European leaders arrive in Brussels on Thursday facing a bill they cannot agree how to pay, and a budget deal that now looks unlikely before the new year.
According to the Financial Times, which has seen the draft conclusions, the text calls on the Commission to present "further measures to address soaring energy prices in the short term". Euractiv reports that the argument is over that verb. Southern and Eastern capitals want the Commission told to act. The Nordics and Germany would prefer the softer wording, because they fear that hasty moves will spook markets. German diesel prices are up 50% on a year ago, and the price of natural gas has almost tripled, according to Euractiv.
The sharpest dispute is the EU's emissions trading system (ETS). Italy and the Czech Republic are expected to float scrapping it. Finland, Sweden and Denmark have written to European Council President António Costa warning that weakening it would hurt investment, because businesses need predictable rules. Leaders are expected to agree to keep the system's price signal, the FT says. Italy and the four Visegrad countries want more room and a further delay to the second phase, which will put a carbon price on heating and transport.
Italy and Greece have also asked for looser fiscal rules so they can subsidise energy bills. That request is unlikely to get a warm reception in Brussels. Another Italian request, to cap the price of gas used to generate electricity, looks more likely to succeed. Prime Minister Giorgia Meloni said her government is close to an accord with the EU on such a mechanism, Bloomberg reports. The Commission has also proposed a one-year delay to its methane rules for importers, to ease concern over winter supply. A bloc-wide windfall tax on oil companies has been floated, though Brussels prefers national action.
Officials privately admit that the Commission has few ways to cut prices quickly. One diplomat told the FT that it is "not being creative enough".
Leaders are also due to discuss the Irish presidency's latest negotiating text for the 2028-34 budget. It would cut €141 billion from the Commission's €1.736 trillion proposal. Germany, the Netherlands, Denmark, Sweden, Finland and Austria say that is not enough and want cuts of "several hundred billion". According to Morning Post Europe, the cuts fall on competitiveness and defence investment (down 13%) and on foreign policy (down 17%), while national allocations for farm and regional funds are untouched. Seventeen members, the self-styled Friends of Cohesion, thanked the presidency for that.
The reference to a year-end deadline has been deleted from the draft conclusions, the FT reports. "We will not sign a disadvantageous agreement just to meet a deadline," Meloni told parliament on Wednesday. Chancellor Friedrich Merz still says the talks should finish this year, but that the text on the table must be cut in every area.
Marine Le Pen, the French presidential frontrunner, added to the pressure in Brussels on Wednesday evening. She called it a "democratic scandal" if leaders settled the budget without her.
The deadline was meant to lock in a budget before the French presidential election next spring. If it slips, the EU goes into that vote with its money unsettled and its leaders still fighting over fuel prices. Expect conclusions that keep the carbon price but promise the Commission will come back with more measures. That calms the summit, not the pump prices. Watch what the final text says about the ETS phase for heating and transport, and whether any date for the budget survives the night.
