EUROPE’S MONEY WOES

I’ll say it bluntly. Europe has a money problem at the worst possible time after a decade of back-to-back crises and cheap credit. I fear that EU indebtedness and indecision will limit its ability to meet the challenges of Russian aggression and climate change. EU leaders often make bold decisions in a crisis. But Europe can ill afford to wait for Moscow to invade the bloc or sea levels to flood coastal cities before acting. The problem is no one can agree on what to do.

If you need a price tag, try €500 billion a year . That’s just to make Europe’s economy greener and more digital. It doesn’t stop there. We’ll also need another €500 billion over the next decade to make the bloc’s defense fit for purpose — and it’s unclear whether that figure includes the cost of supporting Ukraine.

Don’t expect the EU’s rules on public spending to do us any favors. Rather than tailoring the Stability and Growth Pact to meet Europe’s looming challenges after the pandemic, Northern policymakers only made it harder for countries to splash the cash . The reforms help countries handle high debts. And that’s important. But it won’t help spur public investment — a chief criticism of the old rules.

Something’s gotta give. The question is what? Eurobonds are too toxic and talk of a larger EU budget is a nonstarter for euroskeptics and frugal nations. Money problems will only worsen in 2028 when the EU begins paying back the debt it raised to finance its €700 billion post-pandemic recovery fund. Everyone’s looking to the "capital markets union" to solve the issue.

If you haven't heard of CMU, it's a project born almost a decade ago with the express goal of creating a U.S.-style capital market in Europe — with meager results.

Policymakers are deluded if they think Brussels’ bid to deepen its financial markets will solve its money problems while turbocharging Europe’s economy to the levels enjoyed by the U.S. and China. The capital markets union, a lackluster, nine-year-old project, is merely a consolation prize that decisionmakers have accepted in Europe’s frantic hunt for spare change.

Yes. The bloc is overbanked and needs to democratize financial services for its citizens. But the idea that rebranding the CMU will entice the animal spirits of ordinary savers and empty their bank accounts, holding over €33 trillion , and solve Europe’s problems is foolhardy.

The reason decisionmakers have piled their hopes on the CMU is because all other ideas are too controversial. Ursula von der Leyen has refused to mention eurobonds during presidential debates as she seeks Parliament’s approval for a second term as European Commission president. Her suggested solution to Europe’s spending needs is a bigger EU budget and more common taxes. But good luck convincing the frugal North to cough up more cash or the indebted South to deprive themselves of tax revenues.

Von der Leyen, too, has fallen victim to the CMU fallacy. I was astounded when she described the lousy conclusions that EU leaders produced on reviving the CMU in April as “a huge move forward .” I genuinely wondered what planet she was living on. Success in the CMU will need fixes in insolvency law, tax, and supervision and those topics are too sensitive or boring for politicians to focus on.

I firmly believe the EU project will endure, albeit through trial and error. The Russian threat will also unite Europeans against a common enemy and the bloc will take a step closer to federalism once a single defense policy is adopted.

As for the economy, Europe’s leaders must be bold before they’re forced to. Whether that’s a bigger EU budget, eurobonds, or both, time will tell. My only hope is that Brussels does not become too American or Chinese in its pursuit of economic growth. Surely, there is a balance that can be found between hardcore capitalism and industrial policy.

The answer might lie in redefining growth. The race to harvest the world’s dwindling resources will exasperate supply and demand, fueling inflation and the widening wealth gap between the rich and poor. Growth has become a political instrument to demonstrate success despite rising inequality. If policymakers focus on sustainable development and human well-being instead of arbitrary numbers, Europe will be better off.

GREATEST HITS

A LOOK BACK: Before heading for the exit, my editor asked me to pick out my favorite stories over the last eight years at POLITICO. I flicked through 400 articles to bring you the top eight.

— The Markus Ferber affair: When lawmaking meets business . This story began in 2017 and required a year of investigating to complete. Not only does the story concern a hugely influential figure in the EU’s world of financial policy, it raises questions over side gigs that MEPs are allowed to pursue.

— Bloomberg vs. the banks . The European Parliament is rife with stories, waiting to be uncovered. This one centered around Bloomberg’s lobbying shenanigans to undermine a rival called Symphony, funded by Wall Street banks, in the information market.

— Greece approaches World Bank for cash . A world exclusive during the Greek bailout crisis. There was a time when Greece’s financial woes made headlines every day, as Athens clashed with the infamous “troika” before backing down after Germany threatened to throw the country out of the eurozone.

— 4 presidents club: Europe’s recovery on the agenda . I loved this story because it shows just how opaque Brussels can be, as decisionmakers meet behind closed doors to sketch out the direction of European policy.

— ‘It’s a fucking trap!’ The Great Euro Conspiracy Theory . If there’s one story that best sums up my time covering crypto’s boom and bust, it’s this one. The European Central Bank’s dreams of a digital euro soon were born from the ashes of Facebook’s failed bid to launch a virtual currency. But the digital euro has struggled to win many over amid fears that it’ll be used to snoop on people’s spending habits.

— The cold fish deal: How EU spending talks went to Brazil and back ― just in time for Christmas . Journalism is a team sport and achieves the best results when reporters collaborate. This story chronicled how finance ministers overhauled the bloc’s fiscal rules with wonderful reporting from my colleagues.

— EU officials float €100B boost for European companies . Another example of what you can achieve with teamwork. In 2019, I got my hands on the 173-page wish list that eurocrats had put together for the next European Commission. The document was too big to handle alone, so I shared it with the whole newsroom to mine for stories. This article was the best attempt at a summary of the leaked document.

— Washington widens digital tax push to target world’s largest 100 companies . Brussels is a difficult place to get access to confidential documents. Imagine how much harder it is when covering transatlantic negotiations on taxing big tech. This story has a special place in my heart, not just because of the colleagues I worked with, but also because of the comprehensive story we delivered.