European Commission President Ursula von der Leyen has outlined Europe’s multi-faceted response to pressing challenges, including a significant funding gap for Ukraine, soaring energy costs, and an unsustainable trade imbalance with China. Following the European Council, von der Leyen also warned against reduced flexibility in the proposed EU budget, which she described as a “straight jacket.”
Addressing Ukraine’s Funding Gap
Von der Leyen identified a substantial €70 billion Ukraine funding gap for 2027, though she noted that the gap for 2026 is currently covered. She highlighted the EU and its member states’ significant contribution, accounting for 80% of external aid to Ukraine, and urged other international partners to step in. “but we urgently need also other partners to step in,” she stated. The existing €90 billion Ukraine support loan covers two-thirds of the necessary budgetary and defence support, with €45 billion allocated to each of the two years discussed.
Europe’s Energy Response Amid Soaring Costs
Europe faces escalating energy costs, with imported fossil-fuel expenses rising by €106 billion since the start of the war in the Middle East. Gas prices have increased by around 140% since late February, and diesel prices have doubled. In response, von der Leyen set out five short-term measures:
- A release of 100 million barrels of oil and diesel over four months.
- An extension of the temporary state aid framework.
- A one-year postponement of methane regulation implementation.
- A strategic dialogue on European refineries.
- Stronger coordination of energy purchasing.
Tackling the EU-China Trade Imbalance
The Commission President also addressed Europe’s growing trade deficit with China, which she projected at €1 billion a day for 2025 and warned would worsen in 2026. Describing the situation as “this is unsustainable,” von der Leyen outlined a three-pillar approach combining dialogue, existing trade defence instruments, and new tools to address structural imbalances. She announced plans to present “Diversify EU” in December, alongside proposals for a solidarity mechanism and a new instrument to limit access to the EU single market where it serves the Union’s interests.
EU Budget Flexibility and New Resources
Von der Leyen expressed concern over the proposed EU budget, warning that 99.5% of spending would be fixed for the next ten years. She argued that such rigid arrangements could severely constrain Europe’s ability to respond to a changing world, stating, “this proposal puts US in kind of a straight jacket.” She called for the introduction of new own resources to enhance budgetary flexibility.
What is the identified Ukraine funding gap?
European Commission President Ursula von der Leyen identified a €70 billion funding gap for Ukraine for the year 2027, noting that the gap for 2026 is covered.
What are the EU’s short-term energy responses?
The EU’s short-term energy responses include releasing 100 million barrels of oil and diesel, extending temporary state aid, postponing methane regulation, initiating a strategic dialogue on refineries, and coordinating energy purchasing.
How is the EU addressing its trade imbalance with China?
The EU plans a three-pillar approach combining dialogue, existing trade defence instruments, and new tools, including proposals like “Diversify EU” and a new single market access instrument, to address its unsustainable trade deficit with China.
