France Calls for Permanent EU Debt Mechanism to Boost Investment

(Bloomberg) -- France intends to push for a permanent mechanism on joint-debt issuance in the European Union to drive investment in innovation and projects that nations cannot finance alone, said Finance Minister Bruno Le Maire.

President Emmanuel Macron will announce the funding needs for the most innovative sectors “in the coming weeks,” Le Maire said in an interview with French newspaper Le Parisien while attending an economics conference in Aix-en-Provence.

“Close cooperation with our European partners is vital,” Le Maire told the newspaper. “For the biggest investments, particularly in energy transition, we propose that the joint issuance of debt used to finance the 750 billion euro ($890 billion) recovery fund becomes a permanent European financing system.”

The latest push from France for Europe to share the burden of investment more widely is likely to meet with resistance from several countries. To get agreement on the coronavirus-related recovery fund in 2020, France had to concede that such shared debts would be temporary to appease countries, including the Netherlands, that have consistently opposed fiscal transfers.

Le Maire indicated that the new initiative could be structured in such a way that governments would be obliged to limit their own spending.

“In exchange, each member state would accept to be more responsible in terms of public spending,” he said.

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