European Union’s ability to meet its long-term objectives – primarily managing the climate and digital transitions and achieving greater economic resilience – will depend crucially on how much it invests and what it invests in. For the two transitions, the EU member states collectively face a total annual investment gap of at least €481 billion up to 2030. Closing this gap, which is necessary if the EU is to achieve its strategic objectives, will rely on the efficient use of public resources and on mobilising private investment.

We discuss a potential long-term EU approach to the financing of strategic objectives. We define the notion of strategic investment in the context of the EU, set conditions for such investment to be (co-)financed at EU-level, and make recommendations about strategic investment in the EU beyond 2026. We argue that EU (co-)finance would be justified if there is demonstrable EU value added, for example in the form of cross-border efficiency gains. The term ‘strategic’ would help prioritise how the EU pursues its economic and security interests.

Examples that would qualify as European strategic investments include energy and connectivity infrastructure with cross-border impact, and facilities that boost innovation and promote economic security and resilience at the EU level.

We examine various past and present EU strategic project financing programmes. We also survey national programmes to identify best practices in public investment management. We make the following main policy recommendations:

1. There is a lack of continuity in the way that the EU has pursued investments in that programmes have been finite and sporadic, with different sources of funding and overlapping objectives. We propose the creation of a dedicated and permanent fund for European Strategic Investments (ESIs), that can come in the first instance from a partly repurposed European budget (the Multiannual Financial Framework).
2. We argue that the European Investment Bank (EIB) would be the natural manager of such a fund. The fund itself should employ all the financial instruments at its disposal to finance projects. Projects should be evaluated in terms of how well they provide European added value and contribute to the EU’s strategic objectives.
3. Beyond current financing means, the EU still needs to make progress on establishing new own resources, or revenues for the EU budget, to repay debt issued under the NextGenerationEU post-pandemic recovery instrument. At a later stage, a consequence of having established new own resources will be that the EU will then have additional dedicated financing streams that it could use for ESIs. This would ensure continuity in pursuing strategic objectives.