The European Commission's seven-year budget is facing strong resistance, with prominent leaders like Hungarian Prime Minister Viktor Orbán and German Chancellor Friedrich Merz flatly rejecting European Commission President Ursula von der Leyen's request for €2 trillion.
A major point of contention is the size of the proposed budget and the allocation of funds, particularly concerning support for Ukraine. Orbán argues that the budget is designed to integrate Ukraine into the EU and allocate billions of euros to Kyiv, which he strongly opposes.
Orbán expressed concerns that a significant portion of the budget is allocated to Ukraine and to repay previous debts. He pointed out that around 30% of the budget is going to areas not included in the previous seven-year budget.
"The problem with the budget is that it doesn't have a clear strategic basis," he stated. "If we don't know what it's for, then it can't be good, because we must first answer the question: What do we want to achieve with it?"
For Orbán, the primary aim of the budget is to accept Ukraine into the EU. He believes that the correct approach is to develop a cooperative relationship with Ukraine rather than integration.
The objection isn't limited to Orbán; other leaders share similar concerns. German Chancellor Merz expressed his opposition to increasing the EU budget at a time when member states are making significant efforts to consolidate their national budgets.
This widespread opposition suggests that negotiations on the budget will be extremely challenging, especially as any agreement requires unanimous approval from all member states.
In addition to the Ukraine issue, there are other disagreements over aspects of the budget, such as agricultural funding. Orbán raised questions about the future of farmers if the EU doesn't provide adequate support.
The European Commission's attempts to tie "rule of law" to various areas of funding further complicate negotiations, as countries like Hungary, Poland, and Slovakia are likely to reject such conditions.
Additional Analysis:
These disagreements over the EU budget highlight the significant challenges the EU faces in balancing diverse national interests and addressing complex issues like enlargement and support for Ukraine. It will be interesting to observe how these negotiations unfold and whether an agreement can ultimately be reached. The allocation of funds towards different sectors also reflects the evolving priorities of the EU, highlighting areas like defense, climate change, and technological advancement.
Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients.