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MNI POLICY: Repaying NGEU Stays Top Priority Despite Draghi

MNI (BRUSSELS) - The European Union has not “embraced” the proposals of former Italian Premier and ECB Chief Mario Draghi for more joint financing and the repayment of the EUR800bn NGEU post-pandemic recovery instrument will remain the “top priority” and focus for the next European Commission, MNI understands. 

While EU officials have applauded the Draghi report as a comprehensive diagnosis and prescription for tackling Europe’s competitiveness challenges, behind the scenes many of them concede that his financing proposals, particularly at EU level, are too controversial to stand a realistic chance of winning political approval. (See MNI INTERVIEW: Draghi Report Likely To Call For EU Borrowing)

The next Commission will stay focused on agreeing new sources of EU revenue or “own resources” to pay back NGEU from 2027. The EU will continue to pay off NGEU debt until 2058. Proposed revenue channels include a Carbon Border Tax, revenues from emissions trading and from the OECD’s proposed minimum tax on globally active companies.

SAFE ASSET

In his report on EU competitiveness published on Monday, Draghi said EUR800bn in additional annual investments would be needed for the transformation of the European economy, with a substantial part of that having to come from the public sector. He also proposed delaying repayments of the NGEU in order to maintain a more liquid pool of EU bonds in a first step towards the eventual creation of an EU safe asset.    

The Commission has already started internal discussions on its next long-term 2028-2034 budget and these are expected to intensify after the new Commission is named and confirmed by the European Parliament. The proposed Multiannual Financial Framework should be published some time in the summer of 2025.  

The work of finalising the MFF is expected to be in the charge of Piotr Serafin, Poland’s EU Commission nominee. Current expectations are that work will not start until Dec 1 or even Jan 1, according to some sources.

MNI Brussels Bureau | david.thomas.ext@marketnews.com
MNI Brussels Bureau | david.thomas.ext@marketnews.com

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