Europe's fiscal fragmentation: The EU's struggle to build a capital market that can compete with the US and China

Summary

The article analyzes the European Union's struggle to build a financial architecture capable of mobilizing capital at scale, using the clash between French President Macron's call for "future-oriented eurobonds" and German Chancellor Merz's swift rejection as a case study. It argues that the EU's fragmented financial system, constrained by national debt brakes and constitutional court rulings, prevents it from competing with the US and China. The piece contends that without overcoming these structural barriers—including Germany's "debt brake" and the lack of a unified capital market—the EU risks becoming geopolitically irrelevant, trapped between its legacy as a regulatory power and the need to evolve into a fiscal and military power capable of strategic autonomy.

Source

bskyEurope's fiscal fragmentation: The EU's struggle to build a capital market that can compete with the US and Chinaip-quarterly.com