Two top European Commission officials called on Tuesday for joint borrowing by the 27-nation European Union to finance a response to the energy price crisis that is threatening to plunge the bloc into recession.
In an op-ed in the Irish Times, European Economic Commissioner Paolo Gentiloni and Internal Market Commissioner Thierry Breton said the new borrowing could be modelled on the joint debt issued during the COVID-19 pandemic to subsidise jobs that would have otherwise been lost.
Their proposal comes as Germany’s massive 200 billion euro ($197.4 billion) support package for households and companies raises concern among other EU governments, unable to match that support, about the fairness of competition in the single market.
“It is more important than ever that we avoid fragmenting the internal market, setting up a race for subsidies and calling into question the principles of solidarity and unity that underpin our European project,” the two commissioners wrote.
“Faced with the colossal challenges before us, there is only one possible response: that of a Europe of solidarity. In order to overcome the fault lines caused by the different margins of manoeuvre of national budgets, we must think about mutualised tools at the European level,” they wrote.
During the pandemic, the EU jointly borrowed 100 billion euros at very low cost under its SURE scheme and lent the money on to governments to subsidise salaries of workers during the economic slump.
“Taking inspiration from the ‘SURE’ mechanism to help Europeans and industrial ecosystems in the current crisis could be one short-term solution,” the two commissioners wrote.
“It could also pave the way for a first step towards the provision of ‘European public goods’ in the energy and security sectors, which is the only way to provide a systemic response to the crisis,” they said.