Thread by @libobral

another EU policy thread: debt/fiscal policy. the commission's debt burden has increased by 8.6x since 2020 by €792.3bn! despite being "only" about 4-5% of EU GDP, it's a massive increase that reflects a policy shift in how europe approaches joint debt.
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the dividing line is 2020: before SURE and NextGenerationEU, borrowing was usually programme-specific 'borrow-to-lend'; afterwards, the Commission became a large recurring issuer, increasingly acting like a federal state (at least fiscally).
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the first EU loan was in 1954, when the Coal and Steel Community borrowed US$100mn for coal-and-steel investment and workers’ housing.
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loans continued to be used for energy: in 1977 the Council created the Euratom loan facility for nuclear-sector investment; borrowing grew to ECU (European Currency Unit) 324mn; and in 1979 the New Community Instrument was created for industry/energy loans (ECU 177mn)
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the global financial crisis revived EU balance-of-payments lending (lending to member states in acute fiscal situations). the facility ceiling was increased from €12bn to €50bn for Hungary, Latvia and Romania, with €12.05bn (!) outstanding at end-2010.
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on 11 May 2010, the Council established the European Financial Stabilisation Mechanism (EFSM) with up to €60bn of EU-budget-backed borrowing capacity; after lending to Ireland and Portugal, €46.8 billion (!!) was outstanding by the end of the euro crisis
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in 2020, the EU created SURE, authorizing up to €100 billion in loans to protect employment during Covid, and issued its first €17bn of SURE Social Bonds; ultimately €98.4bn (!!!) was disbursed to 19 member states
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this is immediately followed in 2021 by the NextGenerationEU fund, raising €20bn through a ten-year bond, the largest institutional single-tranche bond transaction in Europe at the time. then the corresponding NGEU "green" bonds for another €12bn for green transition
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in 2023, the EU provides €18bn in highly favorable loans to Ukraine (slava). at the same time, Commission introduced its unified funding approach. this means bonds are no longer issued for a specific fund (e.g. SURE, NGEU) and instead are just generic
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in october 2024 the EU established the Ukraine Loan Cooperation Mechanism and exceptional macro-financial assistance as its contribution to the G7 loan initiative, providing an EU loan of €18bn, to be repaid using extraordinary revenues from Russian assets
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also for security, in may 2025 he Council adopted SAFE (Security Action for Europe), authorizing up to €150 billion in EU borrowing-funded loans for member states' common defense procurement and defense-industrial investment
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finally, in may 2026 the Council finalized a new €90bn Ukraine Support Loan for budgetary and defense needs in 2026-2027, financed by EU borrowing and backed by EU budget headroom; after a further €10bn Bond transaction in May, total outstanding EU debt is at about €809bn
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so, europe is now acting like a regular nation on the international money markets. we get a somewhat better rate on lending than france but somewhat worse than germany:
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and here's the yield curve for the nerds:
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there's also lots of stuff that I didn't mention (EIB, EFSF, ESM, how the transition to the euro interacts with all of this...)

(fin)

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