Brussels, July 16, 2025 — The European Commission has proposed a groundbreaking €2 trillion budget for the European Union covering the years 2028–2034, marking a significant shift in priorities toward economic competitiveness, defense, and strategic autonomy.
“This is a budget that matches Europe’s ambition, tackles our challenges, and strengthens our independence,” said European Commission President Ursula von der Leyen during a press briefing in Brussels.
Von der Leyen described the proposal as “bigger, smarter, and sharper,” aiming to deliver real results for EU citizens, businesses, and global partners.
The proposed budget equals 1.26% of the EU’s Gross National Income (GNI), up from 1.13% in the current 7-year budget, and requires approval from all 27 member states as well as the European Parliament.
Key allocations include:
- €451 billion for the new European Competitiveness Fund, which will boost defense industries, support green energy transitions, and drive innovation across the bloc.
- €131 billion for defense and space, a fivefold increase from current spending levels.
- €302 billion to support farmers.
- €218 billion for less developed regions across Europe.
- €200 billion for global programs and foreign partnerships.
While most of the funding is expected to come from member state contributions, the Commission has proposed new direct revenue streams for the EU budget. One notable suggestion is a new tax on companies operating in the EU with annual net turnover above €100 million in any single member state.
However, reactions to the plan were mixed.
Dutch Finance Minister Eelco Heinen criticized the proposal: “The EU is essential for our prosperity, but this budget is simply too large,” he said.
On the other hand, the European Parliament considered the plan insufficient. “You can’t do more with less. New priorities demand new and adequate resources,” argued Siegfried Mureșan, center-right MEP and lead negotiator for the upcoming EU budget.
The months ahead are expected to bring difficult negotiations, as governments clash over how to balance funding for new strategic goals with traditional priorities like agriculture and regional development.
The €2 trillion EU budget proposal signals a historic pivot in the Union’s strategic direction. Defense, innovation, and industrial transformation are now at the top of the European agenda—reflecting a changing global order and the EU’s push to be more self-reliant.
The drastic increase in funding for defense and space, paired with an innovation-focused competitiveness fund, shows that the EU is preparing not only for economic competition with the U.S. and China but also for a more volatile security environment.
At the same time, criticism from net contributor countries like the Netherlands exposes the long-standing tension between shared European goals and national fiscal limits. While richer countries want spending discipline, the European Parliament is demanding more investment to match Europe’s growing global role.
The proposed corporate tax could become a flashpoint. It offers financial independence for the EU but risks backlash from powerful industries and business-friendly member states.
Ultimately, this budget is not just about numbers—it’s about the future identity of the European Union. Will Europe stay a cautious economic club, or evolve into a geopolitical force? The next negotiations may provide the answer.