Germany’s Merz says EU budget needs cut of ‘several hundred billion’ euros

DUBLIN — German Chancellor Friedrich Merz said on Tuesday the European Commission’s original EU budget proposal of almost €2 trillion should be slashed by hundred of billions of euros and that it was “unacceptable” to add 2,500 new jobs at EU institutions. Speaking at a press conference with Irish Taoiseach Micheál Martin, Merz called the Commission’s plan ” unacceptable” and “not balanced.” He added: “That is why we need a draft budget with cuts across the board — totaling several hundred billion euros. These cuts are essential.” Asked by POLITICO whether this proposed cut was identical to the €400 billion in budget reductions that a German document suggested at the end of last month, Merz declined to go into detail, referring to ongoing negotiations. Merz also lashed out at a Commission plan to increase the number of EU staffers, a move that Brussels says is necessary to deal with the increased work load caused by the current geopolitical crises. “It is unacceptable that 2,500 new positions are now to be created for the European institutions. We will not accept that,” the chancellor said, arguing that Germany was reducing its government staff by 8 percent by 2029. Under its presidency of the Council of the European Union, Ireland will have to put forward a new budget proposal before a summit of EU leaders in October. Martin will face the herculean task of squaring Merz’s push for cuts with conflicting pressure from countries supporting a bigger budget, such as Italy, Spain and Poland. The previous Cyprus Council Presidency’s 2 percent cut from the Commission’s proposal in June was deemed insufficient by Germany and its northern European allies. At the press conference, the Irish leader was reticent in response to the German demands, only saying he would “listen carefully to the chancellor what is important for him and for Germany.” Martin added: “I believe, if we all approach the task in the right spirit, agreement should be possible by the end of the year.” But a sensitive issue for Ireland is to identify new bloc-wide taxes to finance the budget, known as own resources, which require unanimous support among EU countries. The Commission proposed last year five new own resources — including higher tobacco rates and a controversial tax on EU businesses — to generate fresh revenue to cover soaring defense and competitiveness spending without relying entirely on higher contributions from national governments. Germany has strongly opposed the business tax and rejected suggestions that the Commission could exempt small and medium enterprises in order to reach a deal. During the press conference, Martin reiterated Ireland’s opposition toward a digital levy, which has been endorsed by the European Parliament and by French President Emmanuel Macron. He warned that it would undermine last year’s “Turnberry trade agreement” with the U.S.