Germany has signaled that it will have limited room to boost financial contributions to the European Union's next seven-year budget, according to a policy paper obtained by Reuters.

The document outlines Berlin’s cautious approach, noting that major contributing countries like Germany lack the capacity to increase spending.

After two years of economic contraction and sluggish growth projections for 2025, Germany — the EU’s largest economy — is entering the budget negotiations with a restrained stance. The paper warns, “For the foreseeable future, member states’ financial leeway will remain limited. There is no basis for increasing the EU budget’s volume relative to Gross National Income (GNI).”

Budget negotiations for the 2028–2034 period are just beginning. The proposed budget stands at around €1.2 trillion ($1.4 trillion). European Commission President Ursula von der Leyen has stressed the need for a more flexible and strategically targeted budget.

The paper also restates Germany’s position on jointly issued EU debt. Repayments for the pandemic-era Next Generation EU (NGEU) fund, financed through common bonds, are set to begin in 2028. The document affirms, “An extension is legally excluded.”

Ongoing budget talks remain contentious within the 27-member bloc. Key areas of friction include the balance between net contributors and recipients, and how funds are allocated between traditional sectors like agriculture and future-facing investments such as digital and defense. Germany's stance emphasizes maintaining support for Ukraine and strengthening the EU's security, defense, and competitiveness. Photo by Jorge Royan, Wikimedia commons.