Europe's autumn reckoning — bonds, budgets, billionaires: Mike Dolan

Even if the TPI were not used, or were not enough to calm a euro bond squall, the risks may refocus minds on joint euro issuance. Numerous proposals for jointly backed euro zone or European Union bonds have been put forward in recent years, and the latest paper on the subject was published on CEPR's VoxEU site this week.

The economists reckon the 2024 reform of EU fiscal frameworks still falls short in two areas: in a deep recession, the frameworks offer too little fiscal flexibility to head off deflationary stagnation and, perhaps, too much to allay national debt sustainability concerns.

The paper argues that "a Eurobond-financed common fiscal capacity can mitigate both tail risks. Under this proposal, stabilisation of exceptional common shocks is shifted to the euro-area level while responsibility for national debt remains firmly national."

Outside severe shocks, the economists argue that Eurobonds can be used to finance large European investment programmes — as joint debt has been used since the pandemic in 2020. But the use of joint debt for budgetary issues has been resisted many times in the 27 years of the euro. The moment may finally have arrived — although the very fractious European politics that bring the thinking back to the fore may be the same upheavals that make joint action less likely.