Dear Friends,
From Russia’s war in Ukraine to the green and digital transformation, we’re not short on challenges nowadays. What we are lacking is the vast sums of money needed to deal with them. The EU requires an estimated 500 billion euros a year for the green transition, while NATO’s European members need to find another 56 billion euros annually to meet the alliance’s 2% defence spending target.
Meanwhile, the financial environment is changing. This year, the EU has returned to an updated version of its previously suspended fiscal rules, which will curb government spending. Eleven EU Member States including France, Italy, and Belgium are already in breach of these rules. In 2025, the EU’s Temporary Crisis and Transition Framework, which allowed Member States to provide significant amounts of state aid to industry, will expire. And in 2026, the Recovery and Resilience Facility – the EU’s historic investment programme launched during the COVID-19 pandemic – will also come to an end.
The political debate on this dilemma is gathering steam, with French President Macron, in his recent Sorbonne speech on the future of the EU, underlining the urgency of the matter: “It is now, within the decade, that we need to make this massive investment – and we’re lagging behind the United States and China”. These discussions are especially relevant in the context of the upcoming negotiations on the 2028-2034 Multiannual Financial Framework (MFF), expected to start in early summer 2025.
At the Heinrich-Böll-Stiftung European Union, we have been looking into a range of options to help facilitate green financing. We recently published a study exploring how the European Central Bank could accelerate the green transition. This is particularly pertinent given Macron’s call for a debate on how to include climate change in the ECB’s mandate. And we are cooperating with economics think tank Bruegel, looking into how financial markets could be leveraged to advance biodiversity. Our headquarters in Berlin has recently published a policy paper on a future-proof financial architecture for the EU (in German), and will hold a webinar next week entitled “What do we owe the future? European instruments for future investments” (in English).
Finally, yet importantly, with the European elections now less than a month away, we have added more features to our European Parliament elections dossier, including the latest edition of our flagship magazine böll.thema entitled “Europe: A Promise”, as well as an interview on the EU elections and the European economy with Sandra Parthie from the German Economic Institute (IW) and yours truly. Do also save the date for our post-elections webinar on Wednesday 12 June!
Happy Europe Day! 🇪🇺
Warm regards,
