Borrowing in the European Union: from a pure national model to the antechamber of a European fiscal federal solution

• Published in: Journal of European Integration Vol. 43; no. 8; pp. 939 - 954
• Main Author: Costa Cabral, Nazaré da
• Format: Journal Article
• Language: English
• Published: Abingdon Routledge 17-11-2021; Taylor & Francis Ltd
• Subjects: Borrowing; COVID-19; covid-19 Crisis; Crises; fiscal Federalism; National debt; next Generation EU; Sovereign debt; sovereign-Debt Crisis
• ISSN: 0703-6337; 1477-2280
• DOI: 10.1080/07036337.2021.1881499

In this article, the author presents the evolution in the European Union of different borrowing models going through a path which starts out with a purely national model, passes through stages of hybrid (national and European) models, to reach the final stage, a purely European model. The European Union is being pushed, after the Sovereign Debt and the COVID-19 crises, to move from pure national borrowing models to new hybrid ones, starting with the proposals for the creation of Eurobonds and safe assets in the aftermath of the former crisis and evolving with this latter crisis to a European hybrid solution, notably with the package Next Generation EU. Here, European Commission borrowing capacity is fully recognised as a way to finance EU expenditures to be eventually backed up by new own tax resources. This decision is considered as an antechamber of a European fiscal federal solution.