The European Union’s costs of borrowing have risen substantially, from 0.14% in 2021 to 2.6% in the second half of 2022. Through last year, the EU earned enough interest on funds it was holding to create a positivethat offset the rise in borrowing rates. But in 2023 that is expected to swing the other way, creating a new layer of administrative costs.
The EU became a major bond market player in 2020, when it pledged to borrow about 900 billion euros on public markets to support its NextGenerationEU recovery programme and a related unemployment-fighting initiative. Net new borrowing for the pandemic programmes is due to end in 2026, but the EU will continue to maintain a large market presence in managing its existing portfolio. It will also continue to borrow to support aid to Ukraine and other goals.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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