From NGEU to a Green Capital Markets Union

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Now that the EU’s post-pandemic recovery programme is on course, the priority should be to increase private sector investments. The two main pillars of the Recovery and Resilience Facility (RRF), a key component of the Next Generation EU (NGEU) programme, are green and digital. Although the EU is taking the global lead on the green transition and is putting a solid policy framework in place, it is lagging in the digital transformation, with significant gaps remaining across Member States. For the EU to deliver the twin transition to a green and digital economy, and mobilise the necessary resources to get there, market financing – which is much less developed compared to international peers – should be developed further. This will advance the green transition, cement Europe’s Green lead, and advance digitalisation.

This policy brief starts by reviewing the implementation of the NGEU programme thus far, and the take-up and allocation of funds at Member State level. It then discusses the expected impact of the plan based on past experience under similar programmes, and how the European Commission (EC) will ensure good use of the money. It continues by examining NGEU’s transition towards private sector financing, and what is required to achieve this. Finally, it concludes with some policy recommendations.

Karel Lannoo is General Manager of ECMI and CEO of CEPS. Apostolos Thomadakis, Ph.D., is a Researcher at ECMI and CEPS