The European Council was once again divided over the possibility of financing the responses to the challenges that all 27 member states have in common with new debt issued directly by the Union as such – and not by individual states. So far it has been used, for example, after the great crisis of 2008. But it was Covid that changed everything. This was also discussed in the April 18 episode of “Numeri”
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Among the main issues of the European Council which was held in Brussels in recent days was that of the common European debt. At the end of the summit, Prime Minister Meloni was clear: the government supports this idea to respond to the Union’s challenges, such as defense or ecological transition. The hypothesis, which has always been divisive, continues to not convince all 27 member states. This was also discussed in the April 18 episode of Numbersin-depth analysis by Sky TG24.
European common debt, trend since 2005 and forecasts
In reality it would be better to talk about a “new common debt”, because in fact it is nothing new. Before the 2008 financial crisis, each country issued its own debt and each looked at its own borders. From that moment on, Europe began to borrow money, for example for the first Rescue Fund, financed with tens of billions. The take-off occurred with the Covid-19 pandemic, when the Recovery Fund (hereinafter Pnrr) arrived: community money which is then given or loaned to various countries. Today we have come close to a value of 500 billion in debt that Europe has asked for on the markets with bonds signed by the European Commission. It means that those who buy them lend money to the EU and not to individual countries. And the amount is expected to rise.
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What is the common EU debt for?
But what is this debt for? Most of the approximately 500 billion euros of debt already made – 61% – went to the Recovery Fund. Then there is the SURE programme, which started even earlier to support the world of work, with 22%. Followed by the Rescue Fund (10%) and aid to Ukraine (7%).
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Who lends money to the EU?
67% of the money lent to the Union – considering residences of banks, funds and so on – comes from within: this is the case for 67%. 21% enter from the UK, 12% from other countries.
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I say no to common debt
However, the ‘no’ side to the idea of creating new common debt remains: this is the position of the so-called frugal countries. The line is well summarized by Austrian Chancellor Karl Nehammer just before yesterday’s summit: “Sharing the debt always means sharing the burden of the interest together. We had to do it once due to the pandemic. We are still paying high interest on the debt. This in turn limits the ability to act.” For a long time the line was the same as that of Angela Merkel, who in 2012 – when she was still chancellor – said: “As long as I am alive the Eurobonds – in fact the common debt, ed – will never be adopted”. Only Covid made her change her mind.
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Tags: returns discussing common debt
