Official Berlin has rejected the European Union’s proposed budget, setting the stage for difficult negotiations between member states and the European Parliament. The German government has sharply criticized the European Commission’s key proposals for the upcoming budget plans. According to government spokesperson Stefan Kornelius, the German government finds it impossible to accept the Commission’s proposal.
Germany Cites National Austerity Efforts
“An overall increase in the EU budget is non-negotiable at a time when all member states are making significant efforts to consolidate their national budgets,” Kornelius stated.
In the proposed Multiannual Financial Framework (MFF), the European Commission suggests a budget of two trillion euros for the 2028-2034 period. This amounts to approximately 700 billion euros more than the current seven-year budgetary period. Among other things, more funds are planned for defense and competitiveness. As the member state with the largest economic weight, Germany generally contributes almost a quarter of the funds.
The MFF is designed for a seven-year period and is initially proposed by the European Commission before being debated by EU member states and the European Parliament. The long-term budget sets maximum limits for annual EU expenditures and how they are utilized.
Criticism of Additional Corporate Taxation
As one of the new revenue sources for the EU budget, the Commission proposes a tax on large companies with an annual turnover of more than 100 million euros. This additional tax on large companies, intended to ease the budgets of member states, also lacks the support of the German federal government.
German Finance Minister Lars Klingbeil declared during a G-20 Finance Ministers’ meeting in South Africa that the German government aims to strengthen the German economy, ensure employment, and attract investment to the country. “And in this context, the corporate tax now proposed by the European Commission, in its current form, sends the wrong signal.”
Klingbeil also criticized the Commission’s planned spending level: “We must maintain an absolute proportionality in terms of finances. I don’t think that is being met,” said the SPD politician.
However, the German government welcomes the European Commission’s reformist approach, especially the shift in the budget towards new priorities such as competitiveness and defense capability. Brussels stated in the draft budget, among other things, that it would reduce the number of aid programs to distribute more funds more flexibly.
Business and Environmental Groups Express Concerns
Business associations are particularly wary of potential tax regulations for companies. The German automotive industry association (VDA) had previously stated that companies in Germany and Europe are in an extremely difficult economic situation. “Therefore, any tax increase or introduction of additional taxes is unfeasible, both at the national and European levels,” declared VDA President Hildegard Müller. A special tax on profits should be considered particularly detrimental to growth, as it would weaken the competitiveness of EU companies.
The German Chamber of Industry and Commerce (DIHK) had stated even before the Commission’s proposal was presented that such a measure would send “an entirely wrong signal.” According to CEO Helena Melnikov, companies need incentives, not additional taxes.
Environmental groups believe their interests are not sufficiently considered in the draft budget. The German Federation for Environment and Nature Conservation (BUND) calls the Commission’s proposal “a zero for nature protection.” According to its president, Olaf Bandt, concrete funding commitments are lacking, for example, for the implementation of the EU Nature Restoration Act for nature restoration. WWF criticized the proposed cuts for environmental and nature protection despite worsening crises, “and this in another summer with heatwaves, forest fires, and floods.”
