Germany and five allies seek hundreds of billions in EU budget cuts for defense focus

German Chancellor Friedrich Merz and the leaders of five other EU economies have urged cuts of “hundreds of billions” of euros to the next long-term EU budget to free capacity for Europe’s defense push, CNBC reported on 30 September.

Letter to the Council presidency

In a letter to Irish Taoiseach Micheál Martin and European Council President António Costa — seen by CNBC — the leaders of Germany, Denmark, the Netherlands, Austria, Finland and Sweden said the Commission’s Multiannual Financial Framework (MFF) proposal for 2028–2034, amounting to almost €2 trillion ($2.3 trillion), “will need to be reduced by several hundred billion euros.” Ireland currently holds the rotating Council presidency. The MFF requires unanimity of all 27 member states.

The six countries said they finance almost 40% of member contributions and that net contributors as a whole shoulder around three-quarters of the financing burden. They argued the next budget should focus on defense and security, competitiveness and innovation, and “the fight against irregular migration.” They wrote that the talks are “about much more than money” and about whether Europe can be “strong and sovereign… in an uncertain world.”

Guns, butter and deficits

NATO members have committed to raise national defense spending toward 5% of GDP by 2035, and US President Donald Trump has pressed Europe to take greater ownership of its defense. The signatories said they are not seeking cuts versus the current MFF through 2027, but that a proposed nominal increase of around 60% “is simply not realistic.” They rejected common borrowing as the answer and stressed that “there will be no European sovereignty without sound public finances,” against a backdrop of higher borrowing costs and several states under the EU’s excessive deficit procedure.