The president of the European Commission, Ursula Von der Leyen, speaks during a press conference on a proposal for the budget of the next seven years of the EU, in Brussels, Belgium, on July 16, 2025.
Yves Herman | Reuters
The executive arm of the European Union presented on Wednesday a proposal for a budget of 2 billion euros ($ 2.31 billion) for the block, with a significant increase in the funds assigned for defense.
The framework amounts to 1.26% of the EU average gross national income and will be executed for a period of seven years from 2028.
“This is a budget for today’s realities, as well as the challenges of tomorrow,” said the president of the European Commission, Ursula Von der Leyen, during a press conference. About 35% of the budget will go to climatic and biodiversity projects, he said.
Von der Leyen said that the EC was proposing to assign 131 billion euros to support investment in defense and space, a five -time increase in current spending, as part of its new European competitiveness fund.
European nations have promised this year to increase their national defense expense in response to geopolitical concerns, which increases the prices of the company’s shares in the sector and attracts the attention of private capital. Von der Leyen said in March that Europe was in its “era of rearmament” and could mobilize 800 billion euros in defense investment through loans and other programs.
The new budget plan seeks to rationalize EU financial programs so that citizens and companies can access financing opportunities more easily, the EC said Wednesday.
The contributions of the Member States would remain unchanged, while the EU is looking for five new sources of income to generate 58.5 billion euros a year, including uncompassed electronic waste rates and new tasks in tobacco products, as well as a global contribution of companies that generate an average of 6.8 billion euros per year.
Other measures include support for revenue frigcence for farmers and fishermen, a triplicate in funds for migration management to 34 billion euros and 100 billion euros in support of Ukraine.
The European Parliament must still authorize the proposal and obtain the unanimous approval of the EU Member States, which finance around 70% of the budget through staggered contributions based on the size of its economy. That could mean significant reviews still ahead.
Dutch finance minister Eelco Heinen said in a statement that the budget proposal was “too high” and that the EU needed to focus on how existing funds could be better spent.
The general figures are widely in line with expectations, said Carsten Brzeski, chief of Macro Global for ING investigation, to CNBC.
“Against the history of the EU budget, today marks an advance, since this is not only the largest budget in absolute terms, but also in percentage of GDP,” Brzeski said.
“However, in the largest scheme of things, the increase is still too small to meet all the expense and investment needs that Europe currently has. If Europe had really wanted to follow the recommendations of the Draghi report, a budget of 2% of the GDP would have been required,” he continued, pointing out that this would have been “politically useless.”
On the other hand, national governments and private capital will still need to finance a large part of Europe’s investment needs, Brzeski said.
