Merz demands EU spend less and boost competitiveness

German Chancellor Friedrich Merz said Tuesday the EU needs to save hundreds of billions of euros and show more "ambition" on competitiveness as haggling starts over the bloc's 2028-2034 budget.

The European Commission has proposed a two-trillion-euro ($2.3 trillion) spending plan for that period but Germany and other members of the so-called "frugal" bloc within the EU have made clear this is too high.

"We need a budget proposal with cuts in all areas adding up to several hundred billion euros," Merz said at a press conference alongside Micheal Martin, prime minister of current EU presidency holder Ireland.

Merz said "we cannot afford exorbitant increases in spending" at a time when budgets are being consolidated at a national level.

Martin said the bloc needed a budget "that meets its future needs and ambitions" while "reflecting our current economic situation", adding that Ireland would work towards a "compromise".

"Ireland has made improving Europe's economic competitiveness a priority for our Presidency," said Martin.

"I believe that if we all approach the task in the right spirit, agreement should be possible by the end of the year."

Brussels had proposed funding new spending with a tax on big businesses but Merz said that while he was prepared to discuss "new resources" for the EU, "an additional tax on business at a European level is not something we can consider".

Merz also said that the bloc's efforts to increase competitiveness had not yet gone far enough.

"I am worried that the zeal in the European Union and the level of ambition have noticeably declined," he said.

"We must do more," Merz said, adding that authorisation procedures for investments were still "too long" and calling for a "thoroughgoing reduction in bureaucracy" at the European level.

The European Commission recently drew the ire of green activists by proposing to soften its carbon pricing mechanism, a scheme criticised by big European businesses.

Merz said on Monday that competitiveness and climate protection had to "go hand in hand".