The price of peace and prosperity

If we needed certainty on European Union priorities, it came in the closing weeks of 2025. Increased defence spending is now the most important focus for Europe. It has taken a few years of war on the EU’s eastern flank, as well as the retreat by the US from being the major protector of Europe, to affirm a conviction that further threats to peace now exist in the form of Putin’s expansionist ambitions. It is not adequate to arm the Ukrainians in defence of their country. The realisation has finally dawned that, whatever the outcome of the Russo-Ukrainian conflict, permanently increased defence spending will be required to protect European democracy. Why are we highlighting this issue in the first Irish Farmers Monthly editorial of 2026? Because it has huge implications for Irish agriculture in the years ahead. We know that the Common Agricultural Policy (CAP) budget for the next five years after 2026 may be significantly reduced in real terms. That will directly impact Irish farm incomes. Ireland is already a net contributor to the general EU budget. In addition, there will be an expectation that the Irish government should make up any shortfalls in our CAP allocation. That may be the case as we look at current exchequer surpluses. There is no certainty that these surpluses will continue and, in any case, Irish politicians, or at least those with an ounce of sense, realise that greatly increased defence spending will also be a necessity. Add in huge infrastructure demands which have to be financed over the next decade, and the allocation to agriculture is unlikely to increase substantially, if at all.
Across the European Union, there are financial, debt, and productivity challenges. Germany and France, especially, are now facing the reality that these challenges cannot be ignored any longer. Britain, our single most important trading partner and nearest neighbour is also in economic difficulty with little evidence that the Starmer government is willing to take the hard decisions needed to reverse overspending and underfinancing. For the European Union, an urgency in adopting the Mercosur trade agreement after several years of prevarication is understandable. There is an optimism, perhaps exaggerated, that Europe’s economic challenges can be overcome by increased trade opportunities. Irish and European cattle producer worries that beef prices may be sacrificed in the stampede towards Mercosur ratification are regarded as inconsequential compared to the opportunity of selling more industrial goods and services to three hundred million South Americans. Environmental and production standard deficits are ignored in the hope that Europe can trade itself into a better economic place. The minds of European political leaders have been concentrated by the realisation that the soft trade climate between the EU and the US is over, with or without Trump in the White House.
The potential cost for the EU of Ukraine becoming an EU member, prematurely it should be noted in view of its alleged corruption problems, is also dawning on politicians across the continent. To fund Ukraine’s vast farm sector alone, at the levels of existing EU food producers, would be alarmingly costly. Increased CAP financing for an enlarged EU cannot be guaranteed, given the financial woes of many member states, who already have so many calls on their own budgets. Add in a severe reluctance by EU citizens to be burdened with increased taxation, and the way forward for Europe is unclear. Peace plans acceptable to Russia may include Ukrainian neutrality, locked out from NATO and EU membership. The rebuilding costs for its EU neighbour and ally will still be significant.