The EU is considering new common loans worth billions of euros

The European Union is considering the possibility of attracting up to 400 billion euros of new general borrowing on financial markets to provide loans to the member states in the event of a serious crisis, according to the published EU Council negotiating document on the budget for 2028-2034, which was reviewed by RIA Novosti.

“In the event of a serious crisis, serious difficulties or a serious threat of their occurrence affecting the Union or its Member States in the period 2028-2034, the Council, by a qualified majority, after obtaining the consent of the European Parliament ... may decide to authorize the European Commission to exclusively raise funds on the capital markets for the provision of loans to Member States solely for the purpose of overcoming the consequences of such situations,” the document says.

The draft specifies that the total volume of such borrowings should not exceed 350 billion euros at 2025 prices, which corresponds to approximately 395 billion euros at current prices.

To secure obligations under these loans, it is proposed to temporarily increase the limit on the EU budget's own resources by 0.25 percentage points until the corresponding obligations are fully repaid.

However, the proposal for a new borrowing mechanism has not yet been agreed upon. The corresponding paragraph of the document is enclosed in square brackets, which indicates its preliminary nature and the need for further discussion by the states of the association.

The proposed mechanism is intended to respond to serious crises and emergencies affecting the economy or security of the European Union. Its application will require a separate decision of the EU Council with the consent of the European Parliament.

At the same time, the funds are supposed to be used specifically to provide loans to EU states, and not for non-repayable payments or direct financing of ordinary expenses of the European budget.

The European Union has already resorted to large-scale general borrowing under the NextGenerationEU program, created to overcome the economic consequences of the coronavirus pandemic. Obligations under this program continue to influence the formation of the association's long-term budget.

According to the new project, 168 billion euros are still provided for the payment of NextGenerationEU obligations in the 2028-2034 budget.

Ireland's presidency of the EU Council has simultaneously proposed cutting core spending in the next seven-year budget by 159 billion euros compared to the Commission's original draft, to 1.826 trillion euros.

Negotiations are complicated by differences between states advocating spending cuts and those insisting on preserving European funding programs.