Unpacking Next Generation EU Debt – the European Commission as a financialized borrower

Next Generation EU (NGEU), the European Union’s Covid emergency recovery response, has been discussed extensively, often under headlines questioning whether the NGEU is the EU’s very own ‘Hamilton moment’ leading to the United States of Europe with common debt and taxation. Although it seems clear by now that NGEU is not the start of a full fiscal unification, Member States tasked the European Commission to act as borrower on financial markets on an unprecedented scale. This paper takes up the task to look closer at the Commission’s role as borrower and reviews its debt management approach under the notion of financialization. The concept ‘financialization’ describes how finance became ever more dominant and shapes every aspect of today's societies, including public debt management. The financialization of public debt in specific means that the relationship between states/governments and financial markets becomes asymmetrical with states ending at financial market’s mercy to obtain the right financing terms for their public debt. With help of seven indicators, this paper analyses the detailed set up of the NGEU debt issuance and management and to how far those aspects are financialized. As a result, the paper discusses how the current borrowing framework is considered financialized and what this means…