Today’s European Commission proposal to allocate 200 billion to the external action budget represents a significant increase. But the restructuring of the budget puts at risk the EU’s central role in fighting poverty, responding to global crises, and supporting those living in the Global South.

The Commission is proposing to merge existing external action instruments into one called Global Europe. This move increases the risk that funding is diverted to serve short-term political gains, rather than used to tackle poverty and inequalities. 

While the detailed factsheets for the budget package have not yet been published, it is expected that the Commission will propose tying future aid to conditions - such as a country’s willingness to curb migration flows to Europe. This would redirect aid to serve the domestic priorities of EU member states, particularly in regions like Sub-Saharan Africa and the Middle East.¹ 

Furthermore, the Commission is likely to propose awarding grants to European private companies without an open bidding process, for investments that might be undertaken even without this support. This deepens the current trend to use development money for the benefit of European companies - a form of tied aid.

María José Romero, Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad) said: “This proposal  means a complete rethinking of how and why the EU gives development aid  - and the consequences could be profound.

“The EU’s development aid used to be based on solidarity - not political strings. But this proposal would push us closer to a system where aid is used as leverage to serve Europe’s own short-term political goals. That would be a huge step backwards.”

Despite these sweeping proposals, the Commission cannot act alone. All 27 EU countries and the European Parliament, must sign off on the final plan — and many are already voicing concern. 

Eurodad is calling for the elected representatives of the EU to: 

• Maintain the budget allocation and deliver on promised commitments.
• Protect the quality of aid – ensure aid is ringfenced for tackling poverty and inequality, especially in the most vulnerable regions.

Alongside the traditional own resources the European Commission’s budget proposal is introducing  new EU-level own resources . Among these is a proposed new mechanism, the Corporate Resource for Europe (‘CORE’), which would generate revenues of an estimated 6.8 billion Euros per year (in 2025 prices) through lump sum payments from large multinational corporations^.2

Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad), said: “With the proposal to introduce lump sum payments from large multinational corporations to the EU budget, the Commission seems to recognise that these actors are currently not paying their share - and that is correct.
“However, rather than just grabbing lump sums for the EU’s own needs, the Commission should engage in an ambitious tax reform to stop large-scale corporate tax avoidance and boost the effective tax rates of corporations. This reform is needed at the EU level, but the EU should also contribute to global solutions by playing a constructive role in the upcoming negotiation of a new UN Convention on Tax. Repairing the fundamental problems in the international tax system would benefit public coffers everywhere - not just in Brussels.”

The Commission also outlines plans around environmental taxation. Eurodad has warned that if done wrongly, the EU risks missing the opportunity to advance equity and climate justice. The discontinuation of the so-called solidarity contribution - a special tax on fossil fuel companies that brought in €28 billion in just a couple of years - is one example of a missed opportunity.³

Markus Trilling, Senior Policy and Advocacy Officer for Progressive Environmental Tax at Eurodad, said: “Taxing polluting profits is both fair and feasible. We believe the Commission should bring back the solidarity contribution,  scale it up, and boost climate action with it. Fossil fuel industries are reaping billions of euros in profits from activities that emit extremely high levels of greenhouse gases. These industrial polluters must, at the very least, contribute their share of taxes to finance the fight against the climate crisis — not least in developing countries.

“We need a permanent ‘polluter pays’ tax on all fossil fuel profits — both in the EU and globally.”

At the same time, the Commission proposes to maintain the very controversial Carbon Border Adjustment Mechanism (CBAM) as an EU own resource.⁴

Trilling added: “CBAM de facto entails a transfer of resources from developing countries to Europe, including into the EU budget. This is climate and economic justice flipped on its head. CBAM is both unhelpful and unfair. We believe it should be replaced by environmental tax mechanisms that are progressive and help to fight environmental destruction and lower inequalities, rather than increasing them.”

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +44 7958184695. 

Notes to editors:

¹ https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1847 

²  https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1847  

³ For more information, see Eurodad’s press release from 21 May 2025, “As EU surtax on fossil fuel profits ends, European Commission report reveals it generated €28 billion of additional public revenue”, https://www.eurodad.org/as_eu_surtax_on_fossil_fuel_profits_ends_european_commission_report_reveals_it_generated_28_billion_of_additional_public_revenue  

⁴  https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1847 .