German Chancellor Friedrich Merz has formed an alliance with the leaders of Denmark, Finland, the Netherlands, Austria and Sweden to oppose a major expansion of the European Union’s long-term budget, arguing that the proposed increase is unaffordable at a time when member states are under pressure to consolidate their public finances.
The six governments have agreed that the EU’s next seven-year financial framework should be cut by several hundred billion euros compared with the European Commission’s proposal. Merz said the reductions would have to affect all areas of the budget, and that the six countries would enter the forthcoming negotiations in Brussels with a common position.
The Commission has proposed increasing the EU’s financial framework by up to 60 per cent. Merz described such an expansion as “simply unaffordable” given the current fiscal environment. Speaking after a confidential meeting in Berlin with the five other governments, he rejected the suggestion that the alliance was motivated by an unwillingness to contribute to Europe. “We are not stingy, but such increases as proposed by the Commission simply do not fit our times,” he said.
The meeting brought together Danish Prime Minister Mette Frederiksen, Finnish Prime Minister Petteri Orpo and Austrian Chancellor Christian Stocker in Berlin, while the prime ministers of the Netherlands and Sweden participated by videoconference. According to Merz, the six countries collectively finance around 40 per cent of the European budget. He also stressed their wider financial contribution to Europe’s support for Ukraine, saying they provide 70 per cent of bilateral aid from EU states.
The alliance is demanding what it calls “realism and reforms” in the financial framework that will take effect on 1 January 2028. At its centre, the group wants the EU budget to prioritise the competitiveness of the European Union and its industry. Merz argued that Europe could not respond to modern economic challenges with spending structures designed for an earlier era. “With a budget of the 20th century, we will not meet the challenges of the 21st century,” he said.
The dispute is likely to become one of the most politically sensitive negotiations in Brussels. The EU budget is agreed for seven years, and member states are now negotiating the framework covering 2028 to 2034. The European Commission has proposed around €1.76 trillion, calculated at 2025 prices, for a wide range of European programmes and priorities.
That money would finance areas including defence procurement, agricultural policy, structural development and the Erasmus exchange programme. The proposed sum is substantially larger than the amount allocated for the current financial framework covering 2021 to the end of 2027.
For Merz, however, the scale of the proposed increase is incompatible with the fiscal constraints facing national governments. His position also reflects a broader argument over what the EU should prioritise as it confronts changing economic and industrial conditions. The six governments want competitiveness and industrial strength to occupy a more central position in the next budget.
The alliance now intends to carry its common position into EU discussions beginning in October, with the stated goal of completing negotiations by the end of this year if possible. The confrontation sets up a difficult test for Brussels, where any agreement on the next seven-year budget will require governments with sharply different spending priorities to compromise.
Merz’s coalition also signals that Germany, traditionally central to the financing and political direction of the EU, is prepared to use its financial weight to challenge the Commission’s proposed expansion rather than simply accept a larger common budget. With six major member states now aligned against the plan, the negotiations over Europe’s finances for 2028–2034 are set for a potentially bruising battle over how much the EU should spend, and what it should spend it on.
