Table of Contents
Plan de l’article
Introduction
- Présentation du sujet et de sa controverse : la France soutient l’endettement commun, l’Allemagne s’y oppose fermement.
- Une question diplomatiquement sensible qui divise l’UE.
- Problématique : Pourquoi ce débat est-il si clivant et quelles perspectives pour l’avenir ?
1. Comprendre l’endettement commun
- L’UE emprunte sur les marchés et redistribue les fonds aux États sous forme de prêts, de subventions ou de dépenses directes.
- Des précédents existent déjà, comme le plan de relance NextGenEU et ReArm Europe pour la défense.
2. Pourquoi le sujet revient-il sur la table ?
- Des besoins d’investissement massifs dans des domaines stratégiques comme les infrastructures, l’énergie, le climat et la défense.
- Les mécanismes actuels, comme NextGenEU, arrivent à expiration et sont jugés insuffisants.
3. Arguments en faveur de l’endettement commun
- Réduction du coût d’emprunt pour les États qui ont des finances fragiles.
- Contournement des règles budgétaires strictes de l’UE qui limitent l’endettement national.
- Financement de projets européens d’intérêt commun que les États ne peuvent assumer seuls.
4. Arguments contre l’endettement commun
- L’inefficacité supposée des programmes existants, notamment NextGenEU, critiqué pour sa faible absorption des fonds et son manque de transparence.
- L’endettement commun reporte mais n’élimine pas la contrainte budgétaire, avec des remboursements lourds dès 2028.
- L’opposition des pays du Nord, comme l’Allemagne et les Pays-Bas, soucieux de ne pas voir leur propre coût d’emprunt augmenter.
5. Perspectives et avenir du débat
- Un possible assouplissement de l’Allemagne sur la question budgétaire pourrait changer la donne.
- Les besoins de financement en transition énergétique et en défense restent considérables.
- L’opposition politique entre les États membres demeure un obstacle majeur.
Article – Everything you always wanted to know about Eurobonds but were afraid to ask
Even casual followers of European affairs are likely to have come across the issue of common borrowing – sometimes referred to as common debt, joint debt, joint borrowing, or Eurobonds.
It is one of the most controversial issues currently being discussed by EU leaders. This is largely because France and Germany, the EU’s two traditional agenda-setters, vehemently disagree on the subject: Paris strongly backs the policy, while Berlin is staunchly opposed.
In fact, the subject is so contentious that some diplomats have, quite literally, urged others not to discuss it – at least for now.
“It’s a divisive discussion because a lot of member states don’t agree on debt financing for defence, or anything else,” said one EU diplomat, adding that member states should instead prioritise reaching a consensus on which projects require common EU funding. “If you start discussing the financing, you will not discuss the rest.”
But what, exactly, is this debate about? Why is it so controversial? What are the arguments for, and against, Eurobonds? And how is this debate likely to develop in the coming months?
The basic idea
Although individual proposals differ, the core idea underlying joint borrowing is as follows:
Step one. The European Commission raises money on behalf of the EU by borrowing on capital markets – that is, by issuing EU bonds.
Step two. The money is then used to finance critical investments in one of three ways:
- By being spent directly at the EU level.
- By being offered as loans to member states, which are eventually paid back to the Commission.
- By being offered as grants to member states, which do not need to be paid back by individual member states but are instead repaid collectively by the EU’s 27 member states.
Isn’t the Commission already doing this?
Yes, but not in the way that most Eurobonders would like.
There are two main examples of ongoing, or recently announced, joint borrowing schemes.
(1) The European Commission’s ‘ReArm Europe’ plan. Unveiled and endorsed by member states earlier this month, it includes a proposal for €150 billion in loans to member states to finance defence investments of “pan-European” interest, such as cyber, air, and missile defence systems. (This is a « (2) » joint borrowing scheme, according to the classification scheme presented in the previous section).
(2) The EU’s pandemic recovery fund. Formally known as the Next Generation EU (NextGenEU) programme, it offers €800 billion in loans and grants to member states to fund green, digital, and other critical investments (excluding defence) in exchange for certain reforms. (This is a hybrid of a (2) and (3) joint borrowing scheme.)
Why are people talking so much about joint borrowing, then?
For two reasons.
First, because Europe has massive investment needs, which many argue can only be met by issuing more Eurobonds. Former Italian prime minister Mario Draghi, for instance, recently argued that the EU should boost investments by at least €750 billion a year, or 4.4% of the bloc’s annual GDP – and that these investments should be financed, at least in part, by issuing common EU debt.
Second, because the aforementioned schemes aren’t exactly what most Eurobonders originally had in mind.
The ReArm Europe loan scheme, for instance, is restricted specifically to defence investments. However, Eurobonders argue that joint borrowing should be used to fund a much wider range of investments, including in infrastructure, energy grids, basic research, and climate change – in short, on European public goods.
“European public goods [are]… definitely one of the big reasons why you would want to raise money on European level and spend it on European level,” said Philipp Lausberg, a senior analyst at the European Policy Centre.
Conversely, NextGenEU has been criticised for not including defence among its permitted investments. Moreover, some argue that the money has been spent on projects that benefit individual member states, rather than the EU as a whole.
“You need to spend the money on the European level,” said Lausberg, adding that a large proportion of NextGenEU funds were “spent by member states… on their own interests”.
Perhaps the most important reason why joint borrowing is being discussed so often, however, is that NextGenEU is set to expire in 2026. It is also not expected to be renewed either, given the staunch resistance from Germany, the Netherlands, and other “frugal” (mostly northern) member states.
What are the arguments in favour of joint borrowing?
There are several – and most of them are interrelated.
First, many member states currently borrow at considerably higher rates than they would if the Commission borrowed on their behalf. So by issuing common EU debt, many countries are saved from having to pay unnecessarily high interest rates.
(Germany and the Netherlands, on the other hand, borrow at a significantly lower rate than the EU – which, arguably, explains their hostility toward joint borrowing.)
“There are specific countries – and France comes to mind – that are completely ‘borrowed up’,” says Maria Demertzis, who leads the Economic Strategy and Finance Programme at The Conference Board Europe. “If they were to borrow [more], they might be getting into trouble. »
A second, related argument for common EU debt is that the bloc’s fiscal rules – which limit deficits to 3% and debt levels to 60% of annual GDP – effectively prohibit member states from borrowing on their own without incurring the wrath of Brussels.
Indeed, eight member states, including France and Italy, are already subject to an “excessive deficit procedure”, or formal reprimand from the Commission for breaching the bloc’s budget threshold.
But the main, overarching reason for joint borrowing, however, is to facilitate investments that member states, for various reasons, are reluctant to finance.
“I wouldn’t say that the lower borrowing cost is a major argument for more EU borrowing,” said Zsolt Darvas, a senior fellow at Bruegel, a Brussels-based think-tank. “I would rather say that the reason is, simply, countries don’t plan to do that much extra investment – [and] we need a lot of public investment.”
What are the arguments against joint borrowing?
There are two main ones.
The first is that the flagship joint borrowing programme that has existed to date – namely, NextGenEU – has, some argue, been an abject failure.
Critics point to the low levels of uptake, with tens of billions of euros still unclaimed even though the fund is set to expire next year.
Moreover, they point to the high levels of corruption with regard to the scheme and the fact that it is overly centralised, with minimal input from the EU’s regions.
The second argument people make against joint borrowing is that the money will, eventually, have to be paid back. Thus, they argue, issuing Eurobonds merely postpones an inevitable fiscal crunch.
Some member states – especially the Netherlands – also point out that from 2028, member states will have to fork out roughly €30 billion per year to pay back the accrued NextGenEU debt: equivalent to around a fifth of the EU’s regular budget.
Eurobonders typically respond to the first argument by arguing that these are problems that are specific to NextGenEU that don’t apply to joint borrowing per se. Some also say that it’s too early to claim that not all of NextGenEU’s funds will be taken up.
On the second argument, some argue that the NextGenEU debt should simply be “rolled over”, with only the interest rate, rather than the principal, repaid – at least for now.
“A good option would be just rolling over,” said Darvas, adding: “That’s what all governments do. You know, the Netherlands, Germany, every country does that.”
Where will this debate lead?
Structural factors – including Europe’s massive investment needs, particularly for defence and climate investments – mean that this issue is likely to remain alive for the foreseeable future.
But the divisions between member states remain deeply entrenched. Indeed, one European official familiar with the details of a recent meeting of EU finance ministers suggested that member states are still as divided as ever.
“While some countries raised [joint borrowing] as something they wanted to explore, there was equal pushback from a few other countries that that would be very difficult for them,” the official said.
Darvas was similarly pessimistic. “I’m afraid that, currently, the political will is not yet there,” he said.
Other analysts, however, pointed to Germany’s recent decision to lift its debt brake to fund a trillion-euro investment programme as evidence that things could soon change.
« I actually thought that the Germans would agree faster to common debt than to changing the debt brake, » Demertzis said. « So I think we will get there. »
A lire aussi :
La boussole UE pour regagner en compétitivité et garantir une prospérité durable
Rapport Draghi : le futur géopolitique de l’Europe
Source : Everything you always wanted to know about Eurobonds but were afraid to ask – Euractiv