Germany and Spain are taking sharply different positions in negotiations over the European Union’s next long-term budget, putting the two major member states on opposite sides of a debate over how much the bloc should spend and how it should finance its priorities.

The dispute concerns the EU’s Multiannual Financial Framework for 2028 to 2034, which will determine spending on areas including agriculture, regional development, competitiveness, defence, migration and other EU programmes.

The European Commission has proposed a package worth almost €2 trillion over seven years. The proposal still has to be negotiated and agreed by the member states and the European Parliament.

Spain calls for a larger budget

Spanish Economy Minister Carlos Cuerpo has argued that the EU needs greater financial capacity to respond to new challenges, including defence, energy security, competitiveness, migration and technological investment.

In a POLITICO opinion article published as negotiations intensify, Cuerpo argued that the next budget should be more ambitious rather than substantially reduced.

Spain is also proposing changes to the repayment schedule for debt issued jointly by the EU in 2021 to finance the post-pandemic recovery.

Around €300 billion of that joint debt is scheduled to be repaid between 2028 and 2058. Under the current repayment structure, member states would face substantial annual payments during the next budget period.

Cuerpo's proposal would spread principal repayments over a longer period, creating additional room within national budgets and the EU's wider financial framework. Current reporting indicates that the Spanish proposal could free up around €11 billion a year for other EU priorities.

Germany and four other countries push for cuts

Germany is taking a different position.

Chancellor Friedrich Merz joined the leaders of Denmark, the Netherlands, Austria and Finland in calling for a more restrained EU budget.

The five governments have argued that the Commission's proposal should be reduced by several hundred billion euros rather than expanded.

Their position is based partly on the argument that EU spending should reflect the financial pressures already facing national governments.

The five countries are also opposing proposals to substantially extend or restructure repayment of the EU's pandemic-era joint debt. They argue that increasing the amount of money available through additional borrowing or delaying repayment would not resolve the bloc's underlying financial pressures.

Germany is one of the EU's largest contributors

The disagreement is particularly significant because Germany is one of the largest contributors to the EU budget.

Germany, Denmark, the Netherlands, Austria and Finland have jointly pressed Ireland, which currently holds the rotating presidency of the Council of the EU, to seek substantial reductions in the next negotiating text.

The exact size of any eventual reduction remains unresolved. Reports citing officials involved in the confidential negotiations indicate that a compromise involving smaller cuts than those initially sought by the group may ultimately be necessary.

Why the pandemic debt matters

The disagreement over debt repayment is closely connected to the size of the future EU budget.

The EU borrowed jointly in 2021 to finance the Recovery and Resilience Facility and other measures responding to the economic consequences of the COVID-19 pandemic.

The principal must eventually be repaid by the EU, with member states contributing through the EU budget.

The current schedule would require substantial repayments during the 2028-2034 period. Spain argues that changing the timetable could create additional financial room at a time when the EU is also being asked to spend more on defence, competitiveness and other strategic priorities.

Germany and its partners are resisting that approach, arguing for tighter control of spending and repayment commitments.

The Commission's proposal is already under pressure

The European Commission's original proposal, presented in July 2025, amounts to almost €2 trillion in current prices for the seven-year period.

The Commission has proposed a substantial restructuring of the budget, including new national and regional partnership plans combining several existing funding streams.

Under the Commission's proposal, around €865 billion would be allocated to economic, social and territorial cohesion, while €409 billion would support competitiveness and related priorities.

These figures are part of the Commission's proposal and do not represent the final budget that member states will receive.

Agriculture and regional funding are also at stake

The negotiations matter particularly to countries that rely heavily on EU cohesion and agricultural funding.

The Commission has proposed keeping cohesion and agricultural policy at the heart of its new national and regional partnership system, while also creating greater flexibility to direct money toward newer priorities.

Sixteen EU countries have separately pushed for stronger protection of traditional cohesion, agricultural and fisheries funding, highlighting the competing demands facing the negotiations.

This has created several overlapping groups within the talks, rather than a simple division between Germany and Spain.

Spain's position is changing

The negotiations also come at an important moment for Spain's relationship with the EU budget.

Spain has historically been a major recipient of EU funding, particularly through cohesion and regional development programmes.

For the 2028-2034 period, Spanish officials expect the country's position to change as economic development means Spain is projected to become a net contributor to the EU budget.

That makes the size and structure of the future budget financially significant for Madrid as well as for the countries that have traditionally been net contributors.

António Costa seeks a compromise

European Council President António Costa has been consulting national leaders as he attempts to narrow differences before the negotiations enter their decisive phase.

Costa has recently travelled to EU capitals to discuss the most contentious issues surrounding the next budget, including its overall size and spending priorities.

He met German Chancellor Friedrich Merz in Berlin on September 9, with EU competitiveness and the future budget among the subjects discussed.

Ireland, which holds the rotating presidency of the Council during the current six-month period, is also playing a central role in coordinating negotiations among member states.

No final agreement yet

Despite the increasingly public disagreement, the final shape of the 2028-2034 EU budget remains undecided.

The Commission's proposal, national government positions and the European Parliament's demands will all have to be reconciled before a final agreement can be reached.

The negotiations are expected to continue through the remainder of 2026, with governments seeking an agreement that would allow the new financial framework to begin on January 1, 2028.

For now, the central dispute is clear: Spain is arguing for greater financial capacity to fund Europe's expanding priorities and more flexibility over pandemic debt repayments, while Germany and several other major contributors are calling for tighter spending and a smaller overall budget.

The final compromise will determine how much money the EU has available for agriculture, regional development, defence, competitiveness and other priorities for the seven years beginning in 2028.