The Council and the European Parliament negotiators reached a provisional agreement on measures to incentivise defence-related investments in the current EU budget to implement the so-called ReArm Europe plan, an EU initiative to increase defence spending and strengthen the EU’s military capabilities. The agreement includes a landmark decision to associate Ukraine to the European Defence Fund, underscoring the EU’s enduring commitment to Ukraine’s security, resilience, and gradual integration into the European defence industrial base. “The agreement reached today on incentivising defence-related investments in...

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By Anamaria Piloiu, Oleg Reichmann and Florian Resch Climate risks affect credit ratings. And these, in turn, influence how banks can use securities as collateral to borrow money. This post takes a closer look at how the Eurosystem integrates climate change risks into its own collateral framework, through the credit risk channel. Central banks must prepare for the financial risks that come with rising temperatures and fast-evolving green policies. In the Eurosystem, we are actively working to ensure that the euro...

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Today, the Commission has published the State of the Energy Union Report 2025 and the accompanying Climate Action Progress Report 2025. They show the significant strides the EU has made in transitioning to a robust and integrated Energy Union by progressing on the clean energy transition with more renewables, addressing high and volatile energy prices and affordability, and further reducing greenhouse gas (GHG) emissions. This is increasing competitiveness, decarbonisation and strengthen energy security and independence reducing EU's reliance on imported fossil fuels. The reports confirm once again that the EU...

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Abstract: Motivated by current events, this paper assesses the impact of tariff increases on bilateral greenfield foreign direct investment (FDI) over the period 2016-2023. Leveraging a comprehensive dataset of announced greenfield investment projects, official FDI statistics, and bilateral product-level tariff data, we estimate a series of gravity equations to uncover key relationships. Our results show that, at an aggregate level, tariff increases are associated with a rise in greenfield FDI, consistent with the tariff-jumping hypothesis. However, this positive effect reverses...

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