European governments could fall if no EU budget deal is reached this year

The next European Union budget could become a political trap for governments across the bloc. If negotiations over the nearly €2 trillion package continue into next year’s election campaigns, domestic rhetoric could take control of the debate and put governing parties on the defensive.

The article points to the previous budget cycle as a warning. In 2019, European Parliament elections coincided with several important national votes. Leaders who faced parliamentary elections avoided making compromises during their campaigns, and negotiations stalled until the end of the following year. Trust between member states then fell to a historic low, leading to a tense veto battle inside the European Union.

Brussels now wants to avoid a repeat. A deal reached this year would at least spare governing parties the budget issue during next year’s elections. That would offer limited relief, however, to parties led by Emmanuel Macron, Pedro Sánchez and Donald Tusk, which still face their own political difficulties.

The divisions over the budget have become sharper. Germany, Austria, Denmark, Finland, the Netherlands and Sweden have formed the so-called “Frugal Six” and are demanding cuts worth several hundred billion euros. Led in discussions in Berlin by German Chancellor Friedrich Merz, the group argues that the EU should spend less during a crisis and calls for a major review of cohesion and agricultural funding, as well as cuts to Brussels’ bureaucracy.

Eastern and southern member states view cuts to development support as an economic declaration of war. They argue that the northern countries’ market presence justifies compensation, and that reducing aid would cause investment to fall and fuel anti-European sentiment. The dispute is also being intensified by Brussels’ plans for direct EU taxes, including carbon border charges and a plastics tax. The “Frugal Six” oppose those measures as an erosion of national sovereignty. The article concludes that, whichever side prevails, Hungary and citizens across Central and Eastern Europe could lose out under the next budget.