French President Macron and German Chancellor Merz got behind agreeing a EU budget before end-2026, Politico reports citing officials. However, a German source said no landing zones of specific numbers have been agreed

• Merz reportedly moved towards Macron by supporting bloc-wide taxes during the last European council, sources suggest.

Franco-German alignment has historically been the necessary precondition for any advance in EU-level fiscal architecture, and joint initiatives from Paris and Berlin have tended to mark the start of a negotiating sequence rather than its conclusion, with budget frameworks of this kind typically taking multiple council rounds and running well past their initial deadlines. The reported German movement towards bloc-wide taxation touches the own-resources question, one of the more divisive files in EU budget talks, since it raises the prospect of common revenue streams that in past episodes have opened the door, at least rhetorically, to shared borrowing capacity. The transmission for rates runs through the periphery: any credible step towards common fiscal capacity has historically compressed BTP-Bund and other core-periphery spreads, while talk alone, with no agreed numbers, has tended to leave spreads unmoved or fade quickly. The German denial that landing zones on specific figures exist is the standard pattern in these negotiations, where political endorsements precede technical agreement by a wide margin. The tells from here are whether the language survives contact with the more fiscally conservative northern member states, whose consent is required, and whether the Commission is tasked with turning the principle into draft proposals, which is where such initiatives have previously stalled.