Brussels Caught in Budget Deadlock As Member States Face Protracting Energy Crisis

This week’s EP plenary session in Strasbourg will mostly be about one thing: money. Or, rather, the lack of it.

In mid-March, the European Parliament’s budgetary committee adopted its own proposal for the EU’s next seven-year budget (MFF) for the 2028-2034 period, which put an extra 10% on top of the Commission’s initial, already record-high proposal unveiled last July. 

The Parliament’s version surpasses €2 trillion, which would require member states to increase their contributions to 1.26% of their annual GDP (compared to the Commission’s more modest request of just 1.15%), and would still keep the controversial “own resources”—new taxes directly collected by the EU.

This is the proposal that will set the table for debate and a key vote in the plenary on Tuesday. 

The Patriots (PfE) already signaled that they will vote against the package for various reasons, ranging from painful cuts to important sectors to a lack of democratic oversight and major potential for power grabs. 

“Cohesion and agriculture are weakened, while new, vaguely defined instruments concentrate decision-making in Brussels,” explained Czech MEP Klára Dostálová (PfE). “Europe does not need a bigger black box. It needs a budget that is transparent, accountable, and rooted in democratic legitimacy.”

Still, the budget proposal will likely pass in the plenary, since the mainstream ‘Ursula coalition’ (centrists, socialists, liberals, and greens) is mostly united behind it. 

However, this will only deepen the institutional deadlock around the next MFF, as member states, though still divided on the issue, seem to favor a smaller budget even compared to the Commission’s €1.8 trillion plan.

Power costs money

Friday marked the first time member states in the European Council truly discussed the next MFF, and it immediately became clear that they are nowhere near a compromise yet.

For instance, Poland and a few other Russia-hawks want a bigger and even more defense-focused budget, closer to the €2 trillion mark. In contrast, Germany, the Netherlands, and the rest of the “frugal” northern member states push for a significantly lower number than the Commission’s proposal, as well as rule out any more common debt. Dutch Prime Minister Rob Jetten even called the €1.8 trillion “unacceptable,” and said the “size of the budget needs to substantially go down.”

Then there is France and Greece, and presumably a few other likeminded countries swimming in debt. They started lobbying for delaying the repayment of the €800 billion worth of joint EU debt Brussels took out during the pandemic, and is due to start paying back at a rate of €25 billion a year starting in 2028. What’s more, Macron even pushed for taking on more common debt to prop up the EU budget instead of increased national contributions. 

The obvious reason countries are suddenly not so keen to pay more into the coffers of the EU is the globally unfolding energy crisis. Europe not only seems to be unable to properly address the issue of oil and LNG prices steadily rising due to the Iran war—as well as strategic mistakes such as deprioritizing nuclear power or banning energy imports from Russia—but soon may also have to face a worsening financial and cost-of-living crisis because of it.

“Energy costs are cascading into food, transport, and housing, hitting lower- and middle-income households hardest,” said Seamus Boland, head of the umbrella organization of trade unions advising the Commission. What worries EU leaders the most, of course, is the possibility of voters punishing them for it.

„Politically, that creates space for distrust — not just of national governments, but of European institutions’ ability to shield citizens from external shocks. It risks accelerating support for more protectionist or inward-looking approaches,” Boland explained. 

Meaning: the mainstream incumbents, both in the capitals and in Brussels, are at major risk of being replaced by more sovereigntist parties if they are unable to solve this complex web of crises ahead of us. 

This is why more and more countries ignore Brussels’ plea to stick only to “temporary and targeted measures” with “limited fiscal impact” when trying to bring down the fuel prices—which, of course, would also leave more room for a bigger EU budget—and choose to spend their money on preserving their power at home.

This is also why the stated goal is to reach an agreement on the MFF by the end of the year, however ambitious it may seem. One of the main reasons for the rush is the growing fear that the possible election of nationalist frontrunner Jordan Bardella (Rassemblement National/PfE) as French president in 2027 may snuff out all hope of a more robust and centralized power structure in Brussels, starting with its financial backbone.

And that’s what the Commission, more than anyone else, wants to avoid. As we’ve seen countless times before, Brussels’ solution to every crisis is more power for itself. This is what we see now as well. Despite her ideologized policies making Europe’s energy sector as vulnerable to outside shocks as it is today, Commission President Ursula von der Leyen still lobbies for a bigger budget and more centralization.

“It’s either higher national contributions or it’s lower spending capacity. That’s the only options that are there. In other words, lower spending capacities would mean less Europe―exactly when more Europe is needed,” von der Leyen said. Because who would know what Europeans need better than her?