Europe borrows without debt: the stack of common borrowing that appears in no ratio

At the end of June 2026, the first disbursement of the European Union’s €90 billion loan to Ukraine left for Kyiv. A few weeks earlier, in Brussels, the negotiation on how to repay the common debt already accumulated was sinking into deadlock. The two events tell the same story from both ends: the European Union borrows better and better, and still does not know who will pay. In between, over six years, a financial object the treaties never envisaged has taken shape: a de facto federal debt, invisible in every member state’s accounts, whose outstandings will approach one trillion euros by year-end.

Debt-to-GDP ratios drive Europe’s fiscal news cycle: France at 116%, Italy at 137%, Brussels surveillance, rating actions. None of those figures contains one euro of the debt the Union issues itself. Yet that debt has changed scale: from a few tens of billions before 2020, the EU’s outstanding bonds reached €827 billion by mid-2026, heading for about €1 trillion by the end of the year. By that yardstick, the Commission now borrows more than most member states, and its paper trades, sits in central bank reserves and gets compared to the Bund. The opacity mechanism is not concealment: everything is public, down to the semi-annual funding calendar. It is architectural, as so often in Europe: this debt has no assigned place in the accounting that structures the public debate.

The stack: a method more than a plan

The common debt stems from no founding decision. It built up by sedimentation, each layer voted as exceptional, temporary and capped. The SURE programme opened the way in 2020: €98.4 billion of loans to finance pandemic short-time work schemes. Then came the quantum leap, NextGenerationEU, the recovery plan: up to €806.9 billion in current prices, of which about €637 billion should be raised by the end of 2026. In 2024, the Union added its share of the G7’s ERA loan to Ukraine, collateralised on the revenues of immobilised Russian assets. In May 2025, the Council adopted SAFE, €150 billion of defence loans, whose first commitments, €38 billion for eight states, were cleared in February 2026; Poland takes the lion’s share with €43.7 billion. And at the end of 2025, the European summit settled Ukraine’s financing for 2026-2027 through a €90 billion loan backed by the Union’s budget, whose genesis we recounted in our investigation into Euroclear and the Russian assets.

Five programmes, five emergency justifications, one signature. The method has an obvious political advantage: none of these texts is called a eurobond, none requires treaty change, and each can be presented to frugal electorates as a parenthesis. It also has a cumulative effect nobody formally decided: the Union now runs a permanent issuance programme, a yield curve, short-term bills, green bonds, and a global investor base. The exception has become an infrastructure.

Why no ratio sees it

The accounting mechanics deserve to be laid out, because there is nothing fraudulent about them: this is law. Debt issued by the Union is that of an international organisation, not of its members. In national accounts, a state’s public debt captures the liabilities of its own administrations; the Commission’s borrowings are not part of it, any more than those of the European Investment Bank. When Italy receives NGEU loans, only the on-lent fraction reappears in its national debt; the grants weigh on nobody in particular. And the €90 billion Ukraine loan rests on the budget’s headroom: the gap between the ceiling of resources member states have committed to provide if needed and actual spending. A guarantee, not a debt; a contingent commitment, off every balance sheet.

Every euro the Union borrows is therefore backed, ultimately, by the taxpayers of the 27, while appearing on none of their liability sides. Investors are not fooled: it is precisely this diffuse collective guarantee that earns the EU one of the continent’s very best ratings. The paradox is the edifice’s strength and its weakness: solidary enough to borrow in the Bund’s neighbourhood, not enough to be called federal debt. Our guide on European sovereign debt places this quasi-safe asset within the wider architecture, a currency with no common debt to face it.

A giant in the market, a dwarf in the indices

The market, for its part, has settled half of the debate. The spread between EU bonds and the German Bund has narrowed from about 70 basis points in 2022 to around 40 on average in 2025: European paper now prices between Germany and France, as a top-tier issuer. Central banks, pension funds and sovereign wealth funds find in it the large pool of high-grade euro assets that was missing, to the point that the European Systemic Risk Board openly argues for expanding the supply of euro safe assets rather than restraining it.

Recognition nonetheless stops at the index door. The major providers still classify EU bonds as supranational debt, alongside the EIB and KfW, not as sovereign: consultations were held, the status quo prevailed. The nuance sounds technical; it is heavy. Inclusion in sovereign indices would trigger tens of billions of passive buying, futures contracts, benchmark liquidity. Its absence sustains a structural discount. The index providers’ reasoning is, at bottom, the same as the lawyers’: a temporary, capped debt without unlimited joint and several guarantee is not a sovereign. The Union finds itself in an in-between of its own making: too big to be a niche issuer, too ambiguous to be a benchmark.

2028, the due date without a payer

The calendar turns this ambiguity into a countdown. Repayment of NGEU principal starts in 2028 and stretches to 2058: about €13.9 billion of principal a year, plus interest peaking around €10.8 billion in 2030, an annual charge in the €25 billion range, and a total debt service estimated between €582 and €715 billion through 2058 according to Bruegel. The Commission built the constraint into its proposal for the 2028-2034 budget framework: out of nearly €2 trillion of budget over seven years, €168 billion is reserved for repaying NGEU. One-twelfth of the European budget, absorbed by yesterday’s debt before financing anything of tomorrow.

The recipe remained to be found. The new own resources promised as early as 2020, a carbon border levy, a share of the carbon market, a corporate contribution, were meant to yield about €58.5 billion a year on the Commission’s estimates. Six years on, none has been adopted: the decision requires unanimity plus ratification in every member state. In the spring of 2026, the Council presidency noted that every avenue, higher national contributions, rescheduling the debt, new resources, appeared deadlocked. Arithmetic will not wait: without a dedicated revenue, repayment will be paid for in cuts to common policies or in higher national contributions, which is to say, either way, in political conflict.

The other reading: an exemplary debt

Honesty requires turning the argument around, because the hidden-debt indictment has its limits. Nothing is less concealed than the Union’s borrowing: semi-annual funding plans published in advance, outstandings detailed bond by bond, parliamentary hearings, public ratings. Next to Europe’s real blind spots, national guarantees, unfunded pensions, off-balance-sheet vehicles, the common debt is probably the best-documented public liability on the continent. Its size remains modest against national liabilities: a trillion euros is less than a third of France’s negotiable debt alone, and about 6% of the Union’s GDP, against the euro area’s 88% average public debt.

The deeper reproach also deserves its counterpoint: if this debt enters no national ratio, it is because it commits no state individually, and that is precisely its purpose. The advocates of a genuine European safe asset, from the European Systemic Risk Board to the economists who see it as the condition for a reserve-currency euro, are not asking for less common debt but for more, owned, permanent and properly institutionalised. In that reading, the problem is not the stacking of programmes: it is the refusal to draw the consequences, by giving the issuer a revenue of its own and a clear status. The opacity denounced here is not that of the figures, available to the cent; it is that of the political unsaid surrounding them.

Three exits, one unsaid

From here, three trajectories emerge, and these are scenarios, not forecasts. The first is silent rescheduling: refinancing redemptions rather than repaying them, as the rollover issuance planned until 2058 already allows, and as the capitals keen to spread the bill quietly suggest. Taken to its end, this path makes the common debt perpetual in fact, without any parliament ever voting on the principle. The second is the institutional leap: real own resources, credible repayment, and eventually the sovereign reclassification the indices refuse today. It is the most coherent path and the least likely near term, unanimity standing in the way. The third is the purge: repaying out of the existing budget, sacrificing common policies, at the risk of turning yesterday’s debt into the enemy of tomorrow’s priorities, defence included.

The signals to watch are concrete: the endgame of the 2028-2034 framework negotiation, due before the end of 2027; any decision on own resources, each one made significant by the very unanimity that makes it improbable; the classification reviews of the major bond indices; and the EU-Bund spread, the best arbiter of this paper’s real status. Meanwhile, the machine keeps running: the Commission will raise more than €150 billion again this year, the Ukraine loan is disbursing, SAFE is arming Polish and Romanian orders. Europe has invented a borrower without a state, backed by everyone and booked by no one, and it lives with it very well, as long as nobody demands to know who, in the end, signs the 2028 cheque.

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Primary sources: European Commission, EU as a borrower and NextGenerationEU (outstandings, ceilings, funding calendar, €637 billion expected raised by end-2026), next generation of own resources; Council of the EU, adoption of SAFE (27 May 2025) and finalisation of the €90 billion loan to Ukraine (23 April 2026); Commission (DG DEFIS), first wave of SAFE funding (January-February 2026); European Parliament, EPRS briefing on the 2028-2034 financial framework (€1,984 billion, including €168 billion of NGEU repayment); ESRB/ECB, “Expanding the supply of euro safe assets” (22 April 2026).

Analysis: Bruegel, “What will it cost the European Union to pay its economic recovery debt?” (€13.9 billion of principal a year, interest, total service of €582-715 billion); Morningstar, “What Are EU Bonds and Can They Become a Safe-Haven Powerhouse?” (outstandings, spread to Bund, index classification); OMFIF, “Outlook 2026”; Jacques Delors Institute on the budget package.

Press: Agence Europe, on the financing deadlock (May 2026); Euronews on the SAFE timeline. Figures and dates checked against the sources cited; outstandings evolve with each issuance, orders of magnitude are as of mid-July 2026.