Berlin Pushes for EU Budget Reforms, Rejects New Debt and Increased German Contribution
The German government has released a position paper outlining its stance on the upcoming EU budget negotiations, which are set to begin after the EU Commission presents its proposal in mid-July. The document emphasizes the need for a reorientation of the EU budget, focusing on projects that bring added value to Europe.
The government firmly rejects new EU debt, an increase in the EU budget and a higher German net contribution to the EU budget. The paper states that the temporary and extraordinary instrument of the Corona recovery fund should not be perpetuated and that any extension is legally excluded.
Berlin also rejects the idea of a significant increase in the budget’s volume, measured against the economic power of the member states, citing a lack of basis for such an increase. The current budget for the 2021-2027 period amounts to around 1.2 trillion euros, with an additional 800 billion euros from the Corona recovery fund.
The government also rejects demands for a significantly higher German net contribution to the EU budget, instead calling for a “fair burden-sharing” and the correction of existing, unproportional net burdens through corrections on the revenue side. This means that Germany will continue to receive payments from the EU budget in various pots, despite being a net payer.
The paper does not leave any backdoor open for EU debt to finance defense, which is a demand made by several member states. Instead, the government suggests that the traditional EU budget should be used to finance “security and defense capabilities” and long-term support for Ukraine.
While the rejection of a significant budget increase is likely to put the German government in conflict with the EU Commission, the government’s demands for a change in budget structure are less conflict-prone. The demand for the financing of “clear European added value” is shared by the EU Commission and the paper mentions examples such as “future, innovation and transformation expenditures.” The commission also supports the government’s call for increased flexibility within the budget, allowing for horizontal reallocation between policy areas.
The government also supports the proposed EU fund for competitiveness, but with the condition that it must follow the principles of competitiveness and excellence, with transparent governance, adequate participation of member states and mechanisms to ensure the support of strategic key technologies in a planned manner.