Overview
- EU leaders began formal negotiations on the Multiannual Financial Framework on Friday and left the June summit without a common position after Cyprus presented a negotiating “box” that narrowed the Commission’s original proposal.
- German Chancellor Friedrich Merz publicly rejected issuing joint EU debt and said the budget must be balanced, reflecting a firm position from the so-called frugal or modernizer group that wants cuts and restraint.
- The European Commission initially proposed roughly €2 trillion for 2028–2034 and the Cypriot-adjusted figures reduce that to about €1.76 trillion, with a reported €20 billion cut focused on a new European Competitiveness Fund.
- Leaders asked the incoming Irish presidency to produce a new negotiating package for an October meeting and António Costa set a political objective to reach a deal by December to avoid complications from 2027 national elections.
- The impasse leaves key trade-offs unresolved between funding new priorities like defence and competitiveness and protecting agriculture and cohesion funds, which could force either higher national contributions, fresh EU-level levies, or cuts to traditional programs that affect regions and farmers.