EU Considers Up to €400 Billion in New Joint Borrowing

The EU is considering the possibility of new collective loans of up to €400 billion

The Council of the EU is examining the option of raising up to €400 billion in additional collective borrowing on the capital markets. These funds could be used to provide loans to member states in the event of a serious crisis. This is set out in the Council of the EU’s negotiating document on the 2028–2034 budget.

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Unlike the NextGenerationEU anti-crisis fund, which was used during the pandemic, the new instrument differs fundamentally: funds raised on the capital markets will be directed exclusively towards providing loans to Member States, rather than non-repayable grants. The draft seven-year budget is available on the European Commission’s official website.

An emergency shield for crises

According to the draft, the mechanism is designed as a rapid-response measure. It may only be activated in the event of serious economic crises, emergencies or threats to the EU’s security.

Activating the fund will require a complex approval procedure: a decision by the Council of the EU, adopted by a qualified majority, as well as the mandatory consent of the European Parliament. To guarantee payments to investors, the authors of the initiative propose temporarily raising the ceiling on the EU budget’s own resources by 0.25 percentage points until the debts are fully repaid.

Budget disputes and square brackets

At present, the clause on new borrowing remains unresolved — in the official negotiation documents, it is still enclosed in square brackets. The idea of collective debt traditionally sparks disputes between the bloc’s southern countries and advocates of strict budgetary discipline from northern Europe.

The situation is complicated by the fact that, in parallel, Ireland, which currently holds the EU Council presidency, has proposed cutting the basic expenditure of the next seven-year budget by €159 billion (to €1.826 trillion).

At the same time, the EU still bears a significant burden from past commitments: the draft budget for 2028–2034 allocates €168 billion solely for servicing and repaying debts under the previous pandemic programme, NextGenerationEU.

EU leaders are expected to attempt to reach a compromise on the overall debt and budget parameters at the forthcoming summit, which will take place on 15–16 October.

This story was translated with the assistance of artificial intelligence.The translation was also reviewed by the Logos Press editorial team.

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