Monika Hohlmeier has a sense of humor. Or is that more called chutzpah? “The challenges are growing while the budget is stagnating. This does not do justice to Europe’s demands. The European Parliament is therefore rightly calling for a significant increase in funding,” said the daughter of the former Bavarian Prime Minister Franz Josef Strauss on Tuesday during the budget debate in the European Parliament. “At the same time, we warn against wrong savings decisions. Cuts in agriculture, structural policy and vocational training endanger food security, regional strength and social participation. These areas must not be played off against each other.”
Parliament then passed the resolution by 370 votes to 201 (with 84 abstentions) according to which the Union budget should amount to 1.27 percent of the EU’s gross national income in the years 2028 to 2034. In current prices that would be 2.01 trillion euros, in 2025 prices it would be 1.78 trillion euros. Parliament would like to have around ten percent more than the European Commission proposed last year. This increase corresponds, again in current and 2025 prices, to 197.3 billion euros and 175.11 billion euros.
And now comes the highlight: the costs of repaying the post-corona fund Next Generation EU should be excluded from this budget, the parliamentarians are demanding. Because this fund turns out to be significantly more expensive than the then budget commissioner Johannes Hahn claimed with unshakable confidence when it was founded. Keyword: interest rate turnaround. In the coming year alone, the Commission expects that repaying the interest on the fund could cost ten billion euros. In 2021 it had estimated 4.98 billion euros for the same year. And that’s not even talking about the divestment of the share capital, which will begin in 2028.
These financing costs must not come at the expense of EU programs, warned Parliament on Tuesday in a resolution concerning the 2027 budget. This attitude is worrying. The MPs seem to be of the opinion that a budget can be glossed over if the actual expenditure cannot be covered by the equally actual income.
The problem with Parliament’s positions on both budgetary issues is not a purely numerical one. There are certainly good reasons why the EU needs more money in times of global upheaval and the threat of Russian imperialism. But if you simultaneously defame any reform ideas as an attack on the legacy of Robert Schuman and Konrad Adenauer, you make yourself untrustworthy. And when you start with “creative” ideas like factoring out interest costs, you open Pandora’s box.
This reckless use of taxpayers’ money tempts politicians of all colors. Monika Hohlmeier, quoted at the beginning, sits in parliament for the CSU. Italy’s Foreign Minister Antonio Tajani is also a Christian Democrat and belongs to a right-wing government led by the post-fascist Giorgia Meloni. Tajani also has fits of creativity in budget policy. Why not simply exclude the costs of state energy price subsidies from the Maastricht deficits? Italy, which is chronically heavily indebted, could make almost 35 billion euros irrelevant to the Stability and Growth Pact with the stroke of a pen. Of course, the deficit and debt still rose. But in the year before the next Italian parliamentary election, this could reduce the risk of an escalating EU excessive deficit procedure.
French President Emmanuel Macron, in turn, struck on the weekend in Athens a creative way to deal with the Next Generation EU debt. At a press conference with Greek Prime Minister Kyriakos Mitsotakis, Macron said repayments of these debts should simply be extended indefinitely – or restructured through new EU bonds. “We took on debt during Covid. Today some are telling us to pay it back quickly. That’s absurd. Let’s stretch this debt or go to issue new bonds,” Macron suggested. Mitsotakis, one of the stars of the European People’s Party, agreed with Macron: “What’s the point of paying back now and reducing the budget space for the next six years when there is strong demand for European bonds?”
You don’t have to be a securities lawyer to delicately object at this point that the Next Generation EU creditors would probably like to have their money back within the time frame that was legally guaranteed when the bonds were issued. And if not, one can assume that they would be compensated accordingly for the extension of the debt repayment. This would increase the final costs for this fund, which is rather disappointing in its impact.
But who knows: perhaps all these creative proposals are just a kind of budget policy brainstorming, while more sober voices will prevail in the actual negotiations on the Multiannual Financial Framework 2028-2034. However, you shouldn’t have very high hopes. According to a new assessment by the European Court of Auditors, the basis for negotiations is “no guarantee for better use of EU funds in the future.”
