The Emergence of a European Debt?
Temps de lecture : min
The European Union’s outstanding debt now stands at €770 billion, a level higher than Belgium’s sovereign debt.
Although the EU has been issuing debt for roughly four decades—primarily through macro‑financial assistance programmes—its indebtedness accelerated sharply from 2020 onward, in the context of the Covid‑19 pandemic. The SURE programme, launched as an emergency measure, enabled the allocation of up to €100 billion in low‑interest loans to Member States to mitigate unemployment risks. That same year, NextGenerationEU, the EU’s landmark €800 billion recovery plan, was deployed to support economic recovery and the green and digital transitions.
To date, €637 billion has already been disbursed in the form of grants and loans. Since 2022 and the onset of the war in Ukraine, the EU has also released several tranches of financial assistance, including a €50 billion facility for the 2024–2027 period, and the European Parliament has just approved a new €90 billion loan to support Ukraine in 2026–2027.
The SAFE programme (Security Action for Europe), announced in 2025, marks a new milestone in the EU’s financial strategy. With €150 billion in loans available through 2030, it aims to finance joint procurement of military equipment among Member States. Nineteen Member States have already submitted requests, including France and Italy among the major economies. Relative to GDP, the main requesting countries are the Baltic States, Hungary, and Poland. The first bond issuances are expected before the end of the quarter.
While Germany has recently reiterated its opposition to a permanent EU‑level common debt—responding directly to the French President’s renewed calls for a joint borrowing initiative to address Europe’s competitiveness challenges—European countries nonetheless continue to find specific areas where they can agree on shared financing.
With an issuance programme of nearly €160 billion in 2026—equivalent to Spain’s—the EU’s debt now offers liquidity comparable to that of several sovereign issuers across the entire yield curve. Moreover, its credit rating (AAA/AA+) and associated yields make it an attractive asset for investors.
Written by
Eric LE COZ
Head of Fixed Income Mandates
