EU summit ends without agreement: Member States continue to disagree over the size and allocation of funding.

The European Council did not reach an agreement on the Multiannual Financial Framework (MFF) for 2028–2034 at its summit in Brussels on 15 and 16 October. A new compromise proposal from the Irish Presidency of the Council was also unable to bridge the differences between Member States. There is disagreement in particular over the size and allocation of EU funding.

Dispute over priorities in the EU budget

As negotiations have progressed, two groups of Member States have emerged: the six ‘frugal’ Member States, including Germany, and the 17 ‘Friends of Cohesion’, including Italy and Spain. The latter advocate substantial European investment but oppose significant cuts to funding for cohesion and agriculture. Through its cohesion policy, the EU primarily supports economically weaker regions. The ‘frugal’ Member States also support European investment but want to focus the EU budget more strongly on new priorities, such as competitiveness and security, and are calling for a significantly smaller overall budget than proposed by the Commission.

Ireland outlines a path towards compromise

In an effort to bring the differing positions of Member States closer together, the Irish Presidency of the Council presented a revised negotiating framework ahead of the summit.

Under the proposal, the overall size of the MFF would be reduced to around 1.62 trillion euros in 2025 prices. This represents a cut of 141 billion euros, or approximately 8 per cent, compared with the Commission’s original proposal.

The scale of the cuts would vary across spending areas. Funding for cohesion and agriculture would be reduced by around 3 per cent. This would also mean that expenditure relevant to social policy within the National and Regional Partnership Plans (NRPPs) – through which a large share of EU funding is to be allocated in future – would be relatively well protected. The proposed minimum allocation of 14 per cent for social objectives would remain unchanged. By contrast, funding for competitiveness and security would face significantly larger cuts of almost 13 per cent, followed by EU external action at just over 17 per cent and administration at almost 9 per cent.

The Irish proposal therefore goes some way towards accommodating the positions of both negotiating groups. At the same time, the cuts would constrain the financial scope for European investment, despite the Draghi report on European competitiveness having identified a substantial need for additional investment.

The Irish Presidency continues to support the introduction of new own resources to generate additional revenue for the EU budget. By contrast, the six ‘frugal’ Member States have explicitly rejected financing through new common borrowing. The Presidency has taken up proposals from the European Commission that would generate around 55 billion euros in annual revenue in future. These include, for example, a share of revenue from the EU Emissions Trading System and new contributions from Member States linked to tobacco excise duties.

European Parliament criticises Irish proposal

The revised negotiating framework has also come under criticism in the European Parliament. The two rapporteurs responsible for the MFF 2028–2034, Siegfried Mureșan (EPP, RO) and Carla Tavares (S&D, PT), rejected the Irish proposal as a basis for reaching an agreement.

They warned that the proposed cuts could weaken the EU’s capacity to act, particularly in the areas of competitiveness, defence and security. They are also calling for a balanced mix of new own resources that takes account of both the Commission’s proposals and those put forward by the Parliament.

Linking EU funding to reforms remains controversial

The planned link between EU funding and national reforms under the National and Regional Partnership Plans (NRPPs) also remains unresolved.

Under the European Commission’s proposal, the disbursement of certain EU funds would increasingly depend on whether Member States have actually implemented previously agreed reforms and investments. The country-specific recommendations issued by the Commission as part of the European Semester would also be taken into account.

During discussions at ambassadorial level in July, eleven Member States, including France, Italy, Spain and Poland, had already expressed concerns about this link.

What happens next?

The European Council has tasked its President, António Costa, with continuing the negotiations. The objective remains to reach an agreement by the end of 2026. A possible special summit on 26 and 27 November could help move the negotiations forward.

Following a political agreement, the MFF Regulation and the legal acts for the individual funding programmes are to be adopted in 2027. The MFF Regulation must be adopted unanimously by the Council and requires the consent of the European Parliament. New own resources also require a unanimous Council decision. Subsequently, all Member States must approve the decision in accordance with their respective constitutional requirements.