New Article: Financing a federal Europe: A roadmap for a European treasury
Santiago Lago Peñas, Professor of Public Finance at the University of Santiago de Compostela and Senior Economist at Funcas, has published a new article in SEFO Economic Journal entitled “Financing a federal Europe: A roadmap for a European treasury.”
The article examines how the European Union could move from temporary, crisis-driven fiscal instruments towards a more permanent and coherent federal fiscal architecture capable of responding to Europe’s growing common challenges, including defence and security, cross-border infrastructure, economic security, and the green and digital transitions.
The paper argues that a genuine European treasury would require three key elements: the transfer to the European level of selected public goods and strategic functions, a system of visible and politically legitimate own resources, and a disciplined capacity to borrow to finance investment and respond to major shocks.
The article also sets out a pragmatic roadmap for European fiscal integration. In the short term, it identifies scope for strengthening joint action in defence and security, diversifying the EU’s own resources and consolidating collective insurance mechanisms. Over the medium and longer term, it explores the institutional and legal steps needed to establish a European treasury with responsibility for multiannual fiscal planning, debt management and a broader range of common fiscal functions.
A central challenge, the paper argues, is to ensure that greater European fiscal capacity is accompanied by fiscal discipline, transparency and stronger links between taxation and political representation, while addressing the legal, institutional and political-economy obstacles to further integration.
The article concludes that the EU’s experience in recent crises demonstrates its capacity to expand its fiscal instruments when the costs of inaction become clear. The challenge now is to transform these temporary responses into a more stable fiscal framework capable of supporting Europe’s long-term strategic priorities.
Reference:Lago Peñas, S. (2026). Financing a federal Europe: A roadmap for a European treasury. SEFO Economic Journal.
