Long-term budget talks can shift into a higher gear after the Cypriot presidency of the Council of the EU presented its first “negotiation box” for the 2028-2034 Multiannual Financial Framework (MFF) on Thursday (11 June).
The MFF, the EU’s seven-year spending plan, sets overall spending ceilings and determines how money is allocated across policy areas, from agriculture and regional development to defence, research and migration. The current budget runs until the end of 2027.
The Commission proposed a budget of almost €2 trillion last July. The proposal would increase spending compared with the current framework, reflecting new priorities such as defence, competitiveness and support for Ukraine, while also covering repayments of debt raised under the post-pandemic recovery fund.
Marilena Raouna, Cyprus’ deputy minister for European affairs, described the presidency’s proposal as a “balanced compromise” and said preparing it had been “one of the hardest tasks” of the six-month presidency.
The negotiation box is the Council presidency’s working document for budget talks. It identifies the main political questions that governments must resolve and proposes possible compromises. The document will now serve as the basis for negotiations among the 27 member states, before turning to the European Parliament for the next round.
Cyprus proposed reducing the Commission’s overall spending proposal by around 2%, equivalent to roughly €33 billion. Raouna said the presidency had sought a middle ground between governments demanding deeper cuts and those arguing the Commission proposal should be maintained or even expanded.
Friends vs Frugals
The proposal immediately highlighted the main divide in the negotiations. A group of northern net contributors to the EU budget, often referred to as the “frugals”, including Germany and the Netherlands, argue that the Commission’s proposal remains too large. Many are facing budgetary pressures at home and want the EU to spend less overall while shifting more money towards new priorities such as defence, industrial competitiveness and innovation.
Some diplomats had sought cuts of up to 20% compared with the Commission proposal. Dutch Finance Minister Eelco Heinen dismissed Cyprus’ proposal as a “no-go box”, arguing that the overall budget remains unaffordable.
On the other side stand the so-called “Friends of Cohesion”, a group that includes countries such as Poland, Spain and Italy. They support a larger budget and have pushed to preserve spending on agriculture and cohesion policy, the EU’s programme for supporting poorer regions.
Cyprus’ compromise appears closer to that camp’s preferences. The presidency largely shielded agricultural subsidies and regional development funding from cuts, while applying larger reductions to newer spending priorities. The European Competitiveness Fund, a proposed €410 billion instrument for industrial policy and innovation, would face some of the deepest reductions.
The presidency also proposed increasing support for member states with a gross national income below 90% of the EU average. To finance this, it suggested reducing funds reserved for future crises and emerging priorities, effectively trading flexibility for larger national allocations.
The disagreement reflects a broader debate over the future shape of the EU budget. Northern countries argue that resources should increasingly focus on competitiveness, defence and common European priorities. Southern and eastern governments counter that traditional policies remain essential for economic convergence and political support for the European project.
Thursday’s presentation marks only the beginning of a negotiation expected to continue well into next year. Unanimous agreement among all 27 member states will ultimately be required before talks can begin with the European Parliament.
The proposal now passes to Ireland, which takes over the Council presidency in July. With member states still far apart on both spending levels and priorities, much of the heavy lifting remains to be done.
