Merz threatens to block EU budget unless all member states back Ukraine funding beyond 2027

German Chancellor Friedrich Merz is threatening to block the European Union's next long-term budget unless all member states commit to financing Ukraine beyond 2027. The warning adds a new layer of tension to the bloc's multi-annual financial framework negotiations, which are already under pressure from disputes over spending priorities and national contributions. The issue is now being framed in Brussels as both a budget question and a test of political solidarity with Kyiv.

According to the supporting material, Berlin wants governments to agree a durable funding arrangement for Ukraine, including help with the cost of servicing Ukraine-related debt. Ukraine is facing an estimated €70bn funding shortfall next year, and the EU intends to cover roughly €45bn of that gap on top of the €90bn Ukraine Support Loan already agreed for 2026-2027. Merz has argued that the solution should involve a "collective commitment" from all member states, without exceptions.

The debate is sharpened by the fact that several countries have already opted out of the existing loan arrangement. Hungary, Slovakia and Czechia did not join the Ukraine Support Loan and are not expected to contribute to any top-up, while Bulgaria has also signalled it will not contribute further. Economy Commissioner Valdis Dombrovskis said proposals to cover Ukraine's financing gap should be backed "by the EU27, not by the EU24 or any number of countries," underlining the institutional push for a bloc-wide solution.

The standoff matters because it links two of the European Union's most sensitive negotiations: long-term budget planning and support for Ukraine. The next multi-annual budget is meant to set spending priorities for years ahead, and any threat to block it can slow or reshape wider policy talks. By tying the budget to Ukraine financing, Merz is increasing pressure on governments that want to limit their exposure while also seeking cuts in other parts of the EU budget.

The German position also reflects a broader argument inside the bloc about how to make support for Ukraine predictable beyond the current funding cycle. The supporting material says Germany had already tried to connect the budget talks to Ukraine financing at a special European Council meeting at the end of the month, in an effort to pressure the so-called Friends of Cohesion. That suggests the issue is not isolated, but part of a wider negotiation over who pays, how much they pay, and whether some states can opt out.

Ireland's Finance Minister Simon Harris also backed the idea that Ukraine funding must be part of any serious budget discussion. He said that to have an honest multi-annual budget for Europe, the question of funding for Ukraine has to be considered, and that any other conversation would be incomplete. His comments indicate that Merz's position is not entirely isolated, even if the proposed method is controversial.

The political risk for Berlin is that the demand for universal participation could harden resistance among countries already reluctant to contribute. The supporting material says states that want to opt out of financing Ukraine could feel cornered if they are asked to pay for Kyiv while also accepting cuts to cohesion funding. It also notes that Slovakia's Robert Fico could emerge as a key disruptor in the talks, adding to the possibility of a difficult negotiation.

What remains unclear is whether the EU can agree a formula that satisfies both the need for Ukraine financing and the demand for fairness among member states. It is also not yet clear how far Merz is prepared to go if the budget talks do not move in Germany's preferred direction. The next developments to watch are whether the Commission and Council can build support for a bloc-wide funding plan, and whether any member states soften or harden their positions in response.

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