The Commission intends to issue up to €90 billion of EU Bonds in the first half of 2025 (H1), from January to June 2025. The Commission’s funding plan for H1 2025 continues the 2024 issuance programme, during which the EU raised €138 billion in long-term funds.
Funds raised by the European Commission through EU-Bond issuances continue to drive the EU’s recovery from the coronavirus pandemic, strengthen the resilience of its economy, and support the EU’s neighbouring partners, notably Ukraine and the Western Balkans.
These wide-ranging borrowing operations will strengthen the EU Bond market while guaranteeing continuous support to policies funded through EU-Bond issuances. Besides long-term funding operations, the Commission will continue issuing short-term EU-Bills to complement its financial operations.
2024 marked the highest annual issuance volume ever executed by the EU, in line with the announced planning. Additionally, in 2024, the EU became the fifth largest issuer of green bonds globally with over €68 billion outstanding in NextGenerationEU (NGEU) Green Bonds, and is now on track to become the largest global green bond issuer.
The recently published NGEU Green Bond Impact and Allocation report confirmed the EU’s role as a global leader in sustainable finance. As demonstrated in the report, the full implementation of green investments financed through NGEU Green Bonds could result in a reduction of 55 million tons of greenhouse gas (GHG) emissions in the EU annually, equivalent to 1.5% of all GHG emissions.
For 2025 as whole, the Commission anticipates issuing approximately €160 billion in EU Bonds, ensuring consistent support for its borrowing-based programmes.
Background
On the basis of mandates under several borrowing programs, the Commission borrows funds on international capital markets on behalf of the EU and disburses them to Member States and third countries. Under the EU Treaties, all Member States are legally obligated to contribute to the EU budget, which guarantees EU borrowing.
Instead of issuing bonds for specific programs with separate labels, in 2023 the Commission began issuing EU-Bonds under a single brand (unified funding approach). The allocation of proceeds from these single-branded bonds is based on processes outlined in the applicable agreements for the relevant programs.
The outstanding stock of EU-Bonds now stands at over €580 billion, with more than €420 billion under the EU’s unified funding approach. The successful execution of EU issuances has been greatly aided by the growing market acceptance of EU-Bonds as large, liquid, and high-quality assets. In October 2024, the EU took another significant step to support the market ecosystem for EU-Bonds and secondary market liquidity with the opening of the repurchase (repo) facility, which helps EU Primary Dealers post prices in EU-Bonds in support of their liquidity.
By early December 2024, a total of almost €330 billion of funds raised from borrowing operations have been disbursed under the NGEU programme. 2024 also saw borrowing operations financing Ukraine under the Ukraine Facility (over €10 billion of funds were disbursed until 2024), as well as the approval of an exceptional Macro-Financial assistance (MFA) loan by Member States within the agreement with G7 partners. Additionally, new policies funded via the issuance of EU-Bonds were agreed upon to support candidate States under the Western Balkan Investment Facility and neighbouring countries (such as Egypt and Jordan).
The EU has also continued issuing EU-Bills on a regular basis, with maturities of three and six months, complementing long-term borrowing activities.  The amount of short-term debt now stands at €25.3 billion.
While new net debt issuance for the largest borrowing-based programme – NGEU – will conclude by the end of 2026, the combination of refinancing maturing debt and bond-financing for other policies, will ensure a strong EU market presence in the foreseeable future. The Commission will also continue issuing NGEU Green Bonds, which currently total €68 billion, to fund the green component of the Recovery and Resilience Facility.
For more information, please contact:

Balazs Ujvari, Spokesperson, EUROPEAN COUNCIL

Francisca Marçal Santos, Press Officer, EUROPEAN COUNCIL

 
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The Council today reached a political agreement on a new directive paving the way for the introduction of an electronic tax certificate for VAT exemptions.
“As part of the EU’s efforts to update VAT systems, I’m glad that after the VIDA package last month, we are taking another modernising step with this agreement on the electronic VAT exemption certificate, that will put an end to paper certificates to be signed by hand.”

– Mihály Varga, Hungarian minister for finance

The directive will provide for an electronic certificate to replace the existing paper certificate that is used when goods are to be exempt from VAT, for example because they are imported for embassies, international organisations or armed forces. The exact electronic format, including the necessary IT specifications, will be discussed in expert groups and determined in Commission implementing acts.
In a transitional period member states will be able to use both electronic and paper versions.
Member states brought a number of amendments to the Commission’s initial proposal. In particular they limited the scope of the mandatory use of the electronic VAT exemption certificate to situations where two member states are involved and the exemption is not granted by way of a refund.
The Council also added to the Directive a number of key elements of the future electronic certificate that the Commission will take into account when designing the format, in the text of the directive. Furthermore, the Council shortened the transition period, originally planned to last 4 years (2026-2030), to just 1 year (2031-2032). The delayed starting date should help tax authorities spread in time the necessary IT developments, which will coincide with the significant investments needed to implement the VIDA package.
Next steps
The agreements will now go through technical and linguistic check before being presented to the Council for formal adoption. The texts will then be published in the EU’s Official Journal and enter into force.
Background
On 8 July 2024, the Commission published two proposals with the aim of replacing the current paper VAT exemption certificate with an electronic VAT exemption certificate:

a proposal for a Council Directive amending Directive 2006/112/EC as regards the electronic value added tax exemption certificate (the Council Directive); –
a proposal for a Council Implementing Regulation amending Implementing Regulation (EU) No 282/2011 as regards the electronic value added tax exemption certificate (the Council Implementing Regulation).

The proposal to amend the VAT Directive creates the legal conditions for the development of the electronic certificate by the Commission through implementing measures, while the proposal to amend the Implementing Regulation provides for the alternative use of both paper and electronic certificates during a transition phase.
The Council today agreed on both these proposals. The European Parliament was consulted on the proposal for a directive and delivered its opinion on 13 November 2024.
For more information, please contact:

Johanna Store, Press officer, COUNCIL OF THE EU

 
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New EU cybersecurity rules take effect today, which will make everything from baby-monitors to smart watches safer. With the entry into force of the Cyber Resilience Act, specific mandatory cybersecurity requirements will now apply to all products connected directly or indirectly to another device or network (except for specified exclusions). These requirements will be imposed on manufacturers and retailers.
The Act will guarantee

harmonised rules when bringing to market products or software with a digital component
a framework of cybersecurity requirements governing the planning, design, development and maintenance of such products, with obligations to be met at every stage of the value chain
an obligation to provide duty of care for the entire lifecycle of such products
In practice this means that manufacturers will have to place compliant products on the EU market by 2027. These products will bear the CE marking to indicate they comply with the new standards. By requiring manufacturers and retailers to prioritise cybersecurity, customers and businesses will be empowered to make better-informed choices.

The EU works on various fronts to promote cyber resilience. Underpinning this work is the EU Cyber Security Strategy which was presented at the end of 2020. It covers the security of essential services such as hospitals, energy grids and railways, as well as of the ever-increasing number of connected objects in our homes, offices and factories. The European Union Agency for Cybersecurity (ENISA) is the EU agency dedicated to achieving a high common level of cybersecurity across Europe.
Cybersecurity and enforcing EU digital laws will continue to be important throughout the 2024-2029 Commission mandate. The Commission will soon propose a European action plan on the cybersecurity of hospitals and healthcare providers to safeguard healthcare systems.
 
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EIB Group offers €3 billion in loans for agriculture and other bioeconomy activities across Europe with focus on young farmers, gender equality and green investments
EIB Group also working with European Commission to develop new forms of agricultural insurance and de-risking schemes against extreme weather events
New initiatives form part of EIB Group’s plan for agriculture and bioeconomy in the context of Strategic Dialogue on the future of EU agriculture

European Investment Bank (EIB) Group President Nadia Calviño has announced a €3 billion financing package for agriculture, forestry and fisheries across Europe along with moves to bolster farm insurance. The EIB Group loans will be matched by other participating financial institutions, unlocking close to €8.4 billion of long-term investments for the bioeconomy sector.
The support marks the largest EIB-backed financing initiative for European agriculture and will be directed towards small and medium-sized enterprises (SMEs) as well as mid-caps. It will be spread over the next three years, with the first loans due to be signed in the first half of 2025.
A share of the loans will be earmarked for young or new farmers because they generally have more trouble obtaining traditional bank financing. The support will also target female farmers to overcome a gender imbalance in agriculture as well as green investments to help farmers make the green transition a success, in support of  the European Union’s sustainability goals.
Commissioner for Agriculture and Food, Christophe Hansen, said: “I welcome the strong commitment of EIB in favour of the EU farming community, especially for young farmers and women farmers. Bridging the financing gap in the sector is vital, and with the EIB Group’s support we are giving agriculture the tools to thrive and grow. We will closely work with the EIB to make sure that this financing opportunity is taken up on the ground and delivers results. Together, we’re securing a sustainable future for the sector.”
“Farming is a vibrant part of European life, and a productive part of our economy. The EIB Group financing announced today will help to support a new generation of farmers, including more women in the sector,” EIB Group President Nadia Calviño said today at the EU Agri-Food Days conference in Brussels. “Our investments are a part of a holistic approach, working with the European Commission, to support innovation and help build the sustainability and resilience of small businesses involved in every part of the broader bioeconomy and agriculture sectors.”
The new financing aims to spur investments in a range of activities including soil health, digital tools, water management and climate resilience. It is also intended to bolster training in sustainable farming practices and the purchase of land by young or new farmers, helping boost the 12% share of Europe’s farmers who are under the age of 40 and the 31.6% share who are women.
“We are stepping up our support for agriculture and the bioeconomy using a wide array of innovative tools,” said EIB Vice-President Gelsomina Vigliotti. “Working with partners along the whole value chain, we aim to help meet agriculture’s triple challenge of producing affordable food, protecting farm production and livelihoods in the face of climate change and preserving the environment and natural resources.”
To ensure favourable loan terms, the package allows for the financing to be complemented by interest rate subsidies or capital grants under the EU and national budgets. Participating financial institutions will also gain extra advisory support from the Green Gateway programme and an enhanced Green Eligibility Checker – an online method to assess the eligibility and climate impact of green investment projects.
As part of its increased support for the bioeconomy, the EIB Group is exploring ways to improve agricultural insurance against the more frequent incidents of extreme weather including floods and droughts. It will work with the European Commission, the insurance industry and other stakeholders to examine options for enhancing EU level support of current insurance schemes coupled with pan-European measures to accelerate investment in climate adaptation or to provide more liquidity and credit risk coverage for companies affected by climate disasters.
The new initiatives are part of an action plan by the EIB Group within the context of a “Strategic Dialogue on the future of EU agriculture” launched by European Commission President Ursula von der Leyen in January 2024. The Dialogue is a new forum that aims to develop a joint understanding and shape a shared vision for the future EU farming and food system.
The EIB Group will work closely with the European Commission to enact the plan with a view to maximise public-investment sources while leveraging and de-risking private capital in the agricultural sector.
The EIB Group action plan also includes:

A venture debt programme, which will provide loans to innovative companies along the agricultural value chain working on, for example, new technologies, the development of payment for ecosystem services or sustainable biofuel and biomaterial technologies.
Guarantee schemes possibly leveraging the European agricultural fund for rural development (EAFRD) and/or national resources under the Common Agricultural Policy Strategic Plans
A private equity programme to back European fund managers that target European innovative technologies and solutions for the future of food (agritech, foodtech), and to attract private investors to the sector.
A broadened scope of direct lending to medium-sized and large counterparts to include not only cooperatives but also other farmer organisations or entities such as irrigation communities, associations for dam and dike maintenance or forestry maintenance.
Increased support to infrastructure in rural areas, such as road networks, education, and agricultural water management.

Background information
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.
The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.
All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support  €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.
Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower. This underscores the Bank’s commitment to fostering inclusive growth and the convergence of living standards.
The Green Gateway advisory programme: financed under the InvestEU Advisory Hub and managed by EIB Advisory, the Green Gateway programme provides advisory services aim to strengthen the skills, procedures and operational tools of EIB Group financial intermediaries to promote the planning, selection and financing of projects and enterprises with positive environmental impact. It also offers an online portal that includes guidelines, case studies and other useful information on green investment. The portal provides access to the Green Eligibility Checker – an online tool making it possible to assess the eligibility and climate impact of green investment projects using EIB financing.
Launched in 1962, the EU’s common agricultural policy (CAP) is a partnership between agriculture and society, and between Europe and its farmers. It aims to support farmers and enhance agricultural productivity to ensure a stable supply of affordable food while safeguarding their livelihoods. The CAP also focuses on tackling climate change, promoting the sustainable management of natural resources, and preserving rural areas and landscapes across the EU. Additionally, it seeks to sustain the rural economy by fostering jobs in farming, agri-food industries, and related sectors. Through the CAP funds, the European Commission ensures that funding for the common agricultural policy is fair, ample, and transparent.
For more information, please contact:

Maciej Berestecki, Spokesperson, EUROPEAN COMMISSION

Thérèse Lerebours, Press Officer, EUROPEAN COMMISSION

 
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The European High Performance Computing Joint Undertaking (EuroHPC)  has selected seven proposals to establish and operate the first AI Factories across Europe. This is a major milestone for Europe in building a thriving ecosystem to train advanced AI models and develop AI solutions. The EU is now one step closer to realising President Ursula von der Leyen’s commitment to setting up the first AI Factories.
The first AI Factories will represent a €1.5 billion investment, combining national and EU funding. Half of this amount will be funded by the EU through the Digital Europe Programme for AI infrastructure and Horizon Europe for AIF services. The selected AI Factories will be hosted at leading research and technology hubs across Europe:

Barcelona, Spain: “BSC AIF” at the Barcelona Supercomputing Centre
Bologna, Italy: “IT4LIA” at CINECA – Bologna Tecnopolo
Kajaani, Finland: “LUMI AIF” at CSC
Bissen, Luxembourg: “Meluxina-AI” at LuxProvide
Linköping, Sweden: “MIMER” at the University of Linköping
Stuttgart, Germany: “HammerHAI” at the University of Stuttgart
Athens, Greece: “Pharos” at GRNET

The seven AI Factories involve 15 Member States and two EuroHPC participating States. Portugal, Romania and Türkiye have joined the BSC AIF; Austria and Slovenia have joined the ITA4LIA; and Czechia, Denmark, Estonia, Norway and Poland have joined the LUMI AIF.
Five of the selected hosting sites will deploy brand-new world-class AI-optimised supercomputers, namely in Finland, Germany, Italy, Luxembourg, and Sweden. The AI Factory in Spain will result from the upgrade of the existing EuroHPC system, MareNostrum 5. In Greece, an AI Factory will be established and operated, associated with the DAEDALUS supercomputer, a EuroHPC supercomputer currently under deployment in Greece. The AI Factories in Spain and Finland will also feature an experimental platform, providing a cutting-edge infrastructure for developing and testing innovative AI models and applications, and fostering collaboration across Europe.
These AI Factories will more than double EuroHPC computing capacity, addressing specific need and boosting the European capabilities in AI. They will be deployed in 2025-2026.
 
Background
AI Factories will bring together the key ingredients that are needed for success in AI: computing power, data, and talent. They will provide access to the massive computing power that start-ups, industry and researchers need to develop their AI models and systems. For example, European large language models or specialised vertical AI models focusing on specific sectors or domains.
The AI Factories will boost new industrial uses of AI and give the opportunity for AI start-ups and SMEs to grow in key strategic sectors for the EU, including health and life sciences, manufacturing, climate and environment, finance, automotive and autonomous systems, cybersecurity, agri-tech and agrifood, education, arts and culture, green economy, and space.
AI ecosystems are expected to develop centered around the EuroHPC supercomputers, linking universities and academia, supercomputing centres, industry and financial actors. This will connect excellence and talent with the financial opportunities needed for business development and scale up.
 
Next Steps
Other Member States have shown interest in either joining the newly selected AI Factories or creating new AI Factories. The next cut-off date for Member States to submit further proposals on AI Factories is 1 February 2025.
For more information, please contact:

Thomas Regnier, Spokesperson, EU COMMISSION

Nika Blazevic, Press Officer, EU COMMISSION

 
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“Since I became Governor, I’ve been laser focused on putting more money in the pockets of working New Yorkers, and that starts with making sure everyone can access a good paying job. Thanks to the Biden-Harris Administration’s CHIPS & Science Act, our advanced manufacturing sector is roaring back to life. And because of the nation-leading Green CHIPS Act I signed into law, these chips won’t just be made in America –– they’ll be made right here in New York. This is all possible because of the unprecedented partnership between New York State and our federal partners, including President Biden, Secretary Raimondo, Senator Schumer and Senator Gillibrand.
“From Micron’s investment in Central New York, to the Buffalo-Rochester-Syracuse (NY SMART I-Corridor) Tech Hub and Albany’s brand-new designation as a National Semiconductor Technology Center facility, we are building a semiconductor highway along the I-90 corridor from Albany to Buffalo bringing with it good paying jobs and transforming our economy. By 2030, 1 in 4 U.S.-made chips will be produced in Upstate New York, making the region the country’s leading hub for semiconductor manufacturing. New York is officially Chips country, but the best is yet to come.
“Growing up in Western New York, I’ve seen how the decline of manufacturing hollowed out previously vibrant communities across Upstate. We’re reversing that trend because of smart, targeted investments that will create tens of thousands of jobs and billions in economic activity. Today’s finalized agreement between Micron and the Biden-Harris Administration is just the beginning of what we’ll accomplish together.”
 
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In this week’s Roar: Pushing for the resumption of shipping in the Red Sea, the ILA and USMX are back at it, a potential limiter to air capacity, the November PMI, and events that shaped the industry in 2024.
The EU’s naval commander is pushing for shipping activity to resume in the Red Sea, saying that under Operation Aspides—and with proper risk management—it would be possible for 15% of ships to return immediately. Part of his argument is that rerouting away from the region undermines the maritime industry’s resilience, adding that coordinated international efforts are needed to maintain secure shipping lanes. One of his recommendations is to transit at night with the Automatic Identification Systems turned off, hindering visual targeting.
In a story that still demands attention, the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) are back at it—fighting over a new contract for East and Gulf Coast ports. Things remain at a standstill as the ILA, which opposes job-replacing technology, halted negotiations, accusing USMX of trying to force automation technology language into the contract. The USMX’s stance is that modernization is necessary to remain competitive and efficient. The January deadline for the resumption of the strike still looms and is ticking closer.
US air traffic control (ATC) restrictions due to a shortage of controllers are impacting aviation expansion. With air cargo demand (and rates) already elevated, there is fear of a long term impact on air freight capacity. Most impacted right now are commercial flights, but off-peak takeoffs and landings of passenger planes affect carriers’ freighters which are generally given lower priority. United CEO Scott Kirby isn’t expecting a speedy fix, predicting years-long controller scarcity at a recent industry event.
The US manufacturing Purchasing Managers’ Index (PMI) for November 2024 shows near stabilization following months of contraction, registering 48.4%. Some factors include improved demand, with new orders reaching 50.4%, and companies hiring more staff, pushing employment up 3.7%. Production is also up slightly at 46.8%. Overall, manufacturers seem positive, despite the potential for increased tariffs causing uncertainty in the industry.
With 2024 almost behind us, let’s look at some events that shaped the year. The Baltimore Bridge collapse highlighted labor challenges and the vulnerability of the supply chain’s infrastructure. Amazon’s expansion into air cargo and UPS’s USPS contract made everyone aware of the growing influence that e-commerce giants have on the industry. And issues like the Red Sea crisis and the impact of potential tariff increases have emphasized the need for resilience and diversification within the supply chain.
For the rest of the week’s top shipping news, check out the article highlights here.
 
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At the initiative of the Hungarian presidency, today the Council approved conclusions on the Commission’s White Paper titled ‘How to master EU’s digital infrastructure needs’.  Extensive transformations, driven by rapid technological progress, have been shaping the electronic communications sector, as well as the whole digital landscape in the past decade. The cross-sectoral nature of the digital transition also signifies that its impact extends well beyond the digital realm, touching upon environmental and societal aspects, as well.
“Today’s comprehensive set of conclusions provide a clear political guidance on what Europe needs in terms of digital infrastructure in the coming years to improve its competitiveness and address the current and future challenges.”
Zoltán Kovács, Hungarian minister of state for international communication and relations
In light of the Commission’s White Paper and the recent Draghi and Letta reports, the Council conclusions aim to take stock of the progress made at European level, with particular attention to digital infrastructures, while identifying the numerous challenges that still lie ahead. The conclusions also aim to convey a comprehensive set of messages on fostering innovation, ensuring security and resilience, promoting fair competition, and driving investments in digital infrastructures to advance the EU’s competitiveness and digital transformation goals.
The text of the conclusions touches upon important questions, such as the possible convergence of cloud and telecoms in the digital ecosystem – where the significance of an impact assessment is stressed – or market consolidation, where the need for effective competition in the relevant market is highlighted.
Regulatory matters are also covered in the set of conclusions. Maintaining the possibility of ex-ante control on certain access markets, as well as taking into account member states’ specificities, competition, and consumer welfare in the context of the migration from copper to fibre, are emphasised in the text.
 
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Contribution by Christine Lagarde, President of the ECB to The Economist
A fragmented financial infrastructure means that Europe gets less bang for its euro
Europe is not short of ideas, innovators or savings. Europeans save more of their income than Americans, and their share in global patent applications is close to that of the United States. But Europe often struggles to turn ideas into new technologies that can drive growth. One reason is that it is much less able than the United States to channel its significant savings into scaling up innovation.
In response, the EU has spent years trying to build a “capital markets union”. Since 2015, there have been more than 55 regulatory proposals and 50 non-legislative initiatives. But a broad agenda has led to little progress. Europe must refocus, exposing the key blockages in the financing pipeline and identifying a smaller number of solutions with the highest return. Three stand out today.
First, Europe’s savings are not entering capital markets in sufficient volume. Europeans hold one-third of their financial assets in cash and deposits, compared with one-tenth in America. If EU households were to align their ratio of deposits to financial assets with that of American households, a stock of up to €8trn ($8.4trn) could be redirected into long-term, market-based investments.
A barrier to such diversification is the retail investment landscape in Europe. Many households face few suitable investment options and high fees. Retail investors in European mutual funds, for example, pay almost 60% more in fees than their American counterparts.
A standardised, EU-wide set of savings products—a “European savings standard”—is the best way to move forward. Such products would be accessible and transparent, offering a range of investment options structured according to clear criteria. And they would be affordable, because there would be less red tape, more comparability and more competition. The attractiveness of the European standard would also be enhanced by harmonising tax incentives across countries.
Second, when savings do reach capital markets, they are not expanding throughout Europe. That limits the ability to build up large pools of capital to finance transformative technologies. For example, more than 60% of households’ equity investment takes place within their own country.
These national silos are sustained by an extraordinarily fragmented set of financial market infrastructures. The EU boasts 295 trading venues, 14 central counterparties and 32 central securities depositories (CSDs). In the United States, there are only two securities clearing houses and one CSD.
A patchwork of different corporate, tax and securities laws hinders consolidation, exacerbated by national authorities mandating the use of national CSDs for certain transactions. Europe’s approach to overcome these barriers has been incremental harmonisation. But progress is much too slow.
Europe needs a change in method to bypass entrenched vested interests. That is why last year I called for a “European SEC” to provide enforcement of a common rulebook across the EU as the Securities and Exchange Commission does in America. But alongside this goal, there are complementary options Europe can pursue.
One would be a two-tier approach, as Europe already has for competition enforcement and banking supervision. Financial-services providers that fulfil certain criteria—such as size or cross-border activity—would fall under European supervision. National authorities would continue to supervise smaller national players.
Another option would be to use “28th regimes” in areas where progress has stalled—a special EU legal framework with its own regulations sitting alongside those of the 27 member states. For example, we could envisage a 28th regime for issuers of securities providing unified corporate and securities law.
Third, once savings have been allocated by capital markets, they are not exiting towards innovative companies and sectors, owing to an underdeveloped ecosystem for venture capital (VC) in Europe. VC investment is only around one-third of American levels, and Europe is largely reliant on American VCs to fund innovation. More than 50% of late-stage investment in European tech comes from outside.
Europe should aspire to have American levels of VC, but it will not happen overnight. In the meantime, the EU needs to use all the flexibility in its financial system to help plug the gap.
Given that institutional investors have long investment horizons, the EU’s regulatory regime should allow them to contribute more to long-term growth. For example, EU pension funds allocate just 0.01% of total assets to European VC, a fraction of what their American counterparts invest in American VC.
The EU should also fully harness the potential of the European Investment Bank to pool risks and crowd private capital into European VC. And it should explore how to support innovation not only through equity, but also through debt. Developing securitisation in Europe could allow banks to free up balance-sheet space and play a greater role in financing innovation.
Progress in these three areas will be self-reinforcing. More high-growth companies will mean higher valuations, greater liquidity in EU markets and higher returns for savers. But it will require a change of approach from taking a large number of small steps to a small number of large ones—and choosing those that are most feasible and that will make the biggest difference.
This contribution is based on the speech held by President Lagarde at the European Banking Congress on 22 November 2024.
 
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The global economy is projected to remain resilient despite significant challenges, according to the OECD’s latest Economic Outlook. The Outlook projects global GDP growth of 3.3% in 2025, up from 3.2% in 2024, and 3.3% in 2026.
Inflation in the OECD is expected to ease further, from 5.4% in 2024 to 3.8% in 2025 and 3.0% in 2026, supported by the still restrictive stance of monetary policy in most countries. Headline inflation has already returned to central bank targets in nearly half of the advanced economies and close to 60% of emerging market economies.

Labour markets have gradually eased, yet unemployment remains low by historical standards. Strong nominal wage gains and continued disinflation have bolstered real household incomes. However, private consumption growth remains subdued in most countries, reflecting weak consumer confidence. Global trade volumes are recovering, with a projected increase of 3.6% in 2024.
Growth prospects vary significantly across regions. GDP growth in the United States is projected to be 2.8% in 2025, before slowing to 2.4% in 2026. In the euro area, the recovery in real household incomes, tight labour markets and reductions in policy interest rates continue to drive growth. Euro area GDP growth is projected at 1.3% in 2025 and 1.5% in 2026. Growth in Japan is projected to expand by 1.5% in 2025 but then decline to 0.6% in 2026. China is expected to continue to slow, with GDP growth of 4.7% in 2025 and 4.4% in 2026.
“The global economy has proved resilient. Inflation has declined further towards central bank targets, while growth has remained stable,” OECD Secretary-General Mathias Cormann said. “Significant challenges remain. Geopolitical tensions pose short-term risks, public debt ratios are high and medium-term growth prospects are too weak. Policy action needs to safeguard macroeconomic stability – through monetary policy easing that is carefully calibrated to ensure inflationary pressures are durably contained and through fiscal policy that rebuilds fiscal space to preserve room to meet future spending pressures. To boost productivity and the foundations for growth, we must enhance education and skills development efforts, undo overly stringent constraints to business investment and successfully tackle the structural increase in labour shortages.”
The Outlook highlights persistent uncertainty. An intensification of the ongoing conflicts in the Middle East could disrupt energy markets and hit confidence and growth. Rising trade tensions might risk hampering trade growth. Adverse surprises related to growth prospects, or the path of disinflation could trigger disruptive corrections in financial markets. Growth could also surprise on the upside. Improvements in consumer confidence, for example if purchasing power recovers quicker than anticipated, could boost spending. An early resolution to major geopolitical conflicts could also improve sentiment, and lower energy prices.
To navigate these challenges, the Outlook emphasises the need to durably reduce inflation, address rising fiscal pressures and tackle labour shortages to alleviate structural impediments to higher trend growth.
Central bank policy rate reductions should continue in advanced economies except Japan. The timing and extent of reductions should be carefully judged and remain data-dependent, ensuring that underlying inflationary pressures are fully contained.
Decisive fiscal action is needed to ensure the sustainability of public finances, and provide the necessary resources for governments to tackle future shocks and future spending pressures. Stronger near-term efforts to contain spending growth, optimise revenues and enhance credible medium-term adjustment paths need to be the cornerstone of efforts to stabilise debt burdens.
Ambitious structural reforms are necessary to reinvigorate weak potential output growth. The policy mix needs to include efforts to enhance education and skills development and reduce constraints in product and labour markets that impede opportunities for investment and labour mobility.
“Structural reforms are essential to lay the foundations for stronger, sustainable growth,” OECD Chief Economist Alvaro Pereira said. “Labour shortages are already a challenge for firms in many countries, and population ageing will only exacerbate this. Policy action needs to ensure that skills evolve with demands on labour markets and that labour force participation, especially of older workers and women, rises.”
For the full report and more information, visit the Economic Outlook online. Media queries should be directed to the OECD Media Office (+33 1 45 24 97 00).

 
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