PARIS — Un peu plus de deux semaines après le Playbook Paris Live, où Gabriel Attal, Marine Le Pen et Jean-Luc Mélenchon étaient reçus, trois autres candidats à la présidentielle étaient invités à s’exprimer ce mardi sur les enjeux économiques du moment lors du Sommet sur la compétitivité économique de POLITICO.

Voitures thermiques et droits de douane

Avec l’ouverture du Salon de l’Auto, c’est l’un des sujets d’actu du jour : l’interdiction de la vente des voitures à moteur thermique dans l’Union européenne à partir de 2035 — un accord pour assouplir cette mesure est sur le point d’être conclu entre la France et l’Allemagne. Sans surprise, Edouard Philippe, Raphaël Glucksmann et Bruno Retailleau ne partagent pas le même avis sur la question.

Le candidat Horizons considère que cette décision est une erreur. “Une stratégie, ça doit s’appuyer sur une analyse précise des moyens qu’on est capable de mettre en œuvre. Et de fait, on n’a pas été capable de mettre en œuvre ce qui aurait permis de rendre cette stratégie possible, pour autant qu’elle ait été adaptée”, a-t-il estimé lors de notre sommet. L’ancien Premier ministre plaide pour une meilleure protection du marché européen via la mise en place de droits de douane élevés sur l’importation de véhicules chinois. Une question de “réciprocité”, a-t-il martelé pendant l’entretien.

Une vision rejetée quelques instants plus tard par Raphaël Glucksmann. “Je ne vois pas du tout en quoi cet objectif [de 2035] était une erreur”, a rétorqué le tout nouveau candidat du PS et de Place publique. L’eurodéputé plaide pour que les constructeurs automobiles se concentrent sur le développement de l’électrique. “C’est ça l’avenir”, a-t-il insisté, jugeant que l’Europe a “un énorme sujet de naïveté vis-à-vis de la Chine”.

Deux positions renvoyées dos à dos par Bruno Retailleau, qui a rappelé que le groupe du Parti populaire européen, dans lequel siègent les eurodéputés LR, s’était opposé à l’instauration de cette règle lorsqu’elle a été votée au Parlement européen. “Ma position, elle est très nette, elle n’a pas changé, ça fait des années que je le demande, je dénonce cet accord”, a insisté le candidat des Républicains. Il aurait préféré voir “imposer le principe de la neutralité technologique”, via un “cadre très exigeant”, mais progressif pour les constructeurs.

Sur la question des échanges commerciaux avec Pékin, le Vendéen rejoint la position d’Edouard Philippe en s’affichant en faveur de “vrais droits de douane” sur les importations chinoises. “A partir du moment où les règles ne sont pas loyales, on doit pouvoir les compenser”, a défendu Bruno Retailleau.

Energies

Autre dissonance entre les candidats : l’énergie. Pronucléaire, Edouard Philippe a insisté sur la nécessité de “défendre” et “favoriser” l’atome, tout en ajoutant que le “risque associé à [son] exploitation” est “réel”. Si, par mesure de sécurité, il fallait interrompre la production des centrales nucléaires françaises, il faudrait que d’autres technologies puissent prendre le relai et produire de l’électricité, a-t-il exposé, mentionnant les énergies renouvelables. Sinon, la France pourrait se retrouver dans une “situation qui peut-être terrible”, a-t-il prévenu. Le candidat Horizons est par ailleurs favorable à la construction de tous les réacteurs EPR2 envisagés par l’exécutif.

Du côté de Bruno Retailleau, le discours est beaucoup plus mesuré sur les renouvelables. Le candidat LR a confirmé vouloir couper leurs subventions s’il était élu, tout comme il compte abandonner la programmation pluriannuelle de l’énergie (la PPE3), définie par le gouvernement Lecornu. Prudent, Bruno Retailleau l’est aussi sur le développement des EPR2. Alors que la construction de six nouveaux réacteurs a déjà été décidée, “on verra” pour les huit autres prévus, a-t-il temporisé.

Vision de l’Europe

Face aux menaces en matière de défense, sécurité ou IA, Raphaël Glucksmann a répondu qu’il fallait “sortir de l’intergouvernemental” et que l’Union européenne devait assumer sa puissance dans le rapport de force avec la Chine ou les Etats-Unis.

“Il faut un instrument pour les financements européens. Si vous avez des financements européens, oui, vous allez voir que subitement les projets européens fonctionnent”, a-t-il plaidé. Pour le candidat PS-Place publique, la France a tout intérêt à diversifier ses alliances en ne regardant pas seulement vers l’Allemagne, mais en se tournant vers la Pologne ou les pays baltes. “La puissance française, elle se construira dans sa capacité à construire une coalition en Europe”, a-t-il martelé.

Pour Edouard Philippe, la relation franco-allemande est “absolument déterminante dans l’ensemble européen”, même s’il ne faut “pas réduire la politique européenne” uniquement à ce duo. Selon le candidat Horizons, la France aurait tout intérêt à “être plus crédible” et à “régler [ses] sujets” (comprenez : ses sujets budgétaires et le redressement des comptes publics), si elle veut retrouver du poids politique en Europe. “Nous sommes les seuls à ne pas savoir respecter des règles communes qui ont été respectées par tous les autres. Et ça, ça nous plante”, a-t-il déploré.

La question budgétaire, c’est par cet angle que Bruno Retailleau a abordé le thème de l’UE. Selon lui, la France doit “absolument” réduire sa contribution au budget de l’Union européenne, a-t-il estimé. Le candidat des Républicains a par ailleurs apporté son soutien aux Etats membres dits “frugaux”, partisans d’un budget de l’UE réduit. “Si la France ne fait pas partie de ces pays frugaux, ça veut dire qu’on a totalement perdu contact avec la réalité”, a jugé l’ancien ministre de l’Intérieur.

Mouvement lycéen

Interrogé sur son soutien au mouvement lycéen, dont c’était “l’acte V” aujourd’hui, Raphaël Glucksmann considère que son rôle n’est pas de manifester, mais “de répondre aux revendications des lycéens et de répondre à une angoisse qui est une angoisse existentielle”. Favorable à la suppression de Parcoursup, il souhaite remplacer la plateforme par “un procédé qui est transparent, mais qui ne peut pas être le retour à ce qu’on faisait avant”, car “ce n’était pas non plus fonctionnel”, a-t-il jugé, sans donner plus de précisions.

Pour Bruno Retailleau, il ne faut pas considérer que les lycéens qui expriment des revendications dans les médias “représentent tous les lycéens”. S’il reconnaît que certaines préoccupations sont “justes”, comme “sur Parcoursup ou sur une angoisse pour l’avenir”, il oppose par exemple les revendications des lycéens ruraux aux citadins. Et note que la situation est moins bouillonnante dans une grande partie du pays.

Le candidat LR a aussi critiqué la présence de la militante écologiste suédoise Greta Thunberg devant un lycée de Seine-Saint-Denis ce matin, jugeant qu’elle incarne une “écologie dévoyée” se résumant souvent à “une forme de gauchisme”.

Grégoire Lovergne a contribué à cet article.

PARIS — Conservative presidential candidate Bruno Retailleau said France should seek a rebate on its contribution to the EU budget ahead of a key European summit in Brussels this week.

France pays more in to the EU budget than it gets out, but it is struggling to reduce a severe budget deficit.

“It’s crazy,” Retailleau, the leader of the conservative party Les Républicains, said at POLITICO’s Competitiveness Summit in Paris. “Why should we contribute more when we know how dire our public finances are?”

European leaders are meeting in Brussels on Thursday and Friday to discuss the bloc’s long-term budget, the Multiannual Financial Framework, which is pitting the so-called frugal countries against those who want a bigger EU budget. France sits in neither camp.

Retailleau singled out structural funds — money that is invested in poorer European regions — as an area where savings could be made.

“We’ve given billions to countries so they would catch up with us. Well they have, and in a couple of years they’ll probably have a higher standard of living. Sorry, but stop,” he said.

However, Retailleau, who is trailing center-right presidential candidate Edouard Philippe and far-right front-runner Marine Le Pen in the polls, did not put a figure on the rebate he would demand if he came to power. Le Pen, who is the front-runner ahead of next year’s presidential election, and her party have proposed slashing France’s yearly contribution by €11.1 billion as early as next year.

Retailleau said he would seek “a negotiation,” rather than unilaterally impose a lower contribution, as Le Pen says she would do.

“I’m not going to behave like Marine Le Pen, I’m pro-European,” said Retailleau.

Retailleau argued that France’s defense and nuclear deterrence investments should also be included in the country’s contribution calculation, because the concept of forward deterrence benefits France’s European neighbors.

PARIS — La France doit “absolument” réduire sa contribution au budget de l’Union européenne, a estimé Bruno Retailleau, invité du sommet sur la compétitivité de POLITICO.

Le candidat des Républicains à l’élection présidentielle a affirmé soutenir les Etats membres dits “frugaux”, partisans d’un budget de l’UE réduit. “Si la France ne fait pas partie de ces pays frugaux, ça veut dire qu’on a totalement perdu contact avec la réalité”, a estimé l’ancien ministre de l’Intérieur.

Bruno Retailleau a aussi reproché à Emmanuel Macron de chercher à faire adopter le budget de l’UE d’ici à la fin de l’année. “Un problème de forme et de démocratie”, selon lui : “comment un président de la République, qui n’a en plus pas de majorité à l’Assemblée nationale, peut-il verrouiller un projet budgétaire fondamental, qui va se dérouler au delà de son mandat ?” a interrogé le candidat, qui se dit par ailleurs toujours “pro-européen”.

Entre simplification et protectionnisme

Bruno Retailleau a aussi indiqué être “bien sûr” en faveur de “vrais droits de douanes” sur les importations chinoises, répondant à une question sur une proposition faite en ce sens par Edouard Philippe. “A partir du moment où les règles ne sont pas loyales, on doit pouvoir les compenser”, a estimé le candidat, qui reproche à la Chine de sous-évaluer sa monnaie, de subventionner son industrie et d’avoir “pillé un certain nombre de nos découvertes”.

Le président des Républicains a aussi renouvelé certaines propositions de simplification de la réglementation en faveur de l’intelligence artificielle, comme “une dérogation de trois ans au RGPD” pour favoriser le lancement de certains service d’IA.

Bruno Retailleau défend aussi une forme de pilotage par l’Etat des infrastructures numériques, et appelle à une “priorisation” dans le raccord des data centers au réseau électrique ou le stockage de données sensibles “sur des clouds souverains opérés par des entreprises qu’on connaît bien”. Il propose enfin un “plan retour” des talents français de l’IA qui travaillent à l’étranger, “avec des exemptions fiscales”, notamment.

Governments should not go back and forth on energy policy and decarbonization targets if they want to attract investors, said Catherine MacGregor, the CEO of French energy giant Engie.

“Without trust, we cannot invest,” MacGregor said at POLITICO’s competitiveness summit in Paris on Tuesday.

In the French government’s 2027 budget proposal, French Prime Minister Sébastien Lecornu proposed backtracking on a number of renewable energy contracts, arguing that subsidies for green energy projects, particularly solar panels, were a major financial burden for the state.

MacGregor said such a move could imperil future investments in France.

“A contract is a contract,” she insisted, adding that “trust is very important” for investors to be able to spend money on energy projects in the long term.

France’s deteriorating public finances have become a central political issue ahead of the country’s presidential election next year. President Emmanuel Macron’s embattled minority government has been looking for ways to cut costs in a bid to bring down a stubbornly high budget deficit projected to come in at 5.4% of gross domestic product.

At the European Union level, Ursula von der Leyen’s second term at the helm of the European Commission has been marked by political pushback against the bloc’s core green policies, including Brussels’ landmark ban on combustion engines by 2035 and its emissions trading scheme.

But the bloc’s commitment to decarbonization gives investors the framework they need to plan ahead, MacGregor argued.

“Europe has one advantage: It moves slowly and that offers a certain level of stability which is very interesting for investors,” she said.

MacGregor defended the competitiveness of renewable energy projects as a means to produce energy locally and quickly, especially with gas prices so high.

“Renewable projects, when we do them well, in an organized manner and at scale … we are able to be competitive,” she added.

PARIS — French center-right presidential candidate Edouard Philippe accused his far-right rival Marine Le Pen of trying to force a Frexit in disguise with her euroskeptic campaign promises.

“There is something in Marine Le Pen’s proposals that has the potential to blow Europe up, or let’s say to crack it open,” Philippe said at POLITICO’s Paris Competitiveness Summit on Tuesday.

The former prime minister — who is currently the best-placed centrist candidate to challenge the front-running Le Pen, according to recent polls — said Le Pen’s plan to unilaterally demand a drastic cut to France’s contribution to the EU budget was akin to “saying you want out of Europe” without openly advocating for leaving the bloc. Le Pen had previously called for a referendum in France on leaving the EU but dropped the proposal after her crushing defeat to Emmanuel Macron in the 2017 presidential election. Her party, the National Rally, now says it wants to change the EU from within.

Philippe, a fiscal conservative who has been pitching himself as the voice of reason in a campaign dominated by populist rivals, also slammed budget plans Le Pen unveiled last week as “grotesque,” accusing her of pitching “fantasy” savings.

Le Pen’s fiscal plans have faced serious scrutiny since being presented, with many observers saying they either lack key details or overestimate savings on major proposals like immigration. Progressive think tank Terra Nova wrote in a note out Tuesday that Le Pen’s budget presentation was “riddled with errors and contradictions” as well as “botched estimates.”

“She isn’t even able to estimate the cost of the pension reform she is proposing,” Philippe said.

Le Pen said in August that her plan to bring France’s legal retirement age back down to 62 for most workers would cost €9 billion a year, and last week she said she would lay out at a later stage how she intends to fund her flagship pledge. However, the Institut Montaigne, a fiscally conservative think tank, estimated the proposal would cost €34.7 billion a year.

Philippe is hoping to convince voters that his fiscally conservative agenda is the right path in a country burdened by a ballooning public debt and a budget deficit still above 5% of gross domestic product, in breach of EU rules.

Philippe said France needed to get its finances back on track to regain credibility on the European stage after a “loss of influence” over the past few years.

Though he currently leads a crowded field of centrist candidates, Philippe’s campaign has struggled in recent weeks to gain momentum — and far-left candidate Jean-Luc Mélenchon is now challenging the former PM for second place in the polls. France’s presidential election goes to a runoff if no candidate receives more than 50% of the vote, and Le Pen’s strong poll numbers all but guarantee her a spot in the second round.

Tough on China

The former prime minister pitched a pragmatic European agenda with less regulatory burden, more focus on investment and a tougher approach to China.

Philippe had some harsh criticism for an already embattled flagship measure of the EU’s green deal, saying the 2035 combustion engine ban has been “disastrous.”

There was “a great naiveté toward China,” which ultimately benefited from Europe’s push on electric vehicles, Philippe said.

“We need to much better protect our market,” he added. “If one wants access to the European market, one has to manufacture in Europe. If a carmaker doesn’t manufacture here, then we have to slap high tariffs.”

The EU is in the process of drawing up new “Made in Europe” rules that would favor European producers over those outside the bloc, in response to trade practices by competitors like China and the United States.

Shortly before Philippe took the stage, European Commissioner for Industry Stéphane Séjourné said at the POLITICO event that a Franco-German deal trading stronger protections on the definition of Made in Europe in exchange for a loosening of combustion engine rules should be finalized “in the next few hours or in the next few days.”

On artificial intelligence, Philippe aligned himself with Macron, advocating for European sovereignty in the field and the need to regulate what he described as “an instrument of power.”

“What I see is an AI world making money for the U.S. with European savings and European data, and that bugs me,” he said.

Reform is under pressure again – but could the coming weeks prove make-or-break for Nigel Farage’s party?

With fresh undercover filming threatening to cause trouble and a crucial report into the £5m gift looming, how serious could the fallout be?

Sam Coates and Anne McElvoy also unpack the latest polling: is Kemi Badenoch enjoying a post-conference bounce, or are internal divisions across the political landscape reshaping the race?

Elsewhere, the battle for the budget narrative is heating up, and Sam has some intel on why business leaders could be getting extra attention from No 10.

Plus, with a date set for an EU-UK summit, Anne gauges the opinion across the continent.

EU capitals must be able to intervene to stop new legislation from Brussels if they say it’s too burdensome for governments and businesses, the leaders of Germany, Italy and Belgium wrote on Monday.

In a letter addressed to European Council President António Costa and seen by POLITICO, the three leaders said the bloc needs an “emergency brake” mechanism to help boost its flagging economic competitiveness.

German Chancellor Friedrich Merz, Italian Prime Minister Giorgia Meloni and Belgian Prime Minister Bart de Wever also called to “significantly accelerate planning and approval procedures,” suspend “certain regulatory areas for a specified period” under a new “priority rule.”

“We call for further ambitious simplification packages to decisively advance the cutting of red tape in the European Union,” they wrote, adding that the Commission must ease the burden “first and foremost” on small and medium-sized businesses.

“More broadly,” the letter reads, “our common objective should be to prevent unnecessary regulatory burdens and related costs from causing permanent losses of European industrial capacity and further weakening investment and competitiveness.”

Coming days before an EU leaders’ meeting, the call echoes demands first stated in March after a summit focused on European competitiveness, and it comes amid worsening signs for the bloc’s industrial sector.

Leaders will debate the EU’s long-term budget, energy prices, and support for Ukraine when they gather in Brussels on Thursday for a two-day European Council summit.

With the budget barely a fortnight away, Chancellor John Healey is warning of mounting economic headwinds. Can he ease the pressure on the public finances without loosening the purse strings?

Sam Coates and Anne McElvoy test the tightrope Healey is attempting to walk ahead of a major speech to the International Monetary Fund.

Elsewhere, is Donald Trump’s energy deal with Vladimir Putin putting the UK’s support for Ukraine to the test? And why has Andy Burnham chosen now to confirm Russian interference in the Brexit vote?

Plus, Sam has an exclusive on how the promise of more money for regional mayors might not be worth as much as they were hoping.

Germany has rejected Ireland’s proposal for the EU’s next seven-year budget, despite €159 billion in cuts. And it’s not alone: Governments are divided over where the cuts should fall, while the European Parliament is threatening to block the deal.

Zoya Sheftalovich and Nick Vinocur unpack the backlash and what it means for this week’s EU leaders’ summit.

Plus, Zoya interviews Migration Commissioner Magnus Brunner about Europe’s efforts to curb irregular migration and plans to tighten restrictions on Russian visitors and former soldiers.

And why the influencers expected at this week’s EU summit won’t be showing up after all.

Questions? Comments? Let us know on our WhatsApp here or at +32 491 05 06 29.

BRUSSELS — Europe will lose out because of €159 billion in cuts to the bloc’s next long-term budget, the European Commission has warned days before EU leaders gather in Brussels for talks on the bloc’s future spending plans.

In an unusual attack, the Commission told governments that scrapping billions from several rainy-day funds will leave Europe less equipped to deal with crises during the next seven-year budget cycle, said four EU diplomats briefed on the talks, granted anonymity to speak freely about confidential discussions.

The Commission’s top budget official, Stéphanie Riso, delivered the warning to the EU’s 27 ambassadors during a closed-door meeting on Sunday, a day after the Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% from the bloc’s total budget from 2028 to 2034.

The Commission is “very concerned about cuts to flexibility,” said one of the EU diplomats.

As a result of the changes, “we will have no ways left to help farmers and regions when crises hit, because of climate change or geopolitical tensions,” they added.

EU ambassadors gathered to discuss the Irish plan, which envisages cuts of €159 billion in current prices from the Commission’s nearly €2 trillion proposal. Of that amount, €38 billion was cut from foreign aid, €75 billion was axed from competitiveness, and at least €22 billion was slashed from rainy-day funds.

But even those reductions were criticized as insufficient by a German-led group of states pushing for cuts of several hundred billion. During the closed-door meeting, a rival bloc of 17 countries, known as the Friends of Cohesion, welcomed the fact that the Irish presidency had spared agriculture and regional payments from cuts.  

EU governments are racing to finalize a deal on the budget among themselves by the end of the year — before elections in France, Italy and Poland that threaten to disrupt the negotiations.

A leaders’ summit on Thursday and Friday will give early signals as to whether the end-of-year deadline is achievable — or whether leaders should start preparing contingency plans.

One EU diplomat said the pressure is now on those leaders: “What could make a difference is if Friedrich Merz and Emmanuel Macron show up, hand-in-hand, and say we live in a new world.”

Cuts to the future

The Commission warned that cuts such as those put forward by Ireland will shrink the next budget — excluding repayments to post-Covid debt — below the current one.

The cuts overwhelmingly affect EU-wide priorities such as competitiveness, defense and foreign aid while leaving traditional policies untouched such as agriculture and regional payouts, which make up almost half the budget.

The changes undermine the Commission’s proposal, which envisaged more flexibility and steered hundreds of billions of euros toward new priorities.

In a further setback for the Commission, Ireland also downsized — or even scrapped — several financial cushions to shelter EU countries from unforeseen events such as natural disasters or public health emergencies.

The EU executive argues these changes will make spending in the next budget more rigid than in the current one — and potentially warrant a midterm review of the budget further down the line.

However, Ireland’s Europe Minister Thomas Byrne disputed this claim in a press conference on Saturday, saying the budget proposal “offers increased flexibility … in response to the clear call from member states for a simplified and more flexible, modern [budget].”

Another source of tension in the next budget came from Ireland’s watering down the link between EU payouts and economic reforms.

The Commission has repeatedly defended using regular budget payments as a carrot to nudge governments to undertake reforms that will make them more competitive.

However, Ireland’s ambassador to the EU, Aingeal O’Donoghue, said during the meeting that the new text will not link EU cash disbursements and “fiscal reforms,” according to one of the diplomats.

BRUSSELS — Germany and its allies rebuffed Ireland’s plan to downsize the bloc’s next seven-year budget, arguing that the proposed cuts are not enough.

On Saturday, the Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% from the bloc’s total budget from 2028 to 2034 in a bid to assuage a German-led camp demanding reductions of several hundred billions euros.

But Dublin’s hopes of facilitating a deal were immediately dashed by German Chancellor Friedrich Merz, one the key players in the negotiations as his country contributes to approximately one-quarter of the bloc’s common budget.

“We are still a long way from an agreement. The amount of the new proposal is not a basis for an agreement. The EU budget must be affordable for those who bear the brunt of the financing,” Merz wrote in a statement on Saturday.

Germany leads a group of six “frugal” countries — Sweden, Denmark, the Netherlands, Finland and Austria — which contribute 40% of the Union’s common budget.

Most frugal countries criticized Ireland’s proposed €159 billion in cuts in current prices from the Commission’s nearly €2 trillion proposal, saying they were insufficient.

Sweden’s Europe minister Jessica Rosencrantz described the negotiating document, or negobox, on X as a “wildly unaffordable increase,” as the overall amount would still be higher than the current budget.

Austrian Europe Minister Claudia Bauer echoed that criticism, saying that the new budget remained “miles away from an Austrian yes.”

Tensions will come to a head during a summit of EU leaders next Thursday and Friday, where they will discuss the negobox.

EU governments are racing to reach a budget deal among themselves by the end of the year — before elections in France, Italy and Poland in 2027 threaten to derail negotiations.

But Dutch Finance Minister Eelco Heinen warned on Saturday that “at this rate, there will be no deal by the end of the year.”

Ireland’s Minister of State for European Affairs Thomas Byrne, who leads the negotiations, dismissed criticism and described the proposal as a balanced compromise.

“The negotiating box acts to bridge the many differences between the Member states,” Byrne told reporters on Saturday.

Divided Union

The EU is split between frugal countries pushing for cuts across the board and a rival camp of southern and eastern states, the Friends of Cohesion, opposing reductions to farmers’ subsidies and regional payouts known as cohesion policy.

These areas account for almost half of the total budget and are politically sensitive because of pressure from farmers’ lobbies and regions.

In a concession to the 17 Friends of Cohesion, Ireland left the agriculture and regional budgets untouched and focused cuts on other priorities such as competitiveness, defense and development aid.

“There was a strong support for heading one [agriculture and cohesion] from almost all of the member states, including some of the countries who would be considered to be net contributors” to the budget, Byrne told reporters.

Reactions to the negobox from the Friends of Cohesion were more conciliatory than those of their frugal peers.

“It’s an excellent starting point to have recovered the money for the CAP [Common Agricultural Policy], but we’re still not satisfied,” said Italy’s Agriculture Minister Francesco Lollobrigida.

Poland’s Europe minister Ignacy Niemczycki welcomed the fact that his country “continues to receive the largest allocation,” but noted that the “change in the overall size of the budget does not match the EU’s ambitions.”

The frugals were also are disappointed that the cuts disproportionately target innovative policies such as defense and competitiveness, which they favor.

“They’re cutting the future to protect the past,” said one EU diplomat from the frugal camp.

BRUSSELS — The bloc’s next seven-year budget suffered a €159 billion cut from the Commission’s original proposal, according to a new plan unveiled Saturday.

The Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% to the bloc’s total budget from 2028 to 2034 to appease a German-led camp demanding major cuts.

The Irish negotiating document, or negobox, envisages cuts of €122 billion in current prices from the previous negobox presented by the Cyprus presidency in June. It sets the scene for fraught discussions among the EU’s 27 leaders during a summit next week.

The bloc is split between frugal countries demanding cuts of several hundred billions to the nearly €2 trillion proposal on the table and a rival camp of southern and eastern states, known as the Friends of Cohesion, opposing reductions.

In a concession to the Friends of Cohesion, Ireland shielded farmers’ subsidies and regional payouts, that account for half of the total budget and are politically sensitive, from any cuts.

Instead, the bulk of the reductions came from foreign aid which was cut by €38 billion; competitiveness which was axed by €75 billion and the EU’s administrative costs which were reduced by €10 billion.

Dublin also scrapped a rainy day fund, known as the “EU Facility cushion,” that allowed the European Commission to deploy cash to tackle unforeseen emergencies throughout the seven-year budget cycle.

Ireland’s Minister of State for European Affairs Thomas Byrne, who leads the negotiations, defended the proposal as a balanced compromise between 27 countries.

“We protected … the traditional policies of the Union, which are very important for the European Union and the single market. But we also very much look to the future,” Byrne told reporters.

However, Ireland’s proposal is unlikely to satisfy the frugals, who have warned against disproportionate cuts to new EU-wide priorities such as competitiveness, defense and development funding.

“The Irish proposal is a disappointment and not even close to a landing zone. The steep increase in MFF spending compared to today is unaffordable and financially not viable at all. By favouring policy priorities of the 20th century the proposal fails to prepare the EU for the 21st century,” an EU diplomat said.

They added: “This negobox is no basis for an agreement among member states. We urgently need more financial realism and less financial La La Land.”

Germany and its allies criticized the previous Cyprus Council presidency for cutting only €32 billion in the last negobox in June.

The new negobox will also be a hard sell to the European Parliament.

“The Irish Presidency has delivered little progress, no meaningful new solutions and a weaker budget,” the European People Party’s budget negotiator Siegfried Mureșan wrote in a statement shortly after the proposal was published.

He added: “Parliament is not bluffing: the budget proposed by the Irish Presidency will not receive our consent.”

The EU’s 27 ambassadors will react to the negobox during a meeting on Sunday, where they will also prepare the leaders’ discussion on Thursday.

Governments are racing to agree on a budget deal among themselves by the end of the year, before elections in France, Poland and Italy threaten to disrupt the negotiations.

Tax tweaks

The Irish presidency made no major changes to a package of five new EU-wide taxes, or own resources, that were proposed by the Commission last year to generate a total of €66 billion for the budget.

This comes as a disappointment for countries such as France, which had been pressuring Dublin to add the European Parliament’s proposed levies on digital giants, online gambling and crypto firms to the negobox to increase the potential revenue.  

Some of the Commission’s ideas — including a corporate tax, known as CORE, and a levy on polluting firms (ETS) — have been challenged by EU governments for more than a year of negotiations and are seen as unlikely to come to fruition.

Despite pressure to drop the most criticized options, Ireland has kept the five taxes on the table and merely suggested technical changes to overcome opposition.

It suggested phasing in ETS contributions for poorer countries that are overwhelmingly hit by the tax, and increasing EU budget contributions from a levy on carbon imports that is accepted by most governments.

Tensions on own resources will come to a head during Thursday’s leaders’ discussions. The president of the European Council, António Costa, said he intends to “fix” a package of potential taxes that are acceptable to governments during that meeting.

This article was updated.

LUXEMBOURG — EU finance ministers struck a compromise to beef up the bloc’s markets watchdog Friday, but the deal exposed divisions over national control and exemptions that critics say favor the biggest member countries.

Most finance ministers backed the Council’s position on MISP, a package of bills to integrate and police financial markets. At its heart is a plan to give the EU’s securities regulator powers to oversee major financial players — a flagship bid to make Europe a stronger investment hub, where European companies can seek investors without traveling to Wall Street.

But capitals stopped short of handing the future watchdog too much autonomy, triggering a hard rebuke from the European Commission.

“We deeply regret that the compromise now on the table falls significantly short of the level of ambition needed,” Finance Commissioner Maria Luís Albuquerque told ministers during Friday’s public Ecofin debate in Luxembourg. “We need [the European Securities and Markets Authority] to become an effective supervisor. The current compromise text would not allow for that.”

France spearheaded a last-minute push over dinner Thursday to strengthen the watchdog’s executive powers. Paris took issue with a rule that would allow nine national supervisors to force the watchdog’s executive board to submit draft decisions for further scrutiny before they’re adopted. The Irish EU presidency tweaked the rule overnight to limit national supervisors’ ability to delay decisions and preserve the watchdog’s power to act in emergencies, according to a compromise document obtained by POLITICO.

That was enough for France and most other countries. But not for the Commission, nor European Central Bank President Christine Lagarde, who was equally critical of the Council compromise. Beyond the governance concerns, Albuquerque took aim at supervisory carve-outs that the Irish introduced to accommodate Germany’s push to exclude its stock exchange, Deutsche Börse, from EU oversight.

The carve-out club

The carve-out shields stock exchanges from direct EU supervision unless they meet certain thresholds for trading activity and cross-border reach. Spain’s stock exchange, Bolsas y Mercados Españoles, would also benefit from the carve-outs, triggering criticism from smaller EU countries that accused the waiver of granting the bloc’s largest nations preferential treatment.

Belgium was particularly critical because its Brussels-based securities depository Euroclear is expected to come under direct EU oversight and face supervisory fees, while some major stock exchanges could remain under national oversight. Belgian Prime Minister Bart De Wever will take the issue to EU leaders at the end of next week.

“We cannot support the carve-outs. The package includes as many ins as there are outs,” Belgian Finance Minister Jan Jambon said during Friday’s public debate. “I think Germany has won in certain cases.”

As a peace offering, Berlin backed a review clause that would allow the Commission to revisit the carve-outs two years after the supervisory rules start applying. Any changes would require new legislation, however.

“The carve-out is temporary,” Dutch Finance Minister Eelco Heinen, who backed the deal, told journalists Thursday. “If that exchange were to grow, it would also fall under [EU supervision]. This is also intended to ensure that Dutch companies or pan-European companies such as Euronext are not put at a disadvantage.”

Friday’s deal puts pressure on MEPs to agree Parliament’s position so negotiations on a final text can begin. The Commission hopes future legislative negotiations will provide a second chance to improve the text, which also threatens to increase pressure on the EU budget.

Under the compromise, the EU budget would shoulder 60% of the cost of ESMA’s activities not covered by industry fees, with national supervisors paying the remaining 40%.

“The Commission cannot accept a significant increase in the EU budget contribution in light of the difficult discussion at [the Multiannual Financial Framework],” Albuquerque said amid a bitter budget battle that threatens to shave hundreds of billions of euros off the proposed €2 trillion cash pot. “I sincerely hope that the European Parliament will be more ambitious.”

BRUSSELS ― EU governments expect the proposed size of the bloc’s next seven-year budget to be slashed by €100 billion to €200 billion from the previous plan announced in June, 12 EU diplomats told POLITICO.

Ireland, which holds the presidency of the Council of the EU and is steering the talks, will unveil the proposal on Saturday, setting the scene for fraught discussions among EU leaders at their summit next week.

The bloc is split between so-called frugal countries — Germany, Austria, the Netherlands and others — that want to slash several hundred billion euros from the nearly €2 trillion proposal on the table, and a rival coalition of southern and eastern countries, the Friends of Cohesion, that opposes the cuts.

Dublin is expected to cut the budget by between €100 billion and €200 billion as a goodwill gesture to the German camp, the diplomats said. However, the Irish plan to shield agriculture and regional spending from major cuts as a concession to the Friends of Cohesion.

At next week’s summit, EU leaders will react to the latest numbers, known as the “negobox” because it gives governments something to negotiate on, and signal early whether an agreement is possible by the end of the year.

Governments are rushing to secure a deal among themselves before national elections in France, Poland and Italy in 2027 threaten to derail the negotiations.

As a neutral broker in the discussions, Ireland hasn’t publicly disclosed its intentions on the negotiating document. 

Dublin’s European Affairs Minister of State Thomas Byrne told the European Parliament earlier this week that EU member countries have made “substantial progress” toward an agreement. But he warned: “we cannot satisfy everybody.”

Germany and its allies criticized the previous Cyprus Council presidency for cutting only €32 billion in the last negobox in June.

Ireland’s looming cuts

The frugals’ calls for budget savings have ignited fears among the Friends of Cohesion. 

The 17 countries — including heavyweights Italy, Spain and Poland — issued a joint statement last week opposing cuts to agriculture and cohesion. 

In a concession to this camp, Ireland is expected to propose budget savings in other policy areas. Governments are bracing for major reductions to the Global Europe fund, the EU’s €200 billion pot of development aid and external relations cash, and the €410 billion European Competitiveness Fund to boost the bloc’s industrial capacity. 

Cuts to administrative costs, with €118 billion earmarked for the EU’s institutions and staff, are also popular among EU governments, though they will yield fewer savings.

However, frugals have warned against shielding agriculture and cohesion from a smaller budget. They argue instead that more money should be steered away from traditional priorities towards new challenges such as defense and competitiveness.

“We are very concerned that Ireland would decide to smash funding for research and external action, which is a major issue for development, our economic interests and migration,” said one EU diplomat, granted anonymity like others in this article to speak frankly about their expectations for the sensitive negotiations.

Tax game

Another sensitive issue is EU-wide taxes — known as “own resources” — to finance the budget and reduce national contributions.

In 2025, the European Commission proposed five new levies that are expected to generate €66 billion per year. During negotiations, governments opposed levies that would overwhelmingly affect their economies.

Several European governments lobbied Ireland to remove a corporate tax, known as CORE, that is unpopular across the bloc. But Dublin is expected to refrain from doing so, and keep the Commission’s five levies in the negobox.

To make CORE more palatable, Dublin might exempt small and medium enterprises from the scope of the levy. It could also make tweaks to a tobacco levy that is opposed by many.

Instead, the European Parliament’s proposed taxes on digital levies, online gambling and crypto firms are expected to be left out entirely from the negobox.  

An EU diplomat criticized these incremental changes as “disappointing and minimal.”

PARIS — France’s top general Fabien Mandon admitted on Thursday that the Franco-German next-generation battle tank project had failed.

It’s one of the first times a French official has publicly acknowledged that the plans have faltered, after months of speculation about the fate of the Main Combat Ground System.

“The outcome isn’t good. We had hoped to build a future tank in cooperation with the Germans, but unfortunately, we have to acknowledge that the Germans have withdrawn from the project,” the French chief of defense staff told lawmakers during a hearing on next year’s budget.

MGCS — which involves KNDS France, KNDS Germany, Rheinmetall and Thales — has been bogged down by years of delays, industrial disputes and political tensions. POLITICO reported in June that the next-generation tank project was increasingly doomed.

Mandon’s admission comes only a few months after another high-stakes Franco-German defense industrial program — the Future Combat Air System — abruptly ended.

However, answering a question from a far-right National Rally lawmaker, the French general pushed back against the word “failure” to describe the MGCS’s fate.

“It’s not a complete failure; it’s an important decision by Germany, but our land forces have worked together for several years to determine what a future main battle tank should look like,” he said. “It wasn’t a waste of time. But from an industrial standpoint, this isn’t good news.”

A German defense official had no comment.

Rixa Fürsen contributed to this report.

The growing popularity of far-right parties across Europe is sparking worries in NATO that they could weaken public support for rearmament and military aid to Ukraine as risks grow of a confrontation with Russia.

In France, Italy, Belgium, Germany, Poland and Romania, these parties are looking to turn voters’ cost-of-living concerns into opposition to aid for Kyiv, and rejection of higher national defense budgets and a greater role for the EU in defense — although each party has often sharply diverging views on those issues.

France’s National Rally leader Marine Le Pen last month called for limiting aid to Ukraine, saying: “financially, we can’t do it anymore.”

Roberto Vannacci, a former general and MEP who leads the far-right National Future party, which is increasingly challenging Prime Minister Giorgia Meloni, called for a rethink of defense spending. “Let’s evaluate whether this military spending is justified: in my opinion, it isn’t, especially at a time when commodity prices are hitting record highs,” he said last week.

The challenge for Europe’s mainstream parties is how to sustain support for higher defense budgets even if that means competing with welfare and other priorities.

“People are struggling with the rising cost of living across the board … so there’s room for populistic rhetoric about how much should we support Ukraine financially, or how much should we invest in defense,” said Janne Kuusela, permanent secretary at Finland’s defense ministry.

The dilemma is sharpening as several large NATO members, including France, Italy and Poland, face elections in 2027, when far-right parties stand a real chance of coming to power. Many countries are also beginning talks on next year’s budgets.

For NATO, a spending slowdown would complicate efforts to meet the alliance’s target of spending 5% of GDP on defense and security by 2035. Four NATO diplomats, granted anonymity to speak freely, said the risk is a growing concern, though some said its effects may not be clear until next year’s budget cycle.

“We’re already in a situation where we need to catch up” with Russia, said a NATO military official. “So far, we’re on a positive trajectory — if someone closes the faucet, there’s a risk of losing capabilities.”

Turning the tide

European countries and Canada are expected to spend $634 billion on core defense needs this year, an 11% hike relative to 2025. But public support has limits.

In eight European countries, an average of 46.2% of respondents said they would not back higher defense spending if it meant higher taxes, while 35.5% were in favor, according to an August poll assessed by the European Council on Foreign Relations and shared with POLITICO. More people were opposed to increasing taxes to finance military spending in Germany, France, Italy, Spain and Poland. Respondents in the Netherlands, Sweden and the U.K. were more likely to accept higher taxes for military spending.

Protests against higher defense spending have taken place in Rome, Brussels and Madrid this year, with demonstrators criticizing cuts to funding for hospitals, universities and social services.

Support for Ukraine is declining as well, according to NATO’s internal polling from this spring, falling from 59% in 2025 to 55% this year, with lethal aid the least popular form of support.

Far-right pushback on defense varies across Europe and falls broadly into three categories: opposition to military aid for Ukraine; rejection of EU-level defense projects; and criticism of defense spending more broadly. Yet all threaten to halt the continent’s effort to rearm rapidly and jointly — and limit Russia’s aggression against Ukraine.

France’s National Rally and Romania’s Alliance for the Union of Romanians oppose aid to Kyiv. Poland’s Law and Justice and the Dutch Party for Freedom resist EU-level defense projects. Alternative for Germany and Italy’s National Future criticize increased spending more broadly.

The right’s political foes warn that opposition plays into the Kremlin’s hands. “The pressure from the right doesn’t actually come from the right, but largely from Moscow,” German Defense Minister Boris Pistorius said. Parties such as National Rally and the AfD have longstanding ties with Russia, though they have sought to shake off their links in recent years.

Defense spending pressure

The political risk varies by country. Le Pen is a front-runner to become French president, while the AfD has made gains at the regional level but is unlikely to take national office soon.

Far-right gains are putting centrist parties under pressure to defend higher spending or consider cuts to retain public support.

“There is a risk that the formally pro-European mainstream across Europe might be too timid to spend … as would be necessary on defence,” said Paweł Zerka, senior policy fellow at the ECFR.

While Le Pen’s National Rally has indicated that she would respect France’s current trajectory of increasing military spending, Italy’s Meloni last week proposed spending €8 billion less on defense than the government’s initial proposal amid pressure from her far-right coalition partner, the League. Meloni last week proposed spending €8 billion less on defense than the government’s initial proposal amid pressure from her far-right coalition partner, the League.

“You can’t spend on weapons what you can’t spend on pensions, excise tax relief, or utility bills,” Claudio Borghi, a League senator, said last week.

In Poland, President Karol Nawrocki, backed by the right-wing Law and Justice party, tried but failed to block access to nearly €44 billion in EU SAFE defense loans, saying the scheme risked making Poland dependent on Brussels and saddling future generations with debt.

Pressure to rethink defense spending could make it harder for NATO members to fund the capabilities officials say are needed to deter Russia, as capitals begin talks this month on determining the alliance’s war plans, which are due by 2029.

A slowdown by larger members such as France and Italy would have broader effects because they account for a greater share of defense investment and aid to Kyiv, one of the NATO diplomats said.

“If bigger countries stop making progress, then NATO will stop making progress,” the diplomat said. “You weaken NATO, you weaken Europe’s ability to defend itself, and you make Ukraine … more vulnerable.” 

It could also affect the sum earmarked for defense in the EU’s next long-term budget if talks stretch on into next year, said Guntram Wolff, a senior fellow and defense economics analyst at the Bruegel think tank.

“Nationalists are all only interested in their country, they don’t want to work together with other European countries,” said German lawmaker Marie-Agnes Strack-Zimmermann, who chairs the European Parliament’s defense committee.

This article has been updated.

Trade Commissioner Maroš Šefčovič is kicking off his visit to China today — and the stakes are high.

On today’s show, Zoya Sheftalovich and Sarah Wheaton discuss the most important topic on the agenda: Europe’s trade deficit with China. France and Germany are finally on the same page and want Brussels to get tougher on unfair trade. So can we expect results from the meeting?

Next, EU development ministers are meeting in Dublin to discuss the future of Europe’s development policy. But the timing is unfortunate, as governments prepare another round of cuts to the next long-term budget.

Finally, a mysterious death at a Russian anti-plague lab has an unexpected connection to Zoya’s own family.

Questions? Comments? Let us know on our WhatsApp here or at +32 491 05 06 29.

Articles mentioned in this episode:

• EU toughens China stance ahead of Šefčovič’s Beijing visit.
• EU-China trade talks zero in on cars.
• WHO seeks clarity on second pneumonia case in Russia amid plague fears.

Bardella, Glucksmann, Knafo… Mistral a déclenché une salve d’applaudissements d’une partie de la classe politique en annonçant avoir lancé son nouveau modèle d’intelligence artificielle, baptisé Large 4. En voulant se replacer dans la course aux IA génératives de pointe, l’entreprise rassure ses défenseurs, à commencer par l’Etat français, qui doutaient de sa stratégie. Comment la start-up s’est-elle imposée comme la protégée d’Emmanuel Macron ? Le départ prochain de l’Elysée en 2027 peut-elle changer les choses ? Anthony Lattier en discute avec Tiphaine Saliou et Emile Marzolf, journalistes tech à POLITICO.
Des questions ? Des commentaires ? Ecrivez-nous sur Whatsapp au +32 494 07 69 41.

Romanian President Nicușor Dan faces demands from allies and adversaries alike to call a snap election, the first in the country’s modern history, if his latest attempt to end five months of political paralysis fails. 

The key NATO and EU member has lacked a fully functioning government since the coalition collapsed in May, and lawmakers have rejected a succession of Dan’s prime ministerial nominees. 

Political parties are now weighing up whether to support Dan’s latest prime ministerial candidate, the diplomat Luca Niculescu, who must win a confidence vote in parliament within the next nine days to be confirmed in the role. 

In an interview, Dan’s arch-rival on Romania’s hard right, George Simion, warned that no stable government can form without an election and accused the president of mounting a “blockade” against democracy because he is “afraid of us coming to power.” 

Speaking separately to POLITICO, Dan’s most recently defeated candidate for prime minister, Member of the European Parliament Siegfried Mureșan, warned the country was already paying an economic price, with investment decisions being delayed. “Postponing early elections and staying in this stalemate situation would, at some point, also have economic negative consequences,” he said. 

Bordering Ukraine, Romania has the sixth-largest population in the EU and plays a critical role in NATO’s defense of the region as home to a major military base and a U.S. missile shield site. The country has been plagued by political instability, corruption and a ballooning budget deficit in recent years, conditions that have fueled a surge in support for hard-right nationalist politics. 

Since the coalition fell apart amid infighting over budget cuts in the spring, Romania’s deadlocked parliament has been unable to agree on a new government. 

Alliance for the Union of Romanians (AUR) leader Simion, a staunch euroskeptic who has called for a halt to aid for Ukraine, told POLITICO the president must face his duty and give voters a chance to end the stalemate with a fresh election, or face being ousted. His party has been leading Romania’s opinion polls for almost two years.

Simion has been building support in parliament to censure the president, which he believes will gain momentum if Niculescu fails and Dan again refuses to call fresh elections.

“Everybody says, ‘OK, if this won’t pass, we will go to snap elections,’ but they do not know Nicușor Dan as I do,” Simion said. The president is “very stubborn” and could defy calls for elections even if all parties want them, he said. “In that case we will have the numbers of signatures and votes to suspend him at least, if not sack him.” 

Dan has refused to contemplate handing AUR a role in government. He defeated Simion for the presidency last year and regards his rival’s politics as a threat to Romania’s pro-Western, pro-European direction. The president says he opposes a snap election because the campaign period would delay budget reforms and healthcare funding. 

‘A new Greece’

The Romanian leu has weakened against the euro in the months since the crisis blew up. Simion urged international investors to remain patient and sought to reassure them that AUR would be fiscally responsible if it won power. “Nobody wants a new Greece,” he said. “We will do everything it takes to respect our commitments to our international partners and for them to recover the debts.” 

The call for an early election is gaining traction in Bucharest.

So far, the leader of Dan’s former party, the Save Romania Union, has joined politicians from the National Liberal Party, and the leader of the Social Democratic Party and AUR, in suggesting an unprecedented emergency election could be required. 

Dan’s latest plan still has time to work, but political feuding between parties remains a problem. The Liberals say they could support Niculescu as prime minister if the Social Democrats do not get too much influence, while the Social Democrats say they want the PM-designate to take the country in a new direction — away from the austerity policies of the outgoing Liberal premier, Ilie Bolojan. 

Mureșan, a pro-EU Liberal and European People’s Party vice-president, said the economic risks of prolonging the crisis were real. He told POLITICO a snap election could be inevitable, though this is not his “preferred” option. “The political uncertainty which exists now in the country can easily transform into economic uncertainty,” Mureșan warned. “We are already now seeing investors holding back on their investments, waiting with major investment decisions before they have more certainty.” 

While Mureșan said he wants Dan to succeed, he criticized the delays in resolving the longest-running crisis since the fall of communism in 1989. “Had the president moved fast in appointing a prime minister in May and not delayed the nominations, we might even have had early elections [by] now, and we would be in a situation with a new parliament, and with a stable government with the four-year agenda,” he said.

“So, clearly, the options are narrowing down and are not getting better, following the prolongation of the political crisis.”