EU Borrowing for Recovery

Today (24 June), the European Commission issued its semi-annual funding plan for the period July to end-December 2022. In keeping with the NextGenerationEU (NGEU) diversified funding strategy, the plan sets out the Commission’s intentions regarding the issuance of EU-Bonds and EU-Bills over the period, providing market participants with transparency and predictability.

Q2 2022 was characterised by persistent market volatility and global interest rate increases following Russia’s attack on Ukraine and ensuing economic turmoil.

Ukraine has been a long-term beneficiary of the EU’s Macro-Financial Assistance (MFA) programme. To date, the EU has provided €6.8 billion to Ukraine through six MFA programmes. This includes the most recent emergency programme of €1.2 billion, for which the Commission raised funds in two private placements in the first half of 2022. The proceeds were transferred to the Ukrainian authorities within 3 days of the transactions.

The war in Ukraine has accelerated the necessity to invest in Europe’s energy independence. Coupled with the need to tackle the climate crisis, this will require energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy.

In September 2021, the Commission introduced its auction programme, supported by colleagues from Banque de France, to further enhance the flexibility of its funding strategy. Since then, EU auctions have become a staple of the Commission’s diversified funding strategy, with nearly €20 billion raised across 7 bond auctions and a total of almost €58 billion raised across 19 EU-Bill auctions.

Under the title “Europe United: resilience, green and digital transformation”, the hybrid conference jointly organised by the European Commission, the European Investment Bank and the European Stability Mechanism was a good opportunity to discuss topical issues with market participants.