19th May 2022

Wariness over more shared EU borrowing

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European finance ministers meeting in Brussels on Tuesday (15 March) agreed to loosen state aid rules to allow member states to support companies disadvantaged by sanctions on Russia and high commodity prices.

They also called on all member states to increase investments in renewables in order to end dependency on Russian gas.

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But some EU members wanted more substantial support measures, including new forms of mutual debt issuance.

Opposition to joint European debt remains among more frugal northern EU member states.

"If you're a proponent [of mutual bonds], I wouldn't be too optimistic," a senior EU diplomat said ahead of the meeting on Tuesday.

French finance minister Bruno Le Maire said his country was, for the moment, emphasising that funds still are available in the pandemic recovery plan.

But Dutch finance minister Sigrid Kaag signalled a less frugal line than her immediate predecessor in government, and she did not close the door entirely to new mutualised debt.

"There are existing funds we can use," she said Tuesday. "But let's see what happens. The pandemic has shown us how important unity is."

Italian prime minister Mario Draghi last weekend called for a new version of the €800bn Covid-19 pandemic recovery fund that involves joint borrowing — and butted up against opposition.

"Some countries always find new arguments why they shouldn't pay their expenses," Magdalena Andersson, the Swedish prime minister said recently in a sign wariness at making Sweden responsible for other countries' debt.


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It's not uncommon to hear accusations of Catalan financial greed as a motivation for independence. But in reality, the economic relationship between Spain and Catalonia is a nuanced one, which many Catalans believe is historically, and now, based on domination.

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The EU Commission has restarted its effort to rewrite European fiscal rules, but some countries, such as Italy, are off the charts on debt in terms of an existing pact.

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