Domestic political constraints facing both Emmanuel Macron and Friedrich Merz have narrowed the room each leader has to manoeuvre in negotiations over the EU's forthcoming seven-year budget. With EU leaders convening in Brussels for a two-day summit opening Thursday, the heads of the bloc's two largest member states hold considerable sway over resolving a prolonged deadlock, as a coalition led by Germany pushing for a leaner budget finds itself at odds with countries including France that are resisting cuts.
Siegfried Mureșan, who is co-leading the European Parliament's work on the multiannual financial framework, described that divide as a source of concern, noting that the budget can only be settled through compromise and that earlier adoption would allow faster implementation, with benefits for farmers, researchers, border security, and cybersecurity. Finalising the EU's long-term central budget, valued at roughly €2 trillion, stands as the foremost challenge over the coming months for leaders, all of whom are required to agree on the final figures.
Closing the gap between the heads of the bloc's two most influential member states would fall short of a complete resolution on its own — yet such a rapprochement could pull the other parties into a broader convergence. In the run-up to the two-day summit, officials in Brussels, Paris, and Berlin had been quietly lowering expectations for any Franco-German alignment, with Macron in the final stretch of his presidency and Merz contending with a demanding political environment at home.
Although the pair were expected to cross paths informally on the margins, no formal bilateral session had been placed on the schedule, according to an Élysée source and two EU diplomats. One of those diplomats, requesting anonymity, observed that a joint Merz-Macron position would carry genuine influence, that drawing in Meloni and Tusk would add to that weight, yet any such coalition would first need to take shape between the two leaders themselves.
Three EU diplomats noted that each leader's vulnerabilities at home narrow the room for compromise at the negotiating table. Approaching the end of his presidency, Macron confronts a delicate political tension: a close ally has noted that yielding too readily in budget talks — particularly on spending reductions pushed by Berlin — risks providing electoral fodder for Le Pen and Mélenchon, both of whom argue that France receives too little in return for what it pays into the EU budget.
At a Brussels press conference on Wednesday evening, Le Pen told reporters that negotiators were moving talks forward too hastily, describing the pace as an effort to foreclose future democratic choices before voters could weigh in. That position amounted to an appeal against finalising any deal ahead of France's April presidential election, as well as votes scheduled in Spain the following month and Italy the year after. Le Pen added that the entire process lacked credibility.
Comparable political pressures have been bearing down on Merz as well. The Chancellor's caution over any deal that opponents might portray as directing further public funds toward EU institutions comes in the wake of state-level electoral losses to the Alternative for Germany party. Merz indicated that, from the government's standpoint, walking away from negotiations entirely would be preferable to agreeing to any arrangement that raises the total budget.
Beneath the pointed public rhetoric, the two countries' actual negotiating positions on the EU budget may be closer than official statements let on. A Macron ally noted that both France and Germany would need to move beyond entrenched positions, yet predicted the two would ultimately reach an agreement. Separately, Europe minister Benjamin Haddad told reporters on Tuesday that budget talks ought to centre on generating revenue through new levies — such as those on online gambling, referred to in EU parlance as "own resources" — rather than on sweeping spending reductions, while Paris has also indicated a preference for holding its own financial contributions to the bloc at their current level.
A representative from Germany indicated that the government held an openness toward reviewing potential new revenue streams, though it viewed such mechanisms with more scepticism than France did regarding their capacity to raise sufficient funds. Élysée officials indicated Wednesday that they anticipate Merz will yield to pressure from peer governments and German business leaders to walk back his push for sweeping spending reductions — a view reinforced by one official's observation that a genuine debate has taken hold within Germany over whether a stance centred exclusively on cuts risks undermining longer-term policy investment.
Leading industry associations in Germany, including the BDI federation, called on their government this week to advocate for a stronger EU budget allocation. Macron and Merz put their names to a joint letter delivered to the European Commission this month, pressing for a firmer approach in its relationship with China.
Talks between Berlin and Paris over a bundled policy arrangement — one pairing tightened "Made in Europe" public-procurement rules with looser vehicle-emissions targets and a renegotiated deadline on the 2035 petrol-and-diesel ban, the contours of which a broadcaster aired in July — have not yet yielded a settled outcome. On Tuesday, Séjourné — who heads EU industry policy — expressed backing for an agreement that would bring both files to a close.
In a statement described as placing a deal within close reach, Macron tied forward movement to the outcome of coalition-building efforts in Germany. No joint deal was unveiled at the Paris motor show, and an Élysée statement confirmed that talks between France and Germany over the terms are still under way.
