EU summit deadlocked on energy and budget as Meloni demands fiscal flexibility
European Union leaders remain divided after the first day of a summit, with major disputes over energy prices, fiscal flexibility, and the bloc's common budget. Italian Prime Minister Giorgia Meloni is pushing for more flexibility in EU fiscal rules, citing inflation as an external factor. The main energy dispute centers on the EU's Emissions Trading System (ETS). Italy, Greece, and the Visegrad countries seek to soften the mechanism, while Nordic states oppose any weakening. A compromise proposal from Germany, Sweden, Denmark, Finland, the Netherlands, and Spain calls for updating the ETS2 assessment without broader impact reviews. European Council President Antonio Costa will present a new proposal for the 2028-2034 EU budget in coming weeks, aiming for a deal by year-end. German Chancellor Friedrich Merz demands significant budget cuts. Meloni hosted a working breakfast with 17 "Friends of Cohesion" countries, drafting a joint declaration opposing new cuts and rebates. Ukrainian President Zelensky arrived early for Friday's discussions on Ukraine and the Middle East.