Joint Borrowing Without Fiscal Integration: A Pragmatic Way Forward for EU Debt Issuance

In the debate on the future of EU joint borrowing, many ideas have been advanced to finance ‘European public goods’, scale up EU debt issuance, and improve its market performance. It is often argued that the EU should, to that end, provide more debt-funded grants, receive new own resources, and establish a permanent borrowing capacity. This contribution takes issue with these reform proposals – they are neither necessary for the EU to provide added value through its debt issuance, nor feasible in the current political context. A close examination of the Commission’s proposals for debt-funded facilities under the post-2027 Multiannual Financial Framework outlines a different scenario. The EU is establishing itself as a ‘Financial Support Union’ that primarily borrows against its budget headroom to finance concessional loans – a more pragmatic model that is already possible within the existing institutional framework.