Joint EU Debt Has Long Been a Reality
ResearchZEW Study on the Debate on Eurobonds in the New Multiannual Financial Framework
In the ongoing negotiations on the EU’s upcoming Multiannual Financial Framework (MFF), proposals to establish “Eurobonds” are attracting a great deal of attention. However, this overlooks that the EU already has a wide range of debt instruments at its disposal, a study by ZEW Mannheim shows. At the end of 2024, joint European debt stood at just over 800 billion euros. Existing agreements are likely to cause this figure to rise to more than 1.15 trillion euros by the end of 2030.
“The political debate often gives the impression that Eurobonds are a project for the future. In fact, European debt instruments with joint liability already exist on a significant scale,” explains Friedrich Heinemann, head of ZEW's “Corporate Taxation and Public Finance” Research Unit. “The problem is that European common tasks are frequently cited as a justification for these instruments, but when looking at their actual use – with the exception of aid to Ukraine – we see that they primarily benefit national budgets.” Fabian Moormann, co-author from the University of Münster, adds: “Countries with low credit ratings in particular benefit from cheap EU loans. However, this is possible only because of the guarantees provided by Member States with higher credit ratings. This is a hidden transfer payment that should be reported more transparently.”
Germany bears hidden repayment obligations
For Germany, the existing EU debt instruments have significant financial implications. As the largest economy in the EU and as a Member State with top credit rating, Germany plays a central role in backing the EU’s financial instruments. At the same time, obligations arise for repayment through EU own resources for grants, EU programmes, and third-country aid with a high probability of default. According to the analysis, the debt burden will total around 120 billion euros by 2030, which is equivalent to approximately 2.8 per cent of Germany’s gross domestic product in 2025. These obligations do not yet appear in national debt statistics. Heinemann recommends: “Future EU debt instruments should focus on clearly established European tasks such as aid to Ukraine, defence or technology policy, and new credit lines for financing national budgets should be assessed critically.”
Financing from EU debt flows primarily to Member States
Existing European debt instruments can be divided into four categories of use: loans to Member States, grants to Member States, financial assistance for third countries, and EU programmes. By far the largest share is accounted for by debt-financed loans to Member States. According to the projection, around 57 per cent of the EU’s joint debt will fall into this category by the end of 2030. A further 24 per cent is accounted for by debt-financed grants to Member States. Debt-financed aid to third countries, particularly Ukraine, accounts for around 14 per cent. The share of debt-financed EU programmes in the EU budget, by contrast, is only around 5 per cent. The analysis thus reveals a significant discrepancy between the rationale for creating new debt instruments to finance European public goods on the one hand, and their actual use on the other.
About the study
The study systematised existing European debt instruments and categorised them according to their actual use: loans to Member States, grants to Member States, financial aid to third countries and EU programmes. On this basis, the authors analysed the development of outstanding EU debt since 1990, projected the debt levels already decided or committed up to 2030, and compared the political rationale for joint debt with actual disbursement and usage patterns. They also calculated the resulting repayment obligations for Germany.
