Costa Urges EU Leaders to Yield on Budget and Seek Unclaimed Tax Revenues

European Council President António Costa has called on EU governments to soften their strict negotiating positions on the bloc's upcoming long-term budget, urging capitals to look toward revenue sources that national treasuries are not already collecting for themselves. Speaking following a diplomatic tour that took him through 25 national capitals, Costa made the case that securing an overarching budget agreement will require member state leaders to abandon deeply entrenched red lines.

The debate centers on how the European Union finances its multi-year budget. Traditionally, the bulk of the revenue comes directly from national treasury contributions based on each country's economic size, alongside customs duties. To ease the burden on domestic balance sheets—and reduce annual friction over which countries pay in more than they get back—Brussels frequently seeks new "own resources," the official term for direct revenue mechanisms managed at the EU level. Costa's key message to capitals is that any new levies cannot simply attempt to clip the ticket on existing taxes that national finance ministers already rely on for domestic spending.

For citizens and businesses, how the EU budget is funded determines where future financial demands will fall. If member state leaders refuse to authorise new EU-wide revenue sources, national governments must either cover the spending through higher direct contributions from their own budgets or cut European programs. Conversely, if Brussels introduces brand-new levies, those charges can translate into subtle costs or administrative requirements passed down to consumers and companies across the 27 member states.

The long-term budget sets spending limits for seven years across everything from regional infrastructure and farm support to border security and scientific research. When capitals dig into unyielding positions early in the process, the risk is delayed funding for real-world projects or emergency last-minute spending cuts.

In Brussels, budget negotiations are the ultimate game of institutional poker, and the European Council president acts as the chief dealer trying to craft a final hand that 27 inherently suspicious players can tolerate. The European Council is where national prime ministers and presidents meet to set broad political direction, and budget talks represent the exact point where domestic political promises collide with shared European ambitions.

Costa’s shuttle diplomacy across 25 capitals serves a specific function in the institutional machinery. Before formal summit negotiations can succeed, the Council president must map every national veto and identify the narrow target where compromise remains mathematically possible. Capitals traditionally enter budget talks with well-rehearsed public stances: net contributors pledge not to spend a cent extra, net recipients demand every euro be protected, and almost everyone balks at granting Brussels direct taxation powers. By urging leaders to soften those stances before formal draft proposals land on the table, Costa is attempting to shortcut the customary procedural theatre that usually grinds Brussels to a halt.

With the preliminary listening tour nearly complete, the process moves into high-stakes bargaining within the Council. The European Council president will use his findings from the capitals to draft compromise negotiating texts, aiming to move all 27 leaders toward unanimous agreement—a constitutional hurdle that gives every single member state absolute veto power over the final deal.

Even if national leaders reach a consensus, the process is only half done. Any final budget package agreed by the Council must also secure the consent of the European Parliament. MEPS historically push for larger overall budgets and stronger central EU funding streams than national treasuries prefer, setting up a second major institutional showdown once the member states finish fighting among themselves.