Investment Report 2025/26 –
Executive Summary

Description

The annual Investment Report provides a comprehensive overview of the developments and drivers of investment and investment finance in the European Union. The 2025/2026 report focuses on Europe’s transition to a digital and green future, social investment and maximising the effect of public financing. The report draws extensively on the results of the annual EIB Investment Survey (EIBIS), combining internal EIB analysis with contributions from leading experts in the field.

Key takeaways

Investment has proved resilient

The EU economy and investment resisted global shifts and various shocks remarkably well in recent years. Investment has benefitted significantly from strong public support, which has focused on structurally transforming European economies. Public investment grew faster than gross domestic product, and government incentives for private investment remain above levels before the COVID-19 pandemic.

Despite heightened uncertainty, corporate investment has remained broadly stable in real terms. EU firms managed sharp rises in US tariffs well. So far, the impact of tariffs has largely been absorbed by American companies that rely on importers, with the effect remaining manageable for EU exporters.  Investment in intangibles (research and development, innovation and skills) continues to grow, but is particularly vulnerable to uncertainty. 

Europe is now at a critical turning point. Decisive policy action and large-scale capital investments are needed to mitigate risks and seize opportunities.

The EU single market is a strong driver of investment

The EU single market provides scale, business opportunities and efficient and secure European supply chains. It has a clear track record, underpinning 25% of new investment recorded in the European Union since the 1980s. Yet integration is stalling:

• 62% of EU firms have difficulty exporting to other EU countries because of fragmented rules and regulations.
• Removing these barriers could boost the ratio of firm investment to assets by 10%, with even stronger gains for intangible investment – which is critical for EU innovation.

The EU single market also drives resilience and economic security. Analysis shows that even limited trade among EU countries helps companies better weather shocks. When global volatility hits, intra-EU trade offsets disruptions in trade with countries beyond the European Union. This stabilising effect only happens, however, when a minimum of trade and production is based within the European Union.

EU firms rapidly adopt AI

Digitalisation and artificial intelligence (AI) are making EU firms’ more productive, but reliance on these technologies are also creating strategic dependencies in an increasingly polarised world. European Investment Bank Group analysis shows that a similar share of EU firms use big data analytics and AI as American firms.

• AI adoption is already having a material impact on EU firms’ productivity. It accounts for  about 12% of the total increase in productivity recorded since 2019.

Looking ahead, the expansion of generative AI will intensify Europe’s dependency on foreign-based technologies. To keep up, Europe will need to invest heavily in innovation, data centres and energy infrastructure. A coordinated pan-European approach is needed. One that aligns initiatives and investment to support frontier computational infrastructure, data hubs and increased cybersecurity.

Energy policies need to address bottlenecks

Addressing bottlenecks and better integrating European energy systems are essential to unlocking the benefits of growing renewable energy production. Energy costs are slowly being pushed down as clean energy is rolled out and markets become better integrated. Costs remain an issue in energy-intensive industries, however.

• For manufacturing firms, lower energy costs have been shown to support more productive investment and improve short-term profit margins and turnover, particularly when firms compete internationally.

More specifically, investment is needed to accelerate cross-border interconnections and improve flexibility – combining energy storage with generation, for example – in the electricity grid. Transforming the energy sector involves substantial upfront costs. To attract capital, the use of proven financial instruments could be expanded to reduce investment risks.

How financial instruments can mobilise private investment

Given limited available resources, future public policy support will need to focus more on impact and mobilising private capital. Targeted EU policies have proven effective at mobilising private investment for specific policy goals, such as those linked to the digital and green transitions.  Experience with the European Fund for Strategic Investment (EFSI) and InvestEU shows the power of mobilising EU resources:

• A guarantee of €1 from the EU budget under InvestEU delivers an estimated €15 of investment in the real economy.

A deep dive into EIB Group data shows that well-designed financial instruments deliver tangible impact, strengthening firms’ performance and promoting innovation and EU competitiveness.

• Firms receiving EIB loans invest 15% more than their peers and have 5% higher productivity.

The European Investment Fund (EIF) attracts institutional investors to venture and growth funds through a fund-of-funds approach. EIB-financed venture debt, which accounted for around 30% of the EU market, enables beneficiary companies to raise 1.5 times more additional finance.

The report is available here.