Merz puts spending reform at the center of EU budget debate

EU spending must be modernised to focus on investment in defence and competitiveness with cuts to traditional farming or regional subsidies, according to Friedrich Merz, the German chancellor.

Germany – Europe’s largest economy and biggest contributor to Brussels’ budget – has laid down red lines as debate over the EU’s next long-term spending plans kicks off.

“The content and structure of the EU budget have remained virtually unchanged over the past few decades,” he said on Thursday, adding that “more than two-thirds of European funds still go toward redistribution and subsidies.”

As negotiations over the European Commission’s proposed 2028-2034 €1.8 trillion spending plan gather pace, pressure is mounting on capitals to decide how to finance the bloc’s new priorities while repaying the Covid-era debt dating back to the last budget settlement.

Merz argued that the EU should focus its spending for the cycle on strategic priorities and investment to lift the…