Much of the EU's aid to Ukraine has been funded similarly.
This represents a profound shift in European integration. Common borrowing is a form of quasi-political and fiscal integration that Eurosceptics long warned would come.
Had the UK remained, it would likely have opposed such moves, as it often sought to veto or dilute them.
Common debt will be the EU's tool of choice for future shocks. Brussels has proposed a permanent fiscal capacity for the 2028-2034 budget, allowing borrowing whenever needed.
More shared borrowing will necessitate more supranational taxation. The commission is pushing for EU-wide corporate and digital taxes to repay the growing debt.
Industrial Policy and Geopolitical Stance
The EU of 2026 is more interventionist and protectionist regarding its single market.
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Its permissive approach to state aid, along with instruments like the proposed Industrial Accelerator Act and Safe, reflects a new willingness to use industrial policy as a geopolitical tool.
Brussels has targeted Chinese overcapacity and restricted US firms' access to EU defence financing through "buy European" requirements to strengthen Europe's industrial base and strategic autonomy.
Historically, UK governments opposed closer European fiscal integration, supranational borrowing, and activist industrial policy, preferring open markets.
Successive British governments also preferred close ties with Washington while balancing hawkish rhetoric on China with economic pragmatism.
The EU's stance toward both the US and China is heading in a more combative direction. The bloc's push for technological sovereignty marks another departure from British instincts.
