EU leaders scaled down the EU bond option to explore it in time to come

European leaders seize the wake-up call raised by the Mario Draghi’s and Enrico Letta’s reports. The declaration adopted after the informal European Council Meeting hosted by the rotating Hungarian presidency of the EU Council lays down that the two reports – one on competitiveness and the other based on internal market – “provide a solid foundation on which we will ambitiously advance” the work.

Leaders agreed that “all instruments and policies must be harnessed in a comprehensive and coherent manner at both EU and Member State level”, because “business as usual is no longer an option”. The possible new perspective to issue common debt in future was a noisy one. In their final statement leaders committed to “exploring and leveraging all instruments and tools to match our goals”. They opted for a general wording due to the lack of strong leadership in several EU countries. Even French government turned around on its activism on the matter.

Sources who followed the debate among head of State and government said that French president Emmanuel Macron pushed much harder on the issue of own resources and the need to move forward with reforms capable of bringing in fresh resources, such as the completion of the Capital Markets Union and the Banking Union. The address was viewed as an alignment to German and Dutch position.

The president of the European Council, Charles Michel, attested that no consensus was reached on the issue of common European loans. “I am sure that the debate will take place when the next multiannual financial framework will be discussed”, he told journalist on the end-of-meeting press conference.

The new domestic political situation, with a very unstable transalpine government, is also beginning to make itself felt at EU level. Spain itself seems to have opted for a more realistic approach, supporting the need to move forward with the issues on which there is agreement. As expected, Germany and Holland did not even raise the “Eurobond” issue.

The document engage the Commission to present, by June 2025, a new and comprehensive horizontal strategy on the deepening of the Single Market that includes a roadmap with clear timelines and milestones. The twelve action points contained in the approved concluding declaration include the reduction of fragmentation of the European single market and the completion of the Capital Markets Union who is renamed Union of savings and investments.

During a press conference in the margins of the summit, the president of the European Commission Ursula von der Leyen announced that the adoption of an Industrial clean deal to boost competitiveness, digitalization and reduction of CO2 will be proposed in the first 100 days of the mandate of the new European Commission.

“If we look at all the needs there are, starting with security and defence and moving on to the topic of, for example, supporting our innovative industries, the approach has to be very clear”, she said after questioned on how to raise the funds that the EU needs for its challenges. “We must first define our priorities, if we are not able to finance them and it is not intelligent to finance them individually but that it is much better to finance them on a European scale, then we can discuss how to finance them’”.

She then narrowed the options to two ways to do this. “Either it is through contributions to the budget or through own resources for the European Commission, and both include, of course, raising capital on the capital markets”, she sharply stated.