European leaders are grappling with how to integrate significant defence spending into the EU’s budget, marking a pivotal shift in financial priorities as NATO pushes for greater commitments from its allies.

At the recent NATO summit in Ankara, European leaders acknowledged the need to shoulder a larger share of the continent’s defence responsibilities, a move spurred by pressure from the United States. However, translating this commitment into sustained financial investment has sparked a contentious debate as the EU prepares its next seven-year budget. The task is monumental; replacing U.S. military capabilities in Europe could require close to $1 trillion in investment, while NATO’s new 5% GDP defence spending target presents further challenges for already stretched budgets.

Historically, the EU has treated defence expenditures as extraordinary measures, funded through temporary mechanisms outside its main budget. Yet, this approach no longer appears viable. The European Commission’s proposal for the 2028-2034 Multiannual Financial Framework (MFF) aims to place defence spending squarely within the bloc’s core financial strategy. With a whopping €131 billion earmarked for defence and space—a fivefold increase from current allocations—the plan reflects a paradigm shift in prioritising security.

Despite the Commission’s ambitions, resistance from traditional budgetary coalitions looms large. Member states such as Ireland and others with significant agricultural sectors remain keen to shield spending on farming and cohesion policies, threatening potential cuts to proposed defence increases. As negotiations unfold under Ireland’s EU presidency, the balance between competitiveness, security, and established financial priorities will test the bloc’s ability to deliver on its newfound defence commitments.