The European Commission has proposed a historic budget of €1.816 trillion for 2028–2035, with €100 billion for Ukraine and 35% for climate and biodiversity. Years of tense negotiations lie ahead.

The European executive presented on Wednesday the proposal for the European Union's central budget for seven years, starting in 2028: 1.816 billion euros is the ambitious plan that Ursula von der Leyen called"a budget for a new era". The document provides for significant increases in spending on climate, research and external support, but also a change in the way the Union collects its funds, according to politico.eu.

"35% of the proposed budget will go towards climate and biodiversity interventions," von der Leyen announced before the European Parliament, emphasizing Europe's commitment to maintaining its role as a global leader in the ecological transition process.

Massive support for Ukraine

The proposed amount includes a €100 billion package for Ukraine, aimed at reconstruction, defense and gradual integration into the European single market. “This support is a clear signal that the EU is with Ukraine for the long term,” said the European Commission President, echoing the message she sent in Rome last week, when she said: “Europe has been with Ukraine since day one and will remain with it for as long as necessary.”

Twice as much money for research, without additional burdens on states

In addition, the Commission proposes to double the budget of the Horizon Europe programme, the main instrument for funding research and innovation in the EU. The programme had an initial budget of around €95.5 billion. It also maintains its intention to support the digital transition and the economic competitiveness of the European bloc.

Despite the expanded ambitions, the Commission wants to maintain Member States' contributions at current levels by reforming the EU's own revenue collection mechanisms.

The EU's own revenues are the direct sources of financing for the European budget, collected independently of Member States' contributions. They include a share of customs duties, a percentage of each Member State's VAT, but also new sources, such as a tax on non-recycled plastics, revenue from emission allowances and, in the future, taxation of digital companies or a carbon border tax. By reforming the collection mechanisms, the EU aims to diversify its sources of financing by introducing new revenues, reducing its dependence on Member States' contributions.

Controversy over the"misleading" calculation method

The Commission has claimed that its budget will reach €2 trillion because it takes into account corrections for inflation and debt repayments incurred after the Covid pandemic. The amount has sparked controversy: Romanian liberal MEP Siegfried Mureșan, vice-president of the European People’s Party and key negotiator on the budget, criticised the calculation method, calling it “misleading”, a view shared by other lawmakers from various political groups.

The EU budget proposal will be subject to intensive negotiations for at least two years with the European Parliament and national governments.

Member States prepare counter-proposals

Many European capitals are expected to ask for a smaller budget or with different priorities:"Only now does the race for Europe's financial future really begin," said Budget Commissioner Piotr Serafin, who presented the plan in the European Parliament's budget committee.

The proposed budget is expressed in 2025 prices and, compared to the current budget for 2021-2027, of around €1.2 trillion in current prices, represents a significant increase. As a share of the bloc's gross national income, this means an increase from 1.1% to 1.26%.