Brussels (Brussels Morning Newspaper) – The European Commission is contemplating a new joint debt mechanism. This mechanism would enable it to access capital markets during crises and create a permanent system for issuing bonds in euros, the Financial Times reported on Thursday, citing three sources familiar with the matter.
The draft proposal outlines a new mechanism designed to raise debt for funding grants or loans to member states during a crisis, according to three people familiar with the matter. This emergency tool is intended to be included in the EU’s upcoming multiannual budget for 2028, which Brussels plans to present in mid-July.
How are member states reacting to shared debt plans?
As reported, EU nations would still need to approve its use, but this would establish a permanent foundation for joint debt issuance—a move that countries like Germany, Sweden, and the Netherlands have long opposed. Last month, Berlin outlined its red lines and explicitly rejected further joint borrowing to fund grants for other member states.
Sweden also stated in a position paper that it is
“opposed to EU borrowing for the purpose of financing grants.”
The Dutch government expressed a broader concern in its position paper, stating it was “not in favour” of shared debt for “new European instruments.”
What challenges lie ahead for consensus on shared debt?
Since reaching a consensus on the common budget demands unanimous approval from all EU27 countries, employing joint debt to fund handouts encounters substantial obstacles. However, using EU borrowing to issue consecutive loans is less contentious.
It has previously been used during the Covid-19 pandemic and more recently for issuing €150bn in EU defence loans. The proposal to increase joint debt is part of Brussels’ strategy to shape the EU’s next long-term budget, which must accommodate a broader range of spending needs.
The common budget, mainly funded by national contributions, is expanding to include priorities such as defence and economic competitiveness, while also allocating funds for pandemic recovery repayment. Most net contributors—countries that pay more into the budget than they receive—are resisting measures to increase their contributions or grant Brussels revenue-raising authority.
Comments
10 responses to “EU Proposes Joint Debt Mechanism in New Budget”
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Looks like the EU’s new plan for joint debt is just what we needed—more red tape to pull us out of the mess we made. Can’t wait to see who gets to foot the bill this time! 💸😏
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Oh, fantastic! Nothing screams “financial stability” quite like a joint debt mechanism – it’s like sharing a pizza only to find out everyone wants the truffle topping but no one wants to pay for it. 🍕💸
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Just what we need, a fancy new way to share debt like a group of pals splitting a bill in a pub—good luck getting the Germans to go along with that! 🍻💸
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Oh, brilliant! Just what we need—another fancy way for Brussels to play Monopoly with our money while the big players have a good old laugh. 🤷♂️💸
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So, we’re all in for a “joint” debt party, eh? I can already hear the sound of German wallets slamming shut! 💸😂
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Another brilliant idea from Brussels! Just what we need—more debt to share like a bad bottle of wine at a dinner party, eh? 🍷💸
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Another brilliant idea from Brussels! Can’t wait to see how this joint debt thing goes down when the Dutch start wearing wooden shoes instead of paying up. 😂💸
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Looks like Brussels is trying to sell us on the idea of joint debt—because who wouldn’t want to share a financial hangover with the whole family? 🍻 #TeamworkMakesTheDreamWork
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Looks like the EU is trying to play ‘let’s all share our wallets’ again. Brilliant idea, isn’t it? Just what we need—a permanent debt party where some of us can’t even afford the entry fee! 😂💸
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Oh, brilliant! Just what we need—more ways for Brussels to play Monopoly with our money while the frugal folks in Germany clutch their wallets tighter than a Scotsman at a pub. 💸🇪🇺
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