Soros favours new ways for EU governments to finance huge Covid-19 debts

George Soros, founder and chairman of the Open Society Foundations

George Soros has said that the prospects of the EU issuing Europe-wide perpetual bonds to finance national budgets and the huge Covid-19 costs have evaporated because the continent is "too divided" amid opposition from Hungary and Poland to the EU budget and its recovery package. 

The financier said that the political divisions mean that investors would be unwilling to buy Europe-wide perpetual bonds but would still likely buy perpetual bonds issued by individual national governments. 

Perpetual bonds offer the benefits during periods of deep economic crisis and escalating debts that governments only pay the interest and would never have to repay the principal, he said. 

Perpetual bonds “would largely solve Europe’s financial problems” and “would go several times further if it were used to issue perpetual bonds rather than ordinary bonds,” Mr Soros wrote in an article published for the Project Syndicate website on Monday. 

Mr Soros said the EU faces a “very difficult situation” and will need to spend much more on its health systems across the continent and in rebuilding the European economy than the €1.8 trillion it has so far said it plans to invest. 

Funding the plans “would go several times further if it were used to issue perpetual bonds rather than ordinary bonds”, he said.