EU sets stage for big battle over long-term budget
EU chief Ursula von der Leyen has to balance a growing list of priorities including bolstering the bloc's security, ramping up Europe's competitiveness to keep up with US and Chinese companies, countering climate change and paying debts due from 2028.
And all of this against a backdrop of soaring trade tensions with the European Union's biggest commercial partner, the United States.
The previous 2021-2027 budget was worth around 1.2 trillion euros ($1.4 trillion) and made up from national contributions – around one percent of the member states' gross national income – and money collected by the EU such as customs duties.
One of the biggest challenges ahead will be over the size of the budget, as the EU's biggest – and richest – countries want to avoid paying more.
But unlike in the previous budget, the EU has debts due from the Covid pandemic, when the bloc teamed up to borrow 800 billion euros to support the continent's economy. These are estimated to cost 25-30 billion euros a year from 2028.
The European Parliament has made it clear that an increase will be necessary.
"We believe that the union cannot do more with the same amount or less. So we believe that in the end, an increase of the budget will be unavoidable," said Siegfried Muresan, the EU lawmaker who will lead negotiations on behalf of parliament.
The commission plans to propose new ways of raising money including taxes on large companies in Europe with annual net turnover of more than 50 million euros, according to a draft document seen by AFP.
Another area of fierce debate will be the large farming subsidies that make up the biggest share of the budget, known as the common agricultural policy (CAP).
Brussels plans to integrate it into a new major "national and regional partnership" fund, according to another document – which farmers fear will mean less support.
The CAP accounts for almost a third of the current multi-year budget – around 387 billion euros, of which 270 billion euros are directly paid to farmers.
Centralising "funding into a single fund may offer some budgetary flexibility, but it risks dissolving" the CAP with "fewer guarantees", pan-European farmers' group Copa-Cogeca has said.
Farmers will put pressure on the commission with hundreds expected to protest outside the building in Brussels on Wednesday.
That will raise fears in Brussels after protests broke out last year across Europe by farmers angry over cheap imports, low margins and the burden of environmental rules.
Muresan, who belongs to the biggest parliamentary group, the centre-right EPP, urged the same level of funding for the CAP, "adjusted for inflation."
The commission has, however, stressed the CAP will continue with its own rules and financial resources, especially direct aid to farmers.
Brussels could also propose reviewing how CAP payments are calculated to better target beneficiaries.
For example, the commission wants to cap aid per hectare at 100,000 euros but this would be a thorny issue unlikely to garner much support.
Facing new costs and competing challenges, the EU wants to tap new sources of funding – fast.
In one document, the commission suggests the bloc take a share from higher tobacco excise duties and a new tax on non-recycled electronic waste.
Such a move, however, is "neither stable nor sufficient", according to centrist EU lawmaker Fabienne Keller, critical of giving new tasks to Brussels "without the necessary means to accomplish them."
Wednesday's proposal will launch difficult talks over the budget and is expected to "as usual, end with five days of negotiations" between EU capitals, an official said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
22 minutes ago
- The Star
Saudi Aramco president stresses China as key strategic market
RIYADH, Aug. 5 (Xinhua) -- Saudi Aramco President and CEO Amin H. Nasser said on Tuesday that China is an important strategic market for Aramco, and the company plans to further expand its investments in China. Speaking at a media conference call for Aramco's half-year 2025 financial results, Nasser made the remarks in response to a question from Xinhua. "We have excellent collaboration with our Chinese partners. China is an important strategic market for Saudi Aramco," he said. Nasser noted that China hosts a number of integrated refining and petrochemical projects, and Aramco is actively participating in the investment and construction of these large-scale projects. He emphasized that Aramco already has major investments in China and plans to further increase its investment in multiple areas in the future. "We have in the pipeline a number of investment plans in China that could be promising," he said. Nasser also pointed out that China holds a significant position in the global chemical market. "China will continue to be a main market for Saudi Aramco when it comes to supply of crude, investments and projects like liquids-to-chemicals," he said.
New Straits Times
2 hours ago
- New Straits Times
Research needed before Chinese new villages can be nominated as Unesco heritage sites
KUALA LUMPUR: The nomination of Malaysia's Chinese new villages as Unesco World Heritage sites requires thorough research before it can be pursued. Tourism, Arts and Culture Minister Datuk Seri Tiong King Sing said to date, no decision has been made as to whether to declare such villages as national heritages or for submission to Unesco. "As such, the ministry, through the National Heritage Department, is of the view that the nomination of the Chinese new villages as Unesco World Heritage sites requires more in-depth research before any formal proposal can be pursued," he said. He was responding to Wan Razali Wan Nor (PN-Kuantan) on the government's position regarding the proposal to recognise Chinese new villages as Unesco heritage sites. Tiong said approval must first be obtained from the respective state authorities, as land planning and development fall under state jurisdiction and involve multiple agencies at both the federal and state levels. He said state and local authorities must also be prepared to comply with the strict guidelines set by Unesco, as the nomination must meet specific criteria. "This includes the identification of Outstanding Universal Value, authenticity, integrity, site management and others. "The recognition process can sometimes take more than 10 years, as seen with other sites in Malaysia, to ensure that all necessary information is in place to meet Unesco's criteria," he said. On action taken by the National Heritage Department to ensure that proposed heritage sites meet the historical criteria of the nation, Tiong said thorough research is conducted to verify facts and ensure accuracy, to avoid any confusion or issues arising in the future. He said before a site is considered for gazettement under the National Heritage Act 2005, it must first be reviewed by the heritage expert committee and the National Heritage Council to determine the designation of the site.
New Straits Times
2 hours ago
- New Straits Times
Brexit's parallels with Trump tariffs tell a tale
In figuring out why the United States tariff shock hasn't sent the economy or financial world into a tailspin, Britain's exit from the European Union trade bloc provides something of a playbook — and without a particularly happy ending. Aside from vast differences in economic scale and global reach, the two episodes bear some comparison in how they upended years of deeply integrated free trade and possibly in how business, the economy at large and financial markets reacted. The 2016 Brexit referendum and Trump's tariffs this year were each widely billed as economic shocks that would send the financial world into paroxysms. They didn't, at least not at the outset. To be sure, both were followed by dramatic downward lurches in the two countries' currencies. But, to some extent, the steep drop in sterling after the referendum vote and the dollar's plunge on President Donald Trump's tariff plan this year helped offset some of the wider impact, at least on stock markets that are loaded with global firms with outsized foreign revenue. More broadly, however, the difficulty in isolating their immediate net impact means no "big bang" economic crisis unfolds to prove critics right, even if their enduring legacy turns out to be a slow burn of economic potential and lost output, often obscured by multiple other crosswinds. In Britain's case, the seismic effects of the Covid-19 pandemic distorted any attempt to easily assess Brexit when it actually happened. Tortuous negotiations with the EU meant the UK's departure eventually occurred on the eve of the health crisis in 2020 and the new trade rules did not come into force until a year later. But in the four years between the referendum surprise and the pandemic, the UK economy never entered a recession nor recorded a negative quarterly GDP print — confounding pro-EU supporters at the time and bolstering the Brexit lobby. Emerging from the twin hits, however, the economy has almost flatlined since. What's more, it's taken more than eight years for the pound's effective exchange rate to recover its pre-referendum levels. Few mainstream economists now doubt that Brexit has taken a serious toll on the UK economy. One academic study by a number of Bank of England economists earlier this year concluded that uncertainty following the referendum resulted in little change in goods exports and imports before the exit was finalised. But after the new rules hit, UK imports fell three per cent and overall exports fell 6.4 per cent, largely because of the 13 per cent hit in exports to the EU. While this slump seems relatively modest compared with the official forecasts of the longer-term hit, the pain has been borne disproportionately by small businesses. And the cumulative damage to London and the service sector over the next 10 years continues to worry the City. The US tariff story is of a completely different order, of course, as it will reverberate across the world economy. But there are some parallels, not least in certain aspects of the market reactions and the initial resilience. Economists estimate that the tariffs could lop anywhere from 0.5 per cent to one per cent off US gross domestic product over time. That's a US$150 billion to US$300 billion hit, which, though painful, would not be an instant crisis for an economy that's growing at a roughly two per cent annualised rate, where imported goods represent just 11 per cent of GDP and where tech and AI trends are generating considerable tailwinds. But as former White House economic adviser Jason Furman said in a New York Times essay last week, the tariff damage is likely not a one-off hit. The loss of 0.5 per cent of GDP, he argued, is "the equivalent of every household in America taking around US$1,000 and lighting it on fire, then doing it again every year. Forever." In the end, the main point of the British comparison is to show how extreme partisan arguments on the pros or cons of such giant economic policy changes don't necessarily get resolved cleanly in adaptive, hardy and hyper-complex economies. The latest YouGov opinion poll shows 56 per cent of Britons now think it was wrong to leave the EU, some nine years after their narrow vote to leave. The jury on Trump's tariffs is still out.
