With Donald Trump back in the White House, the European Union (EU) is ramping up efforts to strengthen its defence capabilities and “enhance its industries’ competitiveness.”
The EU will investigate new strategies to fund significant military investments and support the development of clean technologies. According to the latest draft declaration, which EU leaders are expected to adopt at today’s Budapest summit (8 November), Brussels will “explore the creation of new instruments” to address future needs. However, no additional funds have been secured to close the bloc’s substantial investment gap.
Concerns about Trump’s potential intentions to “leave Europe on its own” have spurred the EU to pursue a more self-reliant defence strategy and ensure its industries can compete with American firms.
In his report, former European Central Bank President Mario Draghi cautioned that the region risks lagging behind the US and China if EU member states do not swiftly increase productivity by investing an additional €800 billion annually.
The draft declaration reflects a shared sense of urgency among national governments, which warn that “business as usual is no longer an option.”
Fiscally conservative nations, including Germany and the Netherlands, have historically resisted calls for more funding, arguing that sufficient resources are already available. These countries prefer to wait until negotiations for the next long-term EU budget in 2028. However, sources close to the matter told Bloomberg that some eastern and southern countries are advocating for new revenue sources beforehand, especially to boost Europe’s defence autonomy.
Despite resistance from some quarters, diplomats report that the final draft of the new funding instruments is expected to pass on Friday without changes.
Due to initial disagreements, negotiators deprioritized the 2027 deadline for establishing an Energy Union, previously considered a step toward enhancing the EU’s energy independence and reducing clean energy costs for businesses and households. Additionally, a reference to the creation of a sovereign wealth fund for equity investments in critical technologies, aimed at sustaining EU competitiveness, was omitted from the final draft.
