negotiators face a year-end deadline to reach consensus—or risk deferring the decision to 2027, when France, Italy, Poland, Spain, and others hold major national elections.

The Three-Pronged Budget Impasse

According to European officials cited by Le Figaro, the negotiations are stalled over what they describe as a “triple deadlock”: the total size of the budget, the level of national contributions, and the introduction of new own resources—such as EU-wide taxes and levies. Financial Times reported that member states remain divided not only on how much to spend but also on how to finance newly prioritized areas, under mounting pressure on national budgets.

The European Commission has proposed a budget approaching €2 trillion—the largest in the bloc’s history—to cover expanded needs in defence, security, and competitiveness, while sustaining existing commitments to agriculture, cohesion, research, digital transition, and the green transition. Reuters quoted a German government document stating Berlin demands a €400 billion cut from the Commission’s proposal and deems the current draft “unacceptable.” German Chancellor Friedrich Merz, per Euronews, insists cuts are necessary regardless of progress on new revenue sources.

Clash Between “Frugal” and “Cohesion” Camps

Germany leads the so-called “frugal camp,” joined by other wealthy member states, advocating substantial reductions in the overall budget volume. In contrast, France, Italy, Spain, and other members of the “Friends of Cohesion” group insist on protecting funding for the Common Agricultural Policy (CAP) and cohesion policy.

A joint declaration signed by 16 countries and published by Spain’s Ministry of Foreign Affairs warned that, despite the proposed increase in nominal budget size, CAP, cohesion, and fisheries funding face real-term cuts. Euronews reported these nations also oppose merging funds into nationally or regionally administered plans if such integration diminishes regional authority or subjects disbursements to stricter central conditions imposed by the Commission.

Agriculture holds particular political weight in France, Italy, and Spain, while cohesion funds serve as a primary development instrument in Southern and Eastern Europe—making any reduction highly sensitive ahead of the 2027 electoral cycle. Should new revenues fail to materialize, competition for limited funds would place CAP, cohesion instruments, green financing, and external development aid under acute pressure.

Structural Shifts and Competing Priorities

The IDDRI institute notes negotiations are trending toward consolidating historically separate policies—including agriculture and cohesion—into more flexible national and regional plans. A new competitiveness fund is also under discussion, intended to pool spending on defence, digitalisation, health, and the green transition.

Global Europe—a proposed external action programme—could reach €200 billion, per the Commission’s outline, but IDDRI warns it may become a contested vehicle for competing priorities ranging from development and trade to migration and security. Disagreement persists even within the competitiveness fund: France, Germany, and the Netherlands favour merit-based innovation funding, whereas Poland, Romania, and others push for allocations weighted by geography and development level.

New Revenue Proposals and Political Hurdles

The Commission has floated several new own resources, including revenues from the EU Emissions Trading System, the Carbon Border Adjustment Mechanism, and levies on large corporations, digital services, and selected products. The European Parliament has added further options to the list.

Euronews reported that EU diplomats acknowledge a combination of new taxes may be essential to finance defence, technology, climate adaptation, and support for Ukraine—especially as a €90 billion EU loan nears expiration. Yet adoption requires unanimous approval from all 27 member states, and some governments fear these measures could impose additional burdens on businesses and citizens.

Timeline Pressures and Institutional Next Steps

The Irish Presidency of the Council of the EU plans to present a revised proposal in October, paving the way for formal discussion at a European summit. Financial Times indicated an extraordinary leaders’ meeting may be convened in late November, ahead of the decisive December summit.

Antonio Costa has cautioned that delaying agreement until 2027 would directly entangle the budget negotiations with national election campaigns in France, Italy, Poland, and Spain—significantly complicating consensus-building. Brussels, per Euactive, seeks final agreement before year-end to allow sufficient time for ratification and administrative preparation ahead of the framework’s 2028 entry into force.