Publication
EIB Investment Report 2023/2024
Read and download the full report
Project
Investment Report 2023/24: Chapter 2. Safeguarding Public Investment: Challenges and Necessity for the EU
European Investment Bank
What is it about?
This report discusses how government investment in the European Union (EU) has remained strong despite past crises. It focuses on the role of local and regional governments, and highlights the importance of understanding the obstacles faced at this level when implementing investment plans related to green transitions and digitalization.
Despite challenges, government investment has grown each year, outperforming previous crises. The EU's decision to pause budget rules during the pandemic supported this growth, aided further by the Recovery and Resilience Facility. However, challenges such as inflation, administrative capacity, and project planning delays pose hurdles. Local and regional governments play a crucial role in sustaining the investment surge, yet face obstacles like a shortage of skilled workers and economic turbulence. The report emphasizes the importance of maintaining high government investment levels for achieving policy goals like carbon neutrality and digitalization. It also highlights the catalytic effect of public investment on private investment, underlining the potential impact on climate change initiatives if government investment slows down.
Why is it important?
Government investment plays a vital role in driving economic growth and sustainability. By analyzing the performance of government investment during challenging times, we can better understand its impact on private sector investment and overall economic development.
To prevent a prolonged period of low government investment, there is a need for a strong commitment or mechanism to safeguard such spending. The involvement of local and regional governments is crucial for effective implementation of investment plans, especially in areas like renewable energy and infrastructure. The report underscores the challenges ahead, including the potential difficulty for EU governments to sustain high public investment levels when budget rules are reintroduced in 2024. The report suggests drawing lessons from the successful Recovery and Resilience Facility and finding innovative ways to deliver on EU policy goals effectively. Overall, safeguarding government investment is essential for sustained economic growth, resilience, and achieving ambitious policy targets in the EU. Recognizing and addressing the challenges faced by subnational governments can help accelerate the transition towards a more sustainable and digitally advanced economy in the EU.
Perspectives
The digital and green transitions, combined with the growing roll-back of globalisation, are pushing the European economy to transform to be more sustainable, resilient, productive, and competitive. Now is the time to accelerate efforts to achieve those aims.
Debora
Revotella
European Investment Bank
Resources8 total
- Publication
Chapter 2 - full text (PDF)
Read and download the full chapter
- Publication
Summary of Chapter 5. Green Energy Transformation: European Companies at a Crossroads
Europe needs to tackle the gap between policy and action in relation to the climate transition – along with the gap between corporate leaders and laggards.
- Infographic
Funding required to offset spending cuts.
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