Project

Investment Report 2024/2025 -Chapter 2: How to maximise the impact of government investment

European Investment Bank

DOI: 10.26303/v3q4-he96

What is it about?

Chapter 2 examines the role of government investment in driving economic growth and transformation in the European Union. It analyses how public spending supported Europe’s recovery since the pandemic, with government investment growing at a record-level pace in 2023 and 2024, as spending on infrastructure and renewable energy increased. The chapter explores the impact EU funds and coordination have had on overall investment, looking closely at the role the Recovery and Resilience Facility and EU structural and cohesion funds. It also addresses the challenges posed by the reinstatement of EU fiscal rules and the need for Europe to use public funds efficiently and effectively as governments withdraw some support. Finally, it highlights the importance of public investment in developing human capital, improving digitalisation, advancing sustainability and building up European defence.

Why is it important?

Government investment can maximize economic stability, competitiveness and long-term growth in the European Union. Public funds need to be used in ways that result in the greatest impact, such as guarantees or other financial instruments, particularly as government finances are squeezed. The chapter also underscores the importance of strategic investment in infrastructure, green energy, digitalisation and social cohesion to address the structural challenges facing Europe, namely demographic shifts and economic disparities. It examines how government investment in one EU country can affect another, and how that impact reinforces the need for policies that are coordinated at the EU level.

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Who is involved?