The new multiannual budget of the European Union (EU) is a direct blow to municipalities and agriculture and is highly disadvantageous for Latvia, stated Member of the European Parliament Nils Ušakovs (S).
The European Commission (EC) presented the draft of the Multiannual Financial Framework at a Budget Committee meeting on Wednesday.
Ušakovs, who serves as a member of the European Parliament’s Budget Committee and rapporteur for the annual EU budget from the Progressive Alliance of Socialists and Democrats, believes the new budget will be used to repay loans taken during the previous COVID-19 crisis. As a result, the interests of the regions and farmers will be sacrificed. “We see that the budget will be smaller, and therefore significantly less money will be left for leveling living standards or supporting rural areas in Latvia,” Ušakovs said.
In his view, the proposed new model for managing EU funds essentially shifts control entirely from local municipalities and regions to central governments. “It’s a double blow: there’s less money, and at the same time, regions are being stripped of their decision-making power on how to spend it,” said Ušakovs, stressing that such weakening of the regions is unacceptable.
He also pointed out that, despite declarations about “strengthening” agriculture, estimates suggest that
the budget for the Common Agricultural Policy could be cut by nearly 30%.
According to Ušakovs, for Latvia – where agriculture and rural development are vital – this would mean the loss of significant support.
At the same time, the declared spending ceiling of 1.26% of Gross National Income is misleading, as a substantial portion of it (0.11%) will go toward repaying the debt of the NextGenerationEU fund, Ušakovs argued. He explained that this effectively means reduced funding for Cohesion Policy and the Common Agricultural Policy – two of the main sources of investment for Latvia.
As previously reported, the proposed budget presented by the EC on Wednesday focuses more on defense and competitiveness-related expenditures, as well as seeking new sources of revenue and revising existing funding allocation criteria.
Funding for defense is set to increase fivefold, reaching 131 billion euros.
The budget proposal also includes the creation of a 451 billion euros competitiveness fund to support EU investments in clean technologies, the digital economy, defense, food security, and innovation.
Up to 100 billion euros is planned to support Ukraine.
The EC’s proposed budget still needs to be discussed and amended in the European Parliament and coordinated with the member states.
Negotiations are expected to be long and difficult.
It has also been reported that on Wednesday, the German government rejected the EC’s proposed 2 trillion euro EU budget for 2028–2034, stating that it was too large.
Read also: Latvia’s Finance Minister makes statement on taxes – are changes still on the horizon?