Europe's Risky Bet: Joint Borrowing to Fund Ukraine Amidst Budget Woes

• EU leaders agreed on joint borrowing for Ukraine's 2026-27 reconstruction and military support, bypassing frozen Russian assets.
• The plan involves borrowing on capital markets, increasing the EU's overall debt exposure amidst existing high public debt from past crises.
• Europe faces significant budgetary gridlock and political hurdles, with member states struggling with deficits and consensus on funding priorities.
• Disagreements over using frozen Russian assets highlight deep divisions and legal concerns within the bloc.
• Analysts warn that funding external aid while domestic economies are vulnerable could lead to public discontent and political backlash, requiring careful fiscal management.

Why It Matters: EU's joint borrowing for Ukraine is ambitious but risks exacerbating Europe's existing fiscal vulnerabilities.