LONDON: Discussions are gathering pace in the European Union or EU on how to increase defence spending, with joint financing becoming a realistic option for a growing list of leaders, according to people familiar with the matter.
French president Emmanuel Macron hosted fellow leaders in Paris on Monday, including the United Kingdom’s Keir Starmer and German Chancellor Olaf Scholz, to discuss ways to bolster Europe’s defence capacity.
Even though joint bonds weren’t specifically addressed, Polish prime minister Donald Tusk said new funding measures would be presented in time for an upcoming March 20-21 summit.
Over the past week, top US officials have indicated they’ll move forward with decisions on the future of Ukraine that will alter Europe’s security architecture for years to come – without input from the European capitals.
This has focused the minds of leaders in Europe, who have indicated a willingness to contemplate bold action to ensure it has a say in its own defence, including the controversial topic of joint bonds.
“In the face of this emergency, I think it is time to take historic decisions,” French Minister for European Affairs Benjamin Haddad said in an interview with Bloomberg. “And indeed, the question of eurobonds, for instance, is one of the mechanisms that we should be talking about.”
European bonds fell and shares in defence companies rallied Monday on the prospect of greater military spending.
German, French and Italian bonds all slipped, with 10-year bond yields – the benchmark borrowing rate for the eurozone – reaching the highest in more than two weeks. Europe’s Stoxx 600 index rose 0.4%, while a Goldman Sachs Group Inc index of European defence shares topped a record high. — Bloomberg
