Europe’s Call-to-Arms Moment May Disappoint Investors, Again
- Positions are entrenched ahead of Thursday’s video conference
- EU leaders unlikely to reach concrete decisions this week
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A video call between European Union leaders on Thursday may fall short of giving investors clarity over how the bloc will finance economic recovery efforts, risking a prolonged paralysis that has pushed borrowing costs higher across peripheral euro-area countries.
EU institutions are focusing on a proposal to boost the bloc’s common budget, largely shunning demands by Italy and Spain for joint debt issuance to share the costs of cushioning a pandemic-induced recession. The plan being prepared would instead see the European Commission use the multi-annual budget to borrow from financial markets and then channel cheap loans to the worst-hit nations, according to two diplomats briefed on the ongoing preparations.