Spain’s finance minister urges more EU joint debt to cut borrowing costs

Spain’s finance minister used the Washington spring meetings to make a direct case for a bigger European borrowing pool, arguing that joint EU debt could lower financing costs and give the bloc a more durable source of funding for defense, industry and the energy transition.

Carlos Cuerpo said a framework built around a share of annual redemptions and part of the deficit allowed under EU fiscal rules could help expand the European Commission’s borrowing role. He said the current stock of Commission debt is about 750 billion euros and that, if the bloc moved further in that direction, it could build a 5 trillion euro-denominated market within five years while saving roughly 25 billion euros a year.

The logic is straightforward. The European Commission can already borrow on behalf of the European Union, and its debt is AAA-rated, which makes it cheaper to issue than the debt of many member states. Cuerpo argued that Europe already has the ingredients for a safe common asset: strong institutions, resilient market infrastructure and a large role in international trade. In his view, scaling up common issuance would deepen the euro market and spread lower borrowing costs across the bloc.

But the proposal goes straight to the fault line in European fiscal politics. Germany, the Netherlands and Sweden have opposed EU joint borrowing, while Denmark has been skeptical, according to Reuters reporting from July 2025. Those governments have long worried that permanent mutualized debt would blur the line between national budgets and collective liabilities, leaving countries with lower borrowing costs on the hook for the debts of others.

Cuerpo tried to answer that objection by proposing a compensation mechanism for countries that already borrow cheaply, including Germany, Denmark, Luxembourg, the Netherlands and Sweden. That concession underscored how politically delicate the debate remains, even as Brussels looks for ways to finance higher spending without pushing borrowing costs up across the bloc.

The issue reaches well beyond EU institutions. A larger common debt market could help Europe finance defense spending at a time of higher security demands, while also supporting long-term investment in energy and industrial capacity. It would also test whether the European Union is moving from crisis-only solidarity, built during emergencies, toward permanent shared fiscal tools that could reshape borrowing across the continent.

The debate was also on display in Washington. The Peterson Institute for International Economics had already lined up a high-level discussion on eurozone economic architecture with Cuerpo, European Central Bank board member Isabel Schnabel, economist Olivier Blanchard and investor Ángel Ubide, signaling that Europe’s future borrowing model remains an active policy fight, not a settled design.