Why a fight over the next EU budget is already starting to brew

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Good morning. There was much ado about nothing in Madrid yesterday, as Pedro Sánchez announced he would remain Spain’s prime minister after threatening to step down. That has inflamed outcries against “Sanchismo”, the premier’s alleged brand of narcissistic politics.

Today, our economy correspondent reports on discussions over the next EU budget, and our man in Budapest reveals the backlash to Gazprom’s sponsorship of Hungary’s top football team.

Cash me if you can

The EU executive wants to change the way it pays out money to its member states from their common budget, which budget commissioner Johannes Hahn yesterday said was “not fit for the future,” writes Paola Tamma.

Context: As the EU sets its spending priorities for the next five years, it is also rethinking its long-term budget. It equals around one per cent of the bloc’s gross domestic product, mostly financed by member states based on their economic weight.

Currently more than a third is spent on cohesion policy: money paid out to poorer regions to help them catch up with wealthier ones. Just under a third is spent on agricultural subsidies.

But with the war in Ukraine raging on and global economic competition intensifying, capitals want the budget to do more.

Hahn said that during the most recent discussions, “everybody was de facto asking for a budget facing global challenges” including “competitiveness, security, global competition in certain areas with other key players in the world”.

“At the same time, nobody was saying that the current key elements of the budget — cohesion, agriculture — should disappear or even significantly decline,” Hahn added. “So if this is the idea, it’s in my view not possible to get this done with the current structure and also the current size.”

Agreeing on the EU’s seven-year budget is the mother of all Brussels fights and normally takes months if not years of negotiations, as it requires unanimous backing from all 27 EU countries.

A formal proposal is only expected next year for the next 2028-34 budget, but talk about reforms is already under way. Specifically, Brussels wants future payouts to be conditional on countries fulfilling certain conditions, similar to the rules of the EU’s post-pandemic recovery fund.

“The [recovery fund] is a very interesting concept for the future,” Hahn said.

French President Emmanuel Macron recently called for a doubling of the budget. But while it will be hard to reduce the slices allocated to cohesion and agriculture, it will be just as difficult to increase the overall size of the pie, calling in more cash from the likes of Germany and other net payers.

“More money is going to be extremely difficult,” Stéphanie Riso, director-general of the commission’s budget department said yesterday.

Chart du jour: Demographic decline

Europeans are ageing, and this will significantly change the make-up of their societies. By 2100, almost 10 per cent of the population in the EU will be over 85, according to new research by think-tank Bruegel published today.

Kicking up a fuss

A senior European lawmaker has taken to Europe’s top football body Uefa to complain about a sponsorship deal between Russian energy giant Gazprom and Hungarian champions Ferencváros, writes Marton Dunai.

Context: Gazprom used to sponsor the Uefa Champions League and German team FC Schalke. But those deals were scrapped following Russia’s full-scale invasion of Ukraine in 2022. The only European club to retain a sponsorship agreement with the company was Serbia’s Red Star Belgrade.

This month, Hungarian media reported that Gazprom was making a comeback in European football, and negotiating sponsorship of Budapest’s top team.

“I was shocked to learn about a likely sponsorship deal between Hungarian champions Ferencvárosi Torna Club and Gazprom,” Katalin Cseh, vice-chair of the European parliament’s liberal Renew group, wrote in a letter to Uefa president Aleksander Čeferin, seen by the FT.

“The realisation of this deal would be a shock to millions of Hungarian football fans and to citizens concerned about human rights when the most illustrious football club is set to seek bloodstained money from a terrorist state,” Cseh wrote.

The Hungarian MEP urged Čeferin to “stop this travesty and prevent damages to our shared European commitment to support Ukraine”.

“This goes against everything that Uefa has stood up for in the last two years and would facilitate a return of Russian entities into European football through the backdoor,” she added.

Hungarian officials, meanwhile, have not taken issue with the sponsorship prospects — on the contrary.

The foreign ministry last week said “the more large international companies invest in Hungarian sports, the better”, adding that “Gazprom is not on the sanctions list”.

What to watch today

1. International Court of Justice to issue ruling on Nicaragua’s case against Germany accusing it of facilitating genocide in Gaza, at 3.00pm.

2. Quarterly GDP estimates to be published by France, Germany, Italy, Spain and the EU.

Now read these

Europe Express will take a break for the May 1 holiday and return on Thursday.