Germany, and allies, have informed European Council President Costa that cohesion and agriculture funding will "definitely" need to be cut in the next budget draft, Politico reports citing sources.

EU budget negotiations of this kind follow a well-worn sequence: an early coalition of net contributors stakes out a hard line on the big spending lines, with cohesion and the Common Agricultural Policy the perennial targets because they dominate the envelope. Precedent from past Multiannual Financial Framework rounds is that opening positions of this sort soften through the Council's negotiating box and the final package lands somewhere between the frugal camp's draft and the Parliament's counter, usually after the timeline slips well beyond the initial deadline. The phrase 'definitely need to be cut' attributed to Germany is notable mainly as a signal of which side of the net contributor divide Berlin is anchoring, since German alignment has historically determined how much leverage the frugal grouping carries. The practical follow-ons are the Commission's draft proposal, the net contributor club's stated ceiling, and whether beneficiary states in the east and south organise in response, as they have in every prior round. Market read-through is limited at this stage; EU-level fiscal size is small relative to national budgets, and any effect on peripheral spreads runs through conditional transfers and growth support rather than headline deficit arithmetic. The signal is one of negotiating posture, not yet of fiscal outcome.