Germany sees limited financial leeway on next EU budget, policy paper shows

Germany sees limited financial leeway on next EU budget, policy paper shows

Germany has indicated limited financial flexibility for the European Union's next seven-year budget, according to a policy paper seen by Reuters. The document, released on Saturday, suggests that member states, particularly the largest contributors, do not have room to increase their contributions [1].

The German economy, Europe's largest, has experienced contraction for the past two years, with modest forecasts for 2025. This has slowed growth in much of the bloc, prompting the German government to enter budget talks cautiously. The policy paper states that "for the foreseeable future, member states' financial leeway will remain limited. There is no basis for increasing the (EU budget's) volume relative to GNI (Gross National Income)" [1].

Negotiations for the next EU budget period from 2028 to 2034 are just beginning. The budget period covers a sum of about 1.2 trillion euros ($1.4 trillion). EU Commission chief Ursula von der Leyen has emphasized the need for the budget to be more flexible and focused [1].

The policy paper also highlights Germany's position on jointly issued debt. Repayments to the Next Generation EU (NGEU) program, a pandemic recovery scheme financed by jointly backed bonds, should begin as of 2028. The document states that "an extension is legally excluded" [1].

The budget talks within the 27-nation EU are contentious, with disagreements between net contributors and beneficiaries, and traditional sectors like agriculture versus the need to develop new technologies [1]. The German paper emphasizes the importance of reinforcing EU security and defense powers and competitiveness, including continued support for Ukraine [1].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3SH03S:0-germany-sees-limited-financial-leeway-on-next-eu-budget-policy-paper-shows/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3SF1IX:0-eu-s-nuclear-energy-plans-require-241-billion-euro-investment-draft-shows/
[3] https://www.dw.com/en/oecd-slashes-growth-forecasts-for-germany-france/a-70958408
[4] https://uk.finance.yahoo.com/news/germany-sees-limited-financial-leeway-132433521.html