Germany issues EU budget ultimatum, FT

German Chancellor Friedrich Merz and five other EU leaders have threatened to withhold agreement on the bloc’s next seven-year budget unless “hundreds of billions” of euros in spending cuts are secured, Financial Times reports.

The ultimatum underscores divisions over the EU’s new spending priorities, including defence and efforts to shore up ailing industries against Chinese and US competition, while continuing to support farmers and poorer regions that have traditionally absorbed the bulk of its budget.

The EU budget “must be fundamentally reformed. We must make choices”, according to a letter signed by the leaders of Germany, the Netherlands, Sweden, Denmark, Austria and Finland and seen by the FT.

“Unless the budget is cut by hundreds of billions, there won’t be an agreement this year,” said a diplomat from one of the signatory countries.

The six leaders want to shift resources towards defence and innovative companies to reflect growing economic and security challenges, while reducing funding for farmers and poorer regions, which traditionally absorb about two-thirds of the EU budget.