The Rise of Common Public Debt in Europe: A New Chapter in Fiscal Integration?

Common public debt in Europe is on the rise. Could it open a new chapter in fiscal integration? Over the past 15 years it has gained in prominence to provide collective funds for financial assistance and investment projects to meet common objectives, in particular when national budgets were stretched. This article reviews how the political focus of the Member States on keeping the financial position of the European Union (EU) under tight control has given way to large-scale common public debt issuance as the logical but still exceptional response to a crisis, pandemic, or war that demands collective action. To open a new chapter in fiscal integration, Member States will need to grant the EU a permanent option to borrow capital within pre-defined limits as well as a standing source of tax revenues for fulfilling its stabilisation, redistribution, and allocation functions. A central fiscal capacity with a permanent role for common public debt in turn requires effective central fiscal surveillance to secure sound national public finances.