Essay: European Solidarity and National Responsibility –
Why Unlimited Liability Is Not a Sustainable Path**
*Dipl.-Kaufmann Rainer Seiffert*
Germany is a country poor in natural resources. Its prosperity has for generations rested primarily on the diligence, education and discipline of its citizens as well as on sound economic and fiscal management. After the devastation of two world wars and long periods of hardship, we may be grateful that the European countries have come together in the European Union and the monetary union. Together we are stronger – that is true. Solidarity among partners is valuable and indispensable in genuine crises.
Solidarity must not, however, mean that the burdens are permanently borne by a few while others live beyond their means and rely on the performance of the more disciplined. Looking at the economic figures of numerous member states, clear differences are still apparent in 2026: While Germany was able to keep its debt ratio comparatively moderate (around 63–64 percent of GDP at the end of 2025), countries such as Greece (around 146 percent), Italy (around 137 percent), France (around 116 percent) and Spain (around 101 percent) remain significantly higher. The euro area as a whole stands at approximately 88 percent.
The consequence of the earlier and later crises was not only a temporary loss of confidence in the euro. Bailout mechanisms, the European Stability Mechanism (ESM) and – especially after the coronavirus pandemic – the NextGenerationEU programme with joint EU borrowing in the triple-digit billions were created. By 2026 the stock of EU bonds and EU bills is approaching the one-trillion-euro mark. What was still discussed in 2011 as “Eurobonds” and regarded by many as risky has partially taken shape in a modified form: joint liability for joint expenditure, initially limited in time and linked to reform conditions, yet with a tendency to become a precedent.
Supporters of joint liability argue that only in this way can contagion risks in the monetary union be effectively contained and a deep, liquid capital market be created. They also point out that states are different from companies: they possess taxing power and – in the euro area – the support of the European Central Bank. These objections must be taken seriously. Nevertheless, the core question remains largely unchanged: How far may joint liability go without permanently weakening the incentives for national fiscal discipline?
In the private sector the principle applies that one should not throw good money after bad. Companies that persistently live beyond their means must enter insolvency. An orderly sovereign insolvency procedure with creditor participation and clear rules would be more honest and more sustainable than ever new support measures that reinforce the moral-hazard effect. Even though states are not comparable one-to-one with companies, the incentive problem remains: those who know that others will ultimately stand in are more inclined to take risks.
Economically, the incentive problem can be well substantiated. When creditors and debtor states expect a high probability of bailout measures or joint liability, the pressure for prudent fiscal management and realistic risk assessment declines – a classic moral-hazard effect that has been extensively described in the literature on international bailouts and the euro crisis. Historical cases such as the Greek debt restructuring of 2012 (with private-sector involvement) show that an orderly restructuring is possible, even if it remains politically difficult. As a constructive alternative, the creation of a transparent and rules-based procedure for the restructuring of sovereign debt in the euro area (Sovereign Debt Restructuring Mechanism) has therefore been discussed for years. Such a procedure would improve incentives without unnecessarily endangering the stability of the monetary union in times of crisis.
Unlimited or gradually expanding liability burdens not only today’s taxpayers. It is also intergenerationally unfair: every additional mountain of debt that we leave to future generations restricts their scope for education, health care, pensions, infrastructure and defence. Germany in particular faces enormous challenges – demographic change, the energy transition, the rebuilding of defence capabilities and the preservation of its industrial base. Germany itself has relaxed the debt brake in recent years and taken on special debt. That does not alter the fact that its own economic performance and the solidity of its public finances must remain the foundation. If these are eroded by ever farther-reaching European commitments, the money will be missing precisely where it is urgently needed.
European integration and solidarity are valuable. In the long run, however, they only work if they are combined with responsibility, fiscal discipline and clear limits. Joint instruments should be temporary, transparent and linked to reform conditions. Otherwise we risk weakening exactly those foundations that have made Europe’s prosperity and stability possible in the first place.
The old rule remains valid: good money should not be thrown endlessly after bad – neither in the private sector nor in the case of states.
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Short sources:
See, among others, the discussions on moral hazard in international bailouts as well as proposals for a European sovereign debt restructuring mechanism (Sovereign Debt Restructuring Mechanism), including work by the German Council of Economic Experts and the economic literature on the euro crisis.
• Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung
• Europäischer Fiskalausschuss
• Arbeiten von Barry Eichengreen
• Arbeiten von Lars Feld
• Arbeiten von Clemens Fuest
• Arbeiten von Daniel Gros
• IMF und OECD zur Eurokrise
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