EU budget: Merz demands hundreds of billions in cuts

German Chancellor Friedrich Merz said Tuesday that the European Union should cut several hundred billion euros from its proposed 2028-2034 budget and do more to improve competitiveness as negotiations begin over the bloc's next spending plan.

The European Commission has proposed a two-trillion-euro, or $2.3 trillion, budget for the period. Germany and other members of the EU's so-called frugal bloc have said the plan is too high.

"We need a budget proposal with cuts in all areas adding up to several hundred billion euros," Merz said at a press conference with Irish Prime Minister Micheal Martin, whose country holds the current EU presidency.

Merz said the EU could not afford large spending increases while national budgets were being consolidated.

Martin said the bloc needed a budget that meets future needs and ambitions while reflecting the current economic situation. He said Ireland would work towards a compromise and believed agreement should be possible by the end of the year if countries approached the talks in the right spirit.

Martin also said improving Europe's economic competitiveness was a priority for Ireland's presidency.

Brussels has proposed funding new spending with a tax on big businesses. Merz said he was prepared to discuss new resources for the EU, but added that an additional European-level business tax was not something Germany could consider.

Merz said the EU had not done enough to improve competitiveness. He said authorisation procedures for investments remained too long and called for a reduction in bureaucracy at European level.

The European Commission recently drew criticism from green activists by proposing to soften its carbon pricing mechanism, a scheme criticised by big European businesses. Merz said on Monday that competitiveness and climate protection had to go hand in hand.