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Joint EU borrowing with grants for defence eventually likely - PIMCO
Published by Global Banking & Finance Review®
Posted on April 2, 2025
1 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on April 2, 2025
1 min readLast updated: January 24, 2026
PIMCO suggests the EU will likely start a joint borrowing program for defence, providing grants to member states. High debt may limit spending in some countries.
LONDON (Reuters) - The European Union is more likely than not to eventually launch a further joint borrowing programme for defence spending that hands out grants to member states, bond giant PIMCO's lead European sovereign credit analyst said on Wednesday.
"Over time, you could have a programme where there's actually EU grants. I think it's possible," Nicola Mai told Reuters at the sidelines of a conference in London, adding he saw a "better than even chance" of it happening.
The EU is creating room for member states to spend up to 800 billion euros ($863.76 billion), mainly by tweaking its fiscal rules to enable more national spending along with 150 billion euros of defence loans that it will provide by borrowing on the bond market.
But high debt and deficit levels are likely to limit how much big economies such as Italy and Spain, which currently spend less than a 2% target NATO is looking to raise beyond 3%, as well as France can spend on defence.
($1 = 0.9262 euros)
(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe)
The article discusses the likelihood of the EU launching a joint borrowing program for defence spending, offering grants to member states.
PIMCO's analyst predicts a better than even chance of the EU starting a joint borrowing program for defence.
High debt levels may limit the ability of countries like Italy, Spain, and France to increase defence spending.
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