Edoardo Campanella, head of investment research and editor‑in‑chief at
UniCredit, said the recent bond‑market sell‑off highlights the challenges of
large public debt. He warned Europe’s push for strategic autonomy is unlikely to
be financed solely by reallocating welfare to defense; instead it will probably
involve higher government borrowing, increased taxes and a larger public sector.
Campanella said this suggests the long‑run equilibrium level of interest rates
could structurally rise even if cyclical growth remains modest. He cautioned
that without closer coordination between fiscal and monetary authorities Europe
risks underinvesting in critical strategic sectors and seeing sovereign bond
spreads widen.
