Spain is solidifying its decision to finance the large amount of private and public investments needed for the twin transitions (green and digital) and to strengthen Defense in Europe. President of the Government, Pedro Sánchez, is advocating for “new Next Generation funds” to finance “European public goods” such as climate policy, digital transformation, and defense. This aligns with the views of Commissioner for the Economy, Paolo Gentiloni, who has called for lessons to be learned from the recovery fund and for a similar tool to be implemented starting in 2026.
Sánchez proposed his idea at an extraordinary European Council meeting in Brussels, where leaders are discussing how the EU can prevent losing competitiveness to other major economic areas like the United States and China during these transitions. Enrico Letta and Mario Draghi have been tasked with presenting reports on enhancing the internal market and economic competitiveness to the leaders.
The reports focus on increasing integration within the single market, particularly in financial areas, telecommunications, defense, health, and education. The goal is to improve access to capital for companies to fund necessary investments. Letta also suggests considering Eurobonds for Defense and using funds from the Rescue Fund to provide credits for defense.
The discussions within the EU are centered on boosting private sector investments but also acknowledging the importance of public funding for European public goods. Sánchez emphasizes the need for Next Generation funds to support initiatives related to climate policy, digital transformation, and defense, stressing that Spain was involved in developing the funds to address the pandemic crisis. Other EU leaders, including Minister of Economy, Carlos Body, echo these sentiments, calling for joint financing mechanisms beyond the Capital Market Union and the European Investment Bank.
The dialogue within EU institutions reflects a shift towards a more integrated approach to address the economic challenges posed by the transition to a greener and more digital economy. The focus is on leveraging both public and private sector investments to promote sustainable growth and competitiveness within the EU.