The European Parliament is pushing for more money on nearly every front in the EU’s next long-term budget for 2028–2034, while ruling out higher national contributions. But what trade-offs is it willing to make — and who will ultimately foot the bill?
When the European Commission tabled its proposal for the Multiannual Financial Framework (MFF) in July 2025, the mood in European capitals was cautious. The plan already implied a sizeable increase of roughly €700bn more than the current framework. German Chancellor Friedrich Merz dismissed the size as “unreasonable” at a time when member states are tightening their budgets. Others signalled similar reluctance.
European Commission President Ursula von der Leyen has now acknowledged that position, arguing that new EU-level revenues will be unavoidable if the bloc wants to meet its growing ambitions without increasing the burden on member states.
Speaking after an informal EU summit in Cyprus, she pointed to the need to repay pandemic-era borrowing under NextGenerationEU, step up investment in areas such as competitiveness, defence and energy, and preserve funding for agriculture and cohesion.
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“There is only one solution. New own resources are indispensable. Without them, the choice is stark: higher national contributions or lower spending capacity. (…) That would mean less Europe exactly where Europe needs to do more,” she said.
A bigger budget
But Parliament wants to push it even further. The budget committee is calling for a 10 per cent increase compared to the Commission’s proposal, though without increasing direct national contributions. Instead, they are doubling down on a politically fraught idea: expanding so-called “own resources”, revenues raised at EU level.
At the heart of Parliament’s position is a simple idea: it will only give its consent to the MFF if new revenue streams are introduced, without governments having to pay more. “No EU revenues, no EU budget,” as the Renew group stated.
Renew’s negotiator, Fabienne Keller (DEU), put it simply: “You can be sure that we will not consent to an EU budget that lacks the necessary EU revenues to sustain itself. It’s a matter of basic financial prudence.”
But with no additional government spending, that leaves the Parliament essentially with two options only: new EU-level levies or more borrowing.
The Commission has already proposed a “basket” of new revenue streams, expected to raise around €60bn annually. Parliament broadly supports this approach, seeing it as a way to square the circle between higher spending and national resistance.
But each proposed revenue source comes with political and economic trade-offs.
The revenue puzzle
Some elements are relatively uncontroversial. Revenues from the EU’s Emissions Trading System (ETS)—including its expansion to buildings and transport from 2027—are widely seen as a logical EU income stream. Carbon pricing is already managed at EU level, making it a natural candidate for the common budget.
Others are more contentious. The Carbon Border Adjustment Mechanism (CBAM), effectively a carbon levy on imports, fits the same logic but risks trade tensions. Emerging economies, including the BRICS bloc, have criticised it as protectionism in disguise.
The most divisive proposal is the corporate levy, known as CORE. It would impose a fixed annual charge on large companies operating in the EU. While modest in absolute terms, critics argue it distorts competitiveness — a sensitive issue as Europe tries to boost investment.
“There is no question for the European Union taxing companies,” said Friedrich Merz. “We are not doing that.”
Tobacco or electronic waste
Formally, the tax would be collected by member states and transferred to Brussels — a legal workaround that has done little to reassure sceptical capitals. Business groups have equally warned deter investment.
Other proposals target politically easier ground, but still face resistance. A share of national tobacco excise revenues would be redirected to the EU budget, reframing an existing tax rather than creating a new one. Yet countries including Sweden and Italy argue this encroaches on fiscal sovereignty.
If everything is a priority, then nothing is a priority. New spending on defence, innovation and industry is being layered on top of existing commitments to agriculture and cohesion — without clear cuts elsewhere.
—Anouk van Brug (Renew/NLD)
Finally, a levy on electronic waste aims to align environmental incentives with revenue generation. But like earlier “green” resources, its long-term yield may decline as behaviour changes — raising doubts about its reliability.
Borrowing as viable option
If thesse new revenues fall short, Parliament is also keeping another option on the table: joint borrowing.
In a resolution on the next MFF, MEPs described borrowing as a “viable option” to finance EU priorities and respond to crises. As precedent, they take the pandemic-era NextGenerationEU programme that broke taboos by allowing the EU to issue common debt to fund grants and loans.
Extending that model, however, would mark a significant shift. Under current treaty rules, EU borrowing is tightly constrained and typically linked to exceptional circumstances. Turning it into a structural financing tool would require political —and potentially legal—breakthroughs.
No trade-offs, no consensus?
For critics, the core problem with the Parliament’s approach is that its amibtions outpace its willingness to prioritise. That critique is also shared by some MEPs. Anouk van Brug (Renew/NLD), for example, pointed out that “if everything is a priority, then nothing is a priority. New spending on defence, innovation and industry is being layered on top of existing commitments to agriculture and cohesion — without clear cuts elsewhere.”
And that tension will likely come at the heart of the coming negotiations. Parliament may favour new EU-level revenues over national contributions, but member states ultimately hold the keys. Any new “own resources” require unanimous approval — and may therefore turn out to be unrealistic.
