Good afternoon, the Vice-President and I welcome you to our press conference.
The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which we steer the monetary policy stance – is based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.
The disinflation process is well on track. Inflation has continued to develop broadly in line with the staff projections and is set to return to our two per cent medium-term target in the course of this year. Most measures of underlying inflation suggest that inflation will settle at around our target on a sustained basis. Domestic inflation remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay. But wage growth is moderating as expected, and profits are partially buffering the impact on inflation.
Our recent interest rate cuts are gradually making new borrowing less expensive for firms and households. At the same time, financing conditions continue to be tight, also because our monetary policy remains restrictive and past interest rate hikes are still transmitting to the stock of credit, with some maturing loans being rolled over at higher rates. The economy is still facing headwinds but rising real incomes and the gradually fading effects of restrictive monetary policy should support a pick-up in demand over time.
We are determined to ensure that inflation stabilises sustainably at our two per cent medium-term target. We will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. We are not pre-committing to a particular rate path.
The decisions taken today are set out in a press release available on our website.
I will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions.
Economic activity
The economy stagnated in the fourth quarter, according to Eurostat’s preliminary flash estimate. It is set to remain weak in the near term. Surveys indicate that manufacturing continues to contract while services activity is expanding. Consumer confidence is fragile, and households have not yet drawn sufficient encouragement from rising real incomes to significantly increase their spending.
Nevertheless, the conditions for a recovery remain in place. While the labour market has softened over recent months it continues to be robust, with the unemployment rate staying low, at 6.3 per cent in December. A solid job market and higher incomes should strengthen consumer confidence and allow spending to rise. More affordable credit should also boost consumption and investment over time. Provided trade tensions do not escalate, exports should support the recovery as global demand rises.
Fiscal and structural policies should make the economy more productive, competitive and resilient. We welcome the European Commission’s Competitiveness Compass, which provides a concrete roadmap for action. It is crucial to follow up, with further concrete and ambitious structural policies, on Mario Draghi’s proposals for enhancing European competitiveness and on Enrico Letta’s proposals for empowering the Single Market. Governments should implement their commitments under the EU’s economic governance framework fully and without delay. This will help bring down budget deficits and debt ratios on a sustained basis, while prioritising growth-enhancing reforms and investment.
Inflation
Annual inflation increased to 2.4 per cent in December, up from 2.2 per cent in November. As in the previous two months, the increase was expected and primarily reflected past sharp drops in energy prices falling out of the calculation. Along with a month-on-month increase in December, this led energy prices slightly higher on an annual basis, after four consecutive declines. Food price inflation edged down to 2.6 per cent and goods inflation to 0.5 per cent. Services inflation edged up to 4.0 per cent.
Most underlying inflation indicators have been developing in line with a sustained return of inflation to our medium-term target. Domestic inflation, which closely tracks services inflation, has remained high, as wages and some services prices are still adjusting to the past inflation surge with a substantial delay. At the same time, recent signals point to continued moderation in wage pressures and to the buffering role of profits.
We expect inflation to fluctuate around its current level in the near term. It should then settle sustainably at around the two per cent medium-term target. Easing labour cost pressures and the continuing impact of our past monetary policy tightening on consumer prices should help this process. While market-based indicators of inflation compensation have largely reversed the declines observed in the autumn, most measures of longer-term inflation expectations continue to stand at around 2 per cent.
Risk assessment
The risks to economic growth remain tilted to the downside. Greater friction in global trade could weigh on euro area growth by dampening exports and weakening the global economy. Lower confidence could prevent consumption and investment from recovering as fast as expected. This could be amplified by geopolitical risks, such as Russia’s unjustified war against Ukraine and the tragic conflict in the Middle East, which could disrupt energy supplies and further weigh on global trade. Growth could also be lower if the lagged effects of monetary policy tightening last longer than expected. It could be higher if easier financing conditions and falling inflation allow domestic consumption and investment to rebound faster.
Inflation could turn out higher if wages or profits increase by more than expected. Upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term and disrupt global trade. Moreover, extreme weather events, and the unfolding climate crisis more broadly, could drive up food prices by more than expected. By contrast, inflation may surprise on the downside if low confidence and concerns about geopolitical events prevent consumption and investment from recovering as fast as expected, if monetary policy dampens demand by more than expected, or if the economic environment in the rest of the world worsens unexpectedly. Greater friction in global trade would make the euro area inflation outlook more uncertain.
Financial and monetary conditions
Market interest rates in the euro area have risen since our December meeting, partly mirroring higher rates in global financial markets. While financing conditions remain tight, our interest rate cuts are gradually making it less expensive for firms and households to borrow.
The average interest rate on new loans to firms declined to 4.5 per cent in November, while the cost of issuing market-based debt remained at 3.6 per cent. The average rate on new mortgages edged down to 3.5 per cent.
Growth in bank lending to firms rose to 1.5 per cent in December, up from 1.0 per cent in November, amid a strong monthly flow. Growth in debt securities issued by firms moderated to 3.2 per cent in annual terms. Mortgage lending continued to rise gradually but remained muted overall, with an annual growth rate of 1.1 per cent.
Credit standards for business loans tightened again in the fourth quarter of 2024, having broadly stabilised over the previous four quarters, as reported in our latest bank lending survey. The renewed tightening mainly reflected banks becoming more concerned about the risks faced by their customers and less willing to take on risks themselves. Demand for loans by firms increased slightly in the fourth quarter but remained weak overall. Credit standards for mortgages were broadly unchanged, after three quarters of easing, while the demand for mortgages again increased strongly, mainly because of more attractive interest rates.
Conclusion
The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which we steer the monetary policy stance – is based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. We are determined to ensure that inflation stabilises sustainably at our two per cent medium-term target. We will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. We are not pre-committing to a particular rate path.
In any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation stabilises sustainably at our medium-term target and to preserve the smooth functioning of monetary policy transmission.
We are now ready to take your questions.
 
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A Balanced Partnership
HR/VP Kallas discussed EU-U.S. cooperation on global issues with U.S. Secretary of State Marco Rubio. The EU-U.S. trade balance is well balanced, both sides have complementary strengths.
800 Million Citizens
Our partnership is the world’s most extensive bilateral trade and investment relationship and our economies are integrated. Read the EU Ambassador Neliupšienė’s remarks to the press.
World Economic Forum
“European companies in the U.S. employ 3.5 million Americans. And another million American jobs depend directly on trade with Europe. Entire supply chains stretch on both sides of the Atlantic.” Learn more about the EU Competitiveness Compass.
— European Commission President Ursula von der Leyen
EU in Pennsylvania
Ambassador Neliupšienė visited Philadelphia to meet the Mayor and highlight the EU’s $72 billion investment in the state and the creation of over 250,000 jobs. We also hosted a group of students from the University of Pennsylvania!
American Farm Bureau Convention
In San Antonio, Texas, EU officials engaged with farmers and industry leaders to highlight innovation in agriculture and the importance of EU-U.S. cooperation.
Holocaust Remembrance Day
“We remember all the victims murdered during the Holocaust and mark the 80 years since the liberation of the Nazi concentration and extermination camp Auschwitz-Birkenau. This memory must be passed to future generations.”
—European Commission
We Stand with Ukraine
European Council President António Costa met President Zelenskyy and assured him of the EU’s support, including through sanctions against Russia.
Pints & Policy with the EU
Defense Attaché Henning Faltin and GMF Managing Director Kristine Berzina discussed the EU-U.S. security partnership and the EU’s vision for boosting its defense capabilities. Learn more.
Towards a Common Future
The future of the Western Balkans is with the European Union, so it is important that we remain in close contact with the Ambassadors. Thank you to Atlantic Council experts for their insights!
 
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Firms reported declining bank interest rates on loans, although indicating a slight further tightening of other lending conditions.
There was a slight increase in the bank financing gap compared with the previous quarter as firms reported a small reduction in bank loan availability and no change in the need for bank loans.
Firms’ inflation expectations increased slightly, with their median expectations for annual inflation in one, three and five years all standing at 3.0%, 0.1 percentage points higher across all three horizons.
Nearly half of the firms surveyed see the ECB’s inflation target at 2% and these firms have lower inflation expectations than those believing the target to be significantly higher.

In the most recent round of the Survey on the Access to Finance of Enterprises (SAFE), euro area firms reported a decrease in interest rates on bank loans (a net -4%, compared with a net 4% reporting an increase in the previous quarter), although a net 22% (30% in the previous quarter) observed increases in other financing costs (i.e. charges, fees and commissions) (Chart 1).
In this survey round, firms reported a small decline in the availability of bank loans in the fourth quarter of 2024 (a net -2%, down from a net 1% reporting an increase in the previous quarter) (Chart 2). At the same time, firms indicated no change in the need for bank loans, compared with 2% reporting a decrease in the third quarter of 2024. This led the financing gap – an index capturing the difference between the need for and availability of bank loans – to increase for a net 1% of firms, compared with a net 2% of firms reporting a decrease in the previous survey round. Looking ahead, firms expect small improvements in the availability of external financing over the next three months.
More firms perceived the general economic outlook to be the main factor hampering the availability of external financing than in the previous survey round (a net percentage of -22%, compared with -20%). A net 8% of firms indicated that their perception of banks’ willingness to lend, which may reflect banks’ risk aversion, had improved further (up from 6%).
A net 6% of enterprises reported an increase in turnover over the last three months, down from 7% in the previous survey round, with a net 11% of firms remaining optimistic about developments in the next quarter. An increased percentage of firms saw a deterioration in their profits compared with the previous survey round (a net percentage of -14%). The survey indicates that the net percentage of firms reporting an increase in cost pressures continued to decline.
Firms continued to expect the increase in their selling prices and wages to moderate over the next 12 months (Chart 3). Selling prices were expected to increase by 2.9% on average (down from 3.0% in the previous survey round), while the corresponding figure for wages was 3.3% (down from 3.5% in the previous round).
Firms’ inflation expectations increased slightly, bringing a halt to the previous declines (Chart 4). Median expectations for annual inflation in one, three and five years all stood at 3.0%, thus increasing by 0.1 percentage points for all three horizons. For inflation in five years, fewer firms reported balanced risks (33%). The increase in the percentage of firms seeing upside risks (51%, up from 46%) was similar to the rise in the share of those perceiving risks to the downside (16%, up from 12%).
To better understand firms’ awareness of and attention to inflation developments, a new set of ad hoc questions was introduced in this survey round. Firms were asked about the factors they believe influenced inflation in 2024, their level of attention to actual inflation, and how this attention has shifted compared with a year ago. Firms cited non-labour input costs rather than wage costs or profits as the primary factor influencing inflation in 2024. Additionally, firms were asked about the inflation target set by the European Central Bank (ECB). Nearly half of the firms surveyed see that target at 2%, and these firms have lower inflation expectations than those believing the target to be significantly higher than 2%.
The report published today presents the main results of the 33rdround of the SAFE survey for the euro area. The survey was conducted between 20 November and 18 December 2024. Firms were asked about conditions over the three-month period from October to December 2024. The sample comprised 5,393 enterprises in the euro area, of which 4,997 (93%) had fewer than 250 employees.
For media queries, please contact Nicos Keranis nicos.keranis@ecb.europa.eu, tel.: +49 172 758 7237.
Notes

The report on this SAFE survey round, together with the questionnaire and methodological information, is available on the ECB’s website.
Detailed data series for the individual euro area countries and aggregate euro area results are available on the ECB Data Portal.

Chart 1
Changes in the terms and conditions of bank financing for euro area enterprises

(net percentages of respondents)

Base: Enterprises that had applied for bank loans (including subsidised bank loans), credit lines, or bank or credit card overdrafts. The figures refer to pilot 2 and rounds 30 to 33 of the survey (October-December 2023 to October-December 2024).
Notes: Net percentages are the difference between the percentage of enterprises reporting an increase for a given factor and the percentage reporting a decrease. The data included in the chart refer to Question 10 of the survey.

Chart 2
Changes in euro area enterprises’ financing needs and the availability of bank loans

(net percentages of respondents)

Base: Enterprises for which the instrument in question is relevant (i.e. they have used it or considered using it). Respondents replying “not applicable” or “don’t know” are excluded. The figures refer to pilot 2 and rounds 30 to 33 of the survey (October-December 2023 to October-December 2024).
Notes: The financing gap indicator combines both financing needs and the availability of bank loans at firm level. The indicator of the perceived change in the financing gap takes a value of 1 (-1) if the need increases (decreases) and availability decreases (increases). If enterprises perceive only a one-sided increase (decrease) in the financing gap, the variable is assigned a value of 0.5 (-0.5). A positive value for the indicator points to a widening of the financing gap. Values are multiplied by 100 to obtain weighted net balances in percentages. The data included in the chart refer to Questions 5 and 9 of the survey.

Chart 3
Expectations for selling prices, wages, input costs and employees one year ahead, by size class

Base: All enterprises. The figures refer to rounds 29 to 33 (April-September 2023 to October-December 2024) of the survey, with firms’ replies collected in the last month of the respective survey waves.
Notes: Weighted average euro area firm expectations of changes in selling prices, wages of current employees, non-labour input costs and number of employees for the next 12 months using survey weights. The statistics are computed after trimming the data at the country-specific 1st and 99th percentiles. The data included in the chart refer to Question 34 of the survey.

Chart 4
Firms’ median expectations for euro area inflation by size class

(annual percentages)

Base: All enterprises. The figures refer to pilot 2 and rounds 30 to 33 (October-December 2023 to October-December 2024) of the survey, with firms’ replies collected in the last month of the respective survey waves.
Notes: Survey-weighted median of euro area firms’ expectations for euro area inflation in one year, three years and five years. The statistics are computed after trimming the data at the country-specific 1st and 99th percentiles. The data included in the chart refer to Question 31 of the survey.

 
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Governor Hochul announced two major initiatives to expand affordable digital access across New York State.

Governor Kathy Hochul today announced two major initiatives to expand digital access across New York State. The first initiative — Affordable Broadband Act (ABA) — has officially taken effect, making New York State the first state in the nation to require internet service providers to offer qualifying low-income households broadband service at $15 per month for 25 Mbps service or $20 for 200 Mbps service. Second, the State is also launching its $15.5 million Digital Equity Program Capacity Grant to provide two-year grants supporting digital literacy training, device access and support services for underserved communities. Additionally, to maximize the impact of this law and alongside its $15.5 million Request for Applications, ConnectALL will invest $3 million to publicize the ABA benefit to eligible households, support them in signing up for the low-cost accessibility option, and help them connect to education programs and affordable devices, while the Public Service Commission works to ensure all internet service providers fully comply with the law.
“Digital connectivity isn’t a luxury — it’s a fundamental right that opens doors to economic mobility and opportunity,” Governor Hochul said. “With the Affordable Broadband Act and this $15.5 million investment in our ConnectALL initiative, we’re taking bold steps to bridge the digital divide creating affordable, accessible and equitable internet for all New Yorkers. These efforts will ensure that families and businesses across New York have the tools they need to thrive in today’s digital world, while empowering local communities to create innovative solutions for long-term digital equity.”
Empire State Development President, CEO and Commissioner Hope Knight said, “Digital access and literacy are the gateway to economic mobility in today’s economy. This combined approach of affordable broadband access and digital inclusion resourcing will empower local organizations to develop innovative solutions that break down barriers. Through ConnectALL, we’re creating a digital ecosystem where every community can fully participate in our state’s economic growth and prosperity.
New York State Public Service Commission Chair Rory M. Christian said, “Broadband is as vital a resource as running water and electricity to New York’s communities. This law is crucial in fostering economic equity, supporting educational opportunities and promoting public health, especially as more essential services, including remote education and health care, are increasingly moving online.”
State Senator Kristen Gonzalez said, “As Chair of the Internet and Technology Committee, I’m proud to see this investment in affordable broadband across our state. This brings us a step closer to securing the right to internet access for all New Yorkers. I commend Governor Hochul for her leadership on this vital issue, and support continued efforts to increase broadband speeds and further expand tech access in our state.”
Assemblymember Steve Otis said, “Congratulations to Governor Hochul and the team at ESD’s ConnectALL office on the launch of this Digital Equity Grant opportunity to support local programs that deliver digital training, device access and support services to those left out of today’s digital world. These grants will allow local providers of these programs to expand their work and bring more individuals across the digital divide. These programs have been a priority for the State Legislature and digital inclusion practitioners for several years. The grants are the next step in the implementation of ConnectAll’s highly regarded Digital Equity Plan.
First-in-the-Nation Affordable Broadband Act Guarantees $15 Broadband Access Statewide
The Affordable Broadband Act, enacted in 2021, recently cleared final legal hurdles when the United States Supreme Court denied further review of the law in December 2024, allowing implementation to proceed. The ABA requires internet providers serving over 20,000 customers to offer reduced-cost plans to qualifying households. The Public Service Commission (PSC) has reinstated temporary exemptions for small ISPs with fewer than 20,000 customers and will review new requests for exemptions based on economic hardship.
Under the ABA, qualifying New York households can access high-speed internet at two price points:

$15 per month for speeds of at least 25 megabits per second
$20 per month for high-speed service of at least 200 megabits per second

These discounted rates are permanent, though providers may adjust prices once every five years. Any price increase must be announced 30 days in advance to customers and regulators, and are limited to the lesser of either the most recent consumer price index change or a maximum of two percent per year.
New Yorkers can qualify for these low-income broadband plans if they participate in any of the following programs:

Free or reduced-priced lunch through the National School Lunch Program
Supplemental Nutrition Assistance Program
Medicaid
Senior citizen rent increase exemption
Disability rent increase exemption
Affordability benefit from a utility

ConnectALL’s commitment to public awareness and enrollment supports its adoption. As a first step in the implementation process, the Public Service Commission has restarted a process, which had been stayed by court order, to implement the ABA law, and its staff will review requests for exemptions from small ISPs that have fewer than 20,000 customers and can show economic hardship. Today, the PSC reinstated temporary exemptions previously provided to small ISPs that requested such relief in May 2021. With the resolution of the litigation, providers with more than 20,000 customers will need to comply with the ABA’s directives.
ConnectALL Digital Equity Program Capacity Grant: Applications Now Open
Empire State Development’s ConnectALL Office is accepting applications for the $15.5 million Digital Equity Program Capacity Grant. This competitive initiative will provide two-year grants to organizations and partnerships working to bridge the digital divide through high-quality digital literacy training, device access programs, digital privacy skills development and inclusive support services.
The RFA is funded through the National Telecommunications and Information Administration’s State Digital Equity Capacity Grant Program and aligns with New York State’s Digital Equity Plan. The funding follows NTIA’s approval of New York State’s Digital Equity Capacity Grant Application in October 2024, which secured nearly $36.9 million in federal funding. ConnectALL aims to double the capacity of New York State’s digital equity ecosystem by 2035. Apply for the Digital Equity Program Capacity Grant on Broadband’s website.
Proposals must be submitted by 11:59 PM ET on Monday, March 24 2025. To help organizations prepare their applications, ConnectALL will host an informational webinar on January 30, 2024. The complete RFA and webinar registration information are available at broadband.ny.gov.
Governor Hochul’s ConnectALL Initiative
Governor Hochul has made expanding broadband access a cornerstone of her administration’s efforts to create a more equitable New York. Through the ConnectALL initiative, New York State is investing $1 billion to transform the State’s digital infrastructure, enhance competition among providers and ensure that every New Yorker has access to reliable, affordable high-speed internet. To date, ConnectALL has overseen the successful launch and implementation of several programs to advance broadband access, including:

The Digital Equity Program will invest $50 million, including a federal allocation of at least $37 million to implement the New York State Digital Equity Plan to close the digital divide. The Plan outlines New York’s statewide strategy to increase its capacity to improve digital literacy and digital job readiness skills, facilitate access to affordable internet and devices, enhance digital privacy and safety, and make government services more accessible through the internet.

The Affordable Housing Connectivity Program is investing $100 million to bring new broadband infrastructure to serve low income households in affordable and public housing. The Program has so far awarded over $13 million and secured broadband service at $10 per month for over 14,000 homes in Bronx, Erie, Monroe and New York counties. The program is currently accepting applications from internet service providers and requests to participate from housing owners and public housing authorities.
The ConnectALL Deployment Program will fund internet service providers to reach unserved and underserved locations. ConnectALL released the program’s Request for Applications for about $664 million in December 2024, drawing on federal funding from the Broadband Equity, Access, and Deployment Program, as described in the ConnectALL Broadband Deployment Initial Proposal.
The Municipal Infrastructure Program has awarded over $214 million for the construction of publicly-owned broadband infrastructure and delivery of affordable broadband service across the State. The program, primarily funded by the U.S. Department of the Treasury under the American Rescue Plan’s Capital Projects fund, facilitates a variety of models of municipal broadband, public-private partnerships, and open access networks to provide New Yorkers with affordable, high-quality service options. The Beta ConnectALL Projects Dashboard provides details on projects funded by the Municipal Infrastructure Program.

 
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The FSB’s work programme for 2025 addresses challenges including digitalisation, climate change, and the consequences of shifts in the macroeconomic and interest rate environment.

In line with the FSB’s mission to promote international financial stability, our priorities for 2025 reflect challenges that are global in nature and affect the financial system as a whole, such as digitalisation and climate change. Work will continue in key areas such as non-bank financial intermediation and cross-border payments. The FSB will keep monitoring emerging financial vulnerabilities and continue its work to implement agreed reforms and evaluate their effects with a view to maintain the resilience of the global financial system.
Priority areas of work for 2025 include:

Supporting global cooperation on financial stability
Enhancing the resilience of non-bank financial intermediation (NBFI), while preserving its benefits
Harnessing the benefits of digital innovation while containing its risks
Implementing the systemically important financial institution (SIFI) framework
Addressing financial risks from climate change
Enhancing cross-border payments
Completing resolution reforms
Monitoring and evaluating implementation of agreed reforms

Ahead of the G20 Leaders Summit in November 2025, the FSB will publish its comprehensive Annual Report on its work to promote global financial stability.

 
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Today in Davos, President von der Leyen launched the Global Energy Transition Forum, together with the Executive Director of the International Energy Agency, Fatih Birol. 

At COP28, the world rallied behind the targets of tripling renewable energy and doubling energy efficiency by 2030. The deadline is approaching fast. 

The Forum brings together partners from across the world, from Brazil, Canada, and the Democratic Republic of the Congo, to Kenya, Peru, South Africa, the United Arab Emirates, the United Kingdom, and many others, as well as companies and investors, who all share the same objective: maintaining the momentum on the clean energy transition, delivering flagship projects, and unlocking more investment. 

No one can be left behind in the global clean energy transition. In her speech, President von der Leyen also highlighted the need for a collective effort to boost Africa’s renewable energy production. Despite holding 60% of the world’s best solar resources and aiming to increase its renewable energy capacity fivefold by 2030, the continent currently gets less than 2% of global clean energy investments.  

The President will also tackle this issue at a dinner hosted tonight in Davos, on the theme of the campaign she launched together with President Ramaphosa of South Africa, ‘Scaling up Renewables in Africa.’ 

The President’s speech at the launch event is available online. More information on the campaign is available online. 

 
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Thank you, President Metsola, dear Roberta,
Mister President of the European Council, dear António,
Honourable Members,
It is a pleasure to join this Plenary debate with President Costa for the first time. And I would like to start by thanking you, dear António, for the excellent cooperation between us in the first weeks of our common mandate. We are only three weeks into 2025, but the glimpse is already there of the change that is coming to global politics. We have entered a new era of harsh geostrategic competition. We are dealing with continent-sized powers. And they engage with each other based mostly on interests. This new dynamic will dominate more and more the relations between global actors. The rules of engagement are changing. Some in Europe may not like this new reality, but we must deal with it. Our values do not change. But to defend them, some things must change.
First of all, we have work to do here at home. If we want to protect our interests and uphold our values, we must also be economically strong. Europe has, as you said António, all the instruments to successfully play its role in the concert of powers. We have a private sector with a long tradition of innovation. We have a top-class workforce – highly educated. We have a unique social infrastructure to protect people from the great risks of life. And we have a huge Single Market of 450 million people. That is our safe harbour in rough waters, and our strongest leverage in tough negotiations. But our Union and our Single Market do need attention and care. For us, Europeans, the global race begins at home. And this is exactly what we have been discussing in the European Council. And all Member States agree on this. It is the core of the Budapest Declaration on competitiveness that we agreed on during the Hungarian Presidency. And now under the Polish Presidency, this consensus must be implemented. This is why next week, we will present our new Competitiveness Compass, which turns the excellent Draghi report into action. It will be the North Star of this new Commission and drive our work for the next five years. We are setting three goals: First, closing the innovation gap with our competitors. Second, a joint roadmap for decarbonisation and competitiveness. And third, strengthening our economic resilience and security. Let me give you a few insights on each.
On innovation, Draghi’s analysis is very clear. There is a vicious cycle of low investment and low innovation. And this has led, for instance, to a slower uptake of digital technologies here in Europe. So how do we break this cycle? Public investment must definitely play a role. For this to be effective, the coordination between the European level and the Member States needs to improve. In particular in a few strategic areas where we really have to focus on, like AI, quantum and biotechnologies just to name a few – but we have to focus on that. We have to invest there, Member States have to chip in, but we all know that public funding can never be sufficient. To boost innovation at the right speed and scale, private capital also has to come in. The good news is that European companies are already ramping up their investments in innovation. Last year, Europe’s industry increased its R&D investment by almost 10%. For the first time in ten years, that is more than in both the US and China. But we have to catch up a lot. Thanks to these efforts, we are back in second position globally in terms of total private R&D investment. But again, we must coordinate, we must concentrate, and we must focus on the crucial areas. For that to happen and to be successful, we need a conducive capital market for our companies and specifically for our start-ups. And to support this, we will be launching a European Savings and Investment Union. We will create new European saving and investment products, new incentives for risk capital, and a new push to ensure the seamless flow of investment across our Union. We must mobilise more capital, to let made-in-Europe and risk-taking innovation thrive here.
Second, I would like to focus on the issue of energy prices. Energy prices in Europe are still structurally higher than in the United States or China and vary significantly within the European Union. So we must bring them down, while we complete the phase-out from Russian fossil fuels. Both objectives are important, and they should go hand in hand. How can we achieve this? Not only must we continue to diversify our energy supplies, which we have done over the last two years. We will also have to invest in next-generation clean energy technologies, because this is energy made in Europe, so it gives us independence. Take the topics of fusion for example, or enhanced geothermal, or solid-state batteries just to name a few. We must also mobilise here more private capital to modernise our grids and storage infrastructure. So again, the topic of a deep and liquid capital market. We must remove any remaining barriers to our Energy Union. And we must better connect our clean and low-carbon energy systems. All of this, and much more of course than I mentioned today, will be part of a new affordable energy plan that we will present in February.
My third and final point is how to bolster our economic resilience and security. Global powers are now vying for access to raw materials and vital supply chains. In the last years, we have concluded more than 35 new agreements with partners across the world, precisely to ensure our access to raw materials and clean hydrogen for example, and to diversify some of our clean-tech supply chains. This work will be even more crucial in the years ahead. As you know, since the start of this mandate, in less than two months, we have already concluded three partnership agreements with Mercosur, Mexico and Switzerland. And last Monday, we relaunched our negotiations with Malaysia. These partnerships address some of our key economic interests. They open new and dynamic markets for us. They protect our distinctive products, with the geographical indications, and key sectors like agriculture. And they guarantee our access to critical minerals and clean energy. So widening our network of partnerships was a crucial recommendation of the Draghi report. And we work with Parliament and Council to move these deals forward.
This new engagement with countries across the world is not only an economic necessity, but it has to be a message to the world. It is Europe’s response to rising global competition. We want more cooperation with all who are open for it. And this of course includes our closest partners. I think, of course, of the United States of America. No other economies in the world are as integrated as Europe and the United States. Millions of jobs on both sides of the Atlantic depend on our trade and investment. The trade volume between us is EUR 1.5 trillion. But beyond these numbers there is so much more. Friendships, family ties, common history and culture. This is something we will always keep in mind as we engage with the new American administration. Our first priority will be to engage early, discuss common interests, and be ready to negotiate. And when the time to negotiate comes, we will be pragmatic in seeking common ground. But I also want you to know that we will always stand by our European principles.
Thank you, and long live Europe.
 
Compliments of the European CommissionThe post European Commission | Speech by President von der Leyen at the European Parliament Plenary on the conclusions of the European Council meeting of 19 December 2024 first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.