With Hungary and Poland vetoing the EU budget and Covid recovery fund, the case for issuing perpetual bonds has never been stronger
I have written a lot in the past about the desirability of the EU issuing perpetual bonds. But today I am proposing that individual member states should do so.
Right now, it would be impossible for the EU to issue perpetual bonds, because the member states are too divided. Poland and Hungary have vetoed the next EU budget and the Covid-19 recovery fund, and the so-called Frugal Five (Austria, Denmark, Finland, the Netherlands and Sweden) are more interested in saving money than in contributing to the common good. Investors will buy perpetual bonds only from an entity that they believe will continue to exist for the foreseeable future. That was true of Britain in the 18th century (when it issued consols) and of the US in the 19th century (when it consolidated individual states’ debt). Sadly, it is not true of the EU today.