EC meeting achieves limited progress

The European Council meeting in October 2026 made some positive steps, including reaffirming support for Ukraine, advancing integration into the single market, adopting a new regime for companies, and showing willingness to coordinate on the energy crisis. However, no agreement was reached on the Multiannual Financial Framework (MFF), which is essential for the EU’s financial planning from 2028 to 2034.

MFF negotiations remain unresolved

Despite efforts, the heads of state and government have not yet agreed on the MFF. They have tasked the president of the European Council, Antonio Costa, to continue consultations, aiming for a resolution by the end of 2026. An extraordinary meeting is planned for late November. However, political uncertainty remains high due to upcoming elections in several EU countries in 2027.

Proposed MFF budget and its implications

The Irish presidency proposed an MFF of slightly over 2,000 billion euros for 2028–2034, representing 1.26% of the EU’s gross national income (GNI). This is a 60% increase compared to the previous MFF. The increase is intended to address needs in areas such as security, competitiveness, climate transition, and territorial cohesion. The 2021–2027 MFF was also supplemented by the Recovery and Resilience Facility (RRF), which added 807 billion euros to the overall budget.

Reduced MFF proposal and funding sources

To address concerns over national budgets, the Irish presidency proposed a reduced MFF of 1,825 billion euros. This aims to shift funding from member states’ contributions to new own resources, such as value-added tax, customs duties, and revenue from the carbon border adjustment mechanism. The European budget is typically funded by member states’ contributions and these additional resources.

Divide between "frugal" and "spending" states

The debate is split between "frugal" states like Germany, the Netherlands, and Sweden, which want to freeze the EU budget and reallocate existing funds, and "spending" states like France, Italy, and Spain, which favor a larger budget to support the EU’s future role and protect existing policies. The "spenders" emphasize the need for structural funds to help less developed regions catch up economically.

Challenges with revenue projections

A major point of contention is the expected growth of own resources, which the "frugal" states question. They doubt these revenues will reduce the burden on national budgets significantly. The yield from the carbon market tax and the tax on multinational companies, for example, is uncertain and depends on factors like industrial production and market conditions.

Net contributions and budgetary balances

Discussions on the EU budget often involve complex figures about member states’ contributions. For example, France paid 25 billion euros to the EU in 2025 but received significant funds through the Recovery and Resilience Facility, resulting in a net positive balance. In contrast, Germany contributed much more than it received, highlighting the uneven distribution of financial flows within the EU.

Political implications of budget proposals

Some political leaders, like Marine Le Pen and Jean-Luc Mélenchon in France, have proposed reducing France’s contributions to the EU budget. However, such reductions are unlikely without consensus among all member states. Unilateral cuts could lead to financial sanctions or even the possibility of leaving the EU, with severe consequences for the Economic and Monetary Union.

Broader economic and political context

The EU faces a complex challenge in balancing solidarity and self-reliance in a period of geopolitical tension. The MFF negotiations must address both the need for collective action and the desire for strategic autonomy. The EU must also ensure the sustainability of its financial commitments while maintaining its role in global affairs.