A chill in the air for the EU budget

Temperatures are not the only thing falling as autumn begins. The future EU budget is shrinking too. For months, everyone has been waiting for proposals from the European Council, chaired by Ireland. Meanwhile, Parliament is sending mixed messages, with its various committees pulling in different directions. The advantage of the Irish proposal, published on 10 October, is that it offers a comprehensive solution. It seeks a compromise between the so-called “frugal” countries (led by Germany and including Austria, Finland, the Netherlands, Sweden and Denmark) and the “friends of cohesion” (17 countries). This leaves four countries outside either bloc.

So what has Ireland proposed?

An 8% cut to the European Commission’s proposed budget, leaving agriculture and regional policy untouched. The cuts would fall mainly on research and external action, but also on all other programmes, such as Agora EU.
The timetable is tight: the Council is supposed to reach an agreement by the end of the year so that negotiations with Parliament and the Commission can begin.

Let’s pause for a moment to consider the choice of words

The “frugal” countries are not, as their name might suggest, advocates of restraint in a world of finite resources. Rather, they are believers in technological solutions who want to invest heavily in industrial research (the research programme is still closely tied to the goal of competitiveness). They chose the label “frugal” to avoid saying “net contributors”, yet it is precisely their status as contributors that gives them such influence in the negotiations. The Competitiveness Fund, a key priority for these countries, is largely devoted to innovation in their own industries.

The other bloc chose the name “friends of cohesion”. It sounds positive, even friendly, and yes, some of the funding clearly does help the most disadvantaged regions. Cohesion is one of the EU’s longest-established policies. Alongside it are the European Social Fund, which reaches every region, and, above all, the Common Agricultural Policy. All lumped together… yet agriculture does not, in itself, create cohesion…

So this is not a battle between Nordic fiscal discipline and those seeking a Europe with fewer regional disparities. It is a battle to protect industries and economies, whose make-up varies from country to country (with agri-food just one sector among many). And since few countries have a well-developed defence industry or rely on it for a large share of jobs, defence faces the deepest cuts in the Council’s proposal.

The “frugal” countries were quick to respond: “the Irish proposal is a 20th-century compromise” … supporting agriculture and the regions is a thing of the past! Technological innovation is the future. That might be true in a stable world. But the 21st century seems to be telling us that resilience should guide all public policy. By that measure, no sector is more essential than another, as long as it helps meet our essential needs: food, health, housing, water and energy. The proposal also sharply cuts the ‘flexibility’ budget for helping countries hit by disasters of all kinds. Yet after the summer of 2026, it seems we will need that funding to rebuild and recover…

On the negotiating chessboard, positions are finally taking shape, but the outcome is still far from clear.
Will it be the bishop or the king who makes the next move?
Let’s hope the transition and our societies’ resilience are not checkmated in the process.