BRUSSELS — Expanding joint EU debt issuance would save governments billions of euros in borrowing costs, former Italian Prime Minister Enrico Letta told POLITICO in an interview.

“A safe asset is not a way to have more debt and to waste money. A safe asset is a way to save money,” said Letta, who authored an influential report in 2024 on how to reboot the European single market.

For decades, EU governments have sparred over whether the European Commission should issue debt on behalf of its 27 member countries.

Southern countries, including France, Italy and Spain, back the idea, arguing that it would enable governments to borrow at a lower cost thanks to the European Commission’s strong credit rating.

Spanish finance minister Carlos Cuerpo claimed earlier this week that a common EU debt market of €5 trillion would save European taxpayers €25 billion a year in extra borrowing costs.

However, a German-led camp argues the approach would encourage high-spending Southern countries to take on more debt.

In response to this criticism, Letta suggested that EU borrowing could finance common security and infrastructure projects — including high-speed trains connecting Europe’s biggest cities — that benefit citizens across the bloc.

“This is the main point, [we need] larger scale up and consolidation, avoiding that each country works alone and we can do it also with this common borrowing.”

The EU broke the taboo around joint issuance when it empowered the Commission to raise €650 billion to counter the economic effect of the Covid-19 pandemic in 2021. The Commission defied calls to extend the program beyond its expiry date of the end of this year.

Taking on the dollar

Supporters claim that mounting competition between Europe, the U.S. and China warrants further issuance of EU joint debt to tackle the dollar’s role as the global reserve currency.

With investors spooked by U.S. president Donald Trump’s erratic decision-making, funds from Asia and the Middle East are increasing their demand for EU bonds, which are currently issued for specific programs including the post-Covid recovery fund and the SAFE loan-for-defense scheme.

In a sign of growing confidence, buyers from the Asia-Pacific region purchased 28 percent of the Commission’s three-year bonds in April — up from 13 percent in the previous auction in March, according to data from the Commission.

“We are in a different mood … in which the European environment is more important than just the national one,” Letta said.

However, in more critical remarks, he compared Europe to a “petrified forest,” in which national stakeholders oppose changes to the status quo.

“Everything is like it was 30 years ago. The banks are the same. The energy providers are the same. Telecom operators are the same as 30 years ago. Because we decided to protect our national champions.”