EU leaders have asked Ireland to prepare options for new sources of revenue for the bloc’s next seven-year budget, as governments remain divided over who should pay for Europe’s expanding list of priorities.
European Union leaders have opened a difficult phase in negotiations over the bloc’s next long-term budget, with pressure mounting to find new revenue sources that could reduce the burden on national treasuries while preserving spending on defence, competitiveness, agriculture and regional development.
At their Brussels summit on 18–19 June, leaders discussed the next Multiannual Financial Framework, the EU’s seven-year budget plan for 2028–2034. They asked Ireland, which takes over the rotating presidency of the Council of the EU in July, to advance work on the budget before the European Council meeting scheduled for 15 October.
The issue is not simply the size of the next EU budget. It is a dispute over who pays, who benefits, and whether the Union can fund new strategic priorities without cutting into long-established programmes or forcing higher national contributions from member states.
According to the Commission’s own budget material, the next framework is designed to finance almost €2 trillion in EU priorities across the next financial cycle. That scale has already triggered resistance from several net contributor countries, which pay more into the EU budget than they receive. At the same time, net beneficiary states are concerned that any reduction would weaken cohesion funding, agricultural support and investment in poorer regions.
The result is a familiar seven-year budget conflict, but with sharper pressure than in previous cycles. The EU is now trying to finance a wider agenda: support for Ukraine, defence industrial capacity, competitiveness against the United States and China, energy transition costs, migration management, border control, research, infrastructure and the repayment of pandemic-era borrowing.
To avoid a direct clash between higher national contributions and spending cuts, leaders are looking again at new own resources — revenue streams assigned to the EU budget rather than paid directly from national budgets. These could include a share of revenue from the EU Emissions Trading System, proceeds from the Carbon Border Adjustment Mechanism, a levy linked to non-collected electronic waste, a tobacco excise element, and contributions from large companies operating in the EU.
Other politically sensitive ideas under discussion include levies on digital services, online gambling, crypto-asset capital gains and extreme wealth. Each carries a different political cost. Some would be opposed by low-tax countries, others by governments wary of new EU-level taxation, and others by industries already under pressure from energy costs and global competition.
Ireland’s task will therefore be politically delicate. It will have to identify which combination of revenue options could command unanimous support among the 27 member states. Under EU rules, the long-term budget requires agreement among governments, making any one capital capable of delaying or blocking a deal.
The timetable adds further pressure. EU governments legally have until the end of 2027 to agree the next budget, but leaders want a political agreement earlier so that legislative acts can be adopted in time and EU funding can begin flowing from January 2028. Delaying the decision would also risk pushing the budget fight into a more difficult political period, with several national electoral calendars already complicating fiscal decisions.
The political dividing lines are already visible. Countries that rely heavily on cohesion and agricultural funding want assurances that traditional spending areas will not be sacrificed. Others argue that Europe’s budget must shift towards defence, technology, industrial competitiveness and strategic autonomy. The underlying question is whether the EU budget can continue to serve both purposes at once.
The debate also exposes the limits of earlier promises that new priorities could be funded without difficult trade-offs. Defence spending, Ukraine support and industrial renewal are no longer marginal budget items. They are becoming central claims on EU resources. Yet the Union’s fiscal structure still depends heavily on national contributions, which governments are reluctant to increase at a time of weak growth and domestic budget pressure.
For Brussels, new own resources offer a way to make the next budget politically possible. For sceptical capitals, they risk becoming EU-level taxation by another name. For businesses, several of the options could mean new costs or higher compliance burdens. For beneficiary regions, failure to find new money could mean tighter funding envelopes after 2027.
The October deadline now gives Ireland several months to test where a compromise might be found. If it succeeds, the EU could enter the final budget negotiations with a clearer financing model. If it fails, the next budget fight is likely to become a direct confrontation between net payers, net recipients and governments demanding money for Europe’s new security and industrial priorities.
The Brussels summit did not resolve that confrontation. It moved it into a more concrete phase. The question is no longer whether the EU needs more money for the next seven years, but whether member states are willing to create revenue streams that would give Brussels greater financial room for manoeuvre.
