German Chancellor Merz calls for more investment, less subsidies in EU budget

"“We cannot meet the challenges of the 21st century with a 20th-century budget,” the conservative leader declared in Aachen, Germany, in a speech at the ceremony awarding the Charlemagne Prize to former European Central Bank president Mario Draghi."

"He lashed out at the fact that “more than two-thirds of European funds go to redistribution and subsidies”. The EU has long relied upon subsidies and redistribution to assuage the impact from disruptions caused by reducing internal trade barriers, as well as to help integrate poorer nations as the bloc has expanded east."

"Merz supported Draghi's call, criticising the fact that the EU's budget “has remained, in its content and structure, practically unchanged over the past decades”. He called on the bloc to cut its budget and step up investments meant to boost competitiveness and defence."

"However the German leader reiterated his opposition to the mechanism advocated by Dragi to fund the investments: joint borrowing by EU nations. “Excessive indebtedness threatens sovereignty and limits the capacity to act,” said Merz, whose comments were likely also directed to a domestic political audience."

Friedrich Merz urged the European Union to reform its budget by increasing investment and reducing subsidies. He argued that the EU cannot address 21st-century challenges with a budget structure that has remained largely unchanged for decades. He criticized that more than two-thirds of European funds go to redistribution and subsidies. He linked the EU’s reliance on subsidies and redistribution to past efforts to ease disruption from reduced internal trade barriers and to support integration of poorer member states after expansion eastward. Merz called for cutting the budget while stepping up investments for competitiveness and defence. He opposed joint borrowing among EU nations, warning that excessive indebtedness threatens sovereignty and limits capacity to act.

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