“We should have more time [to decide],” Meloni told reporters last week, adding that the proposed April time frame to activate the mechanism was “a bit too close.”
France, meanwhile, has indicated it does not plan to activate the clause, according to two EU diplomats. With a debt-to-GDP ratio above 110 percent, Paris is wary of spooking markets or endangering its credit rating — a key factor in how much it pays to borrow.
Germany, by contrast, is expected to activate the clause to help fund its mammoth €500 billion defense upgrade. But like other triple-A rated states such as Denmark and the Netherlands, Berlin is unlikely to accept Commission loans it could raise more cheaply on its own.
That has compounded anxiety among more vulnerable member states, which fear that by stepping up first to request EU loans they might signal financial weakness to the markets — triggering higher borrowing costs.
Fragmentation among the EU’s 27 countries “makes a difference on the market perception, which might be negative,” said the senior EU diplomat.
“If everyone doesn’t [submit the request] at the same time, the market will set the limit” of how much you can spend, they added.
But fiscally conservative states are not buying that argument, with the third EU diplomat accusing Southern states of “playing politics.”
(Jacopo Barigazzi contributed to this report)