Vulcan View: The latest EU developments 17 March – 21 March

European Commission unveils its White Paper on Defence to rearm the EU

On Wednesday, 19 March, the European Commission unveiled its White Paper on Defence, setting out a vision to rearm Europe by ensuring the European defence industry can produce at the requested speed and volume; and facilitating rapid deployment of military troops and assets across the EU.

The White Paper introduces plans for a true European defence union in which EU countries will remain in charge of defence, while benefiting from added EU benefits to strengthen the defence industry, by closing important gaps and ensuring long-term readiness. The White Paper also offers suggestions to Member States on how to invest heavily in defence, buy necessary equipment, and support the industry’s growth over time. The Key areas outlined in the White Paper are:

• Closing capability gaps and supporting the European defence industry, including simplifying regulations and streamlining industrial programmes.
• Deepening the single defence market and accelerating the transformation of defence through disruptive innovations such as AI and quantum technology.
• Enhancing European readiness for worst-case scenarios, by improving military mobility, stockpiling, and fostering operational cooperation across the EU.

The ReArm Europe Plan/Readiness 2030, will aim to mobilise €800 billion by activating the national escape clause of the Stability and Growth Pact, allowing Member States to increase defence spending. A €150 billion loan instrument will be launched, named Security Action for Europe (SAFE), that will help countries invest in key defence areas like missile defence, drones, and cyber security. The European Investment Bank Group will also widen its scope for defence loans and security projects, while the Savings and Investment Union will also be mobilised to accelerate private capital.

Additionally, the EU’s leader met for a European Council (EUCO) meeting on Thursday, 20 March, to address Russia’s war of aggression against Ukraine and the EU’s support for Ukraine and its people, the situation in the Middle East, and European defence. The main focus of the meeting was to draft the rules needed to turn the EU into a military superpower.

The European Commission’s White Paper on Defence marks a significant step towards a stronger and more autonomous European defence strategy. With ambitious funding plans and a push for greater military coordination and innovation, the EU aims to enhance its military readiness and industrial resilience.

European Commission presents Savings and Investments Union proposal

On Wednesday (19 March), the European Commission presented a comprehensive strategy for the Savings and Investment Union (SIU), designed to reshape how the EU financial system directs savings into productive investments. This initiative integrates two previous proposals, the Capital Markets Union and the Banking Union. Moreover, the proposal seeks to improve citizens’ access to capital markets—potentially offering higher returns on savings—while also making it easier for companies to secure the funds they need for innovation and growth. Thus, this initiative could become a key catalyst for driving economic growth, strengthening competitiveness, and creating jobs across Europe.

The SIU framework rests on four interconnected pillars:

1. Citizens and savings: Retail investors are central to the plan. The Commission seeks to broaden access to capital markets, offering citizens “more and safer opportunities to invest” while boosting long-term wealth. Initiatives include tax-advantaged savings accounts, enhanced financial literacy programmes, and reforms to pension frameworks to encourage auto-enrolment and cross-border accessibility.
2. Investment and financing: To address the €750–800 billion annual investment gap identified in the Draghi Report, the SIU prioritises easing access to capital for SMEs and innovative firms. Proposed measures include revising securitisation rules to free up bank liquidity, expanding venture capital funds, and leveraging public institutions like the European Investment Bank (EIB) to attract private co-financing.
3. Integration and scale: Market fragmentation remains a barrier. Despite regulatory harmonisation, cross-border inefficiencies persist. The Commission plans legislative proposals to streamline market infrastructures, reduce duplication, and lower transaction costs.
4. Efficient Supervision in the Single Market:  An efficient supervisory framework is critical. The EU’s current system relies on national authorities and convergence tools. The Commission proposes transferring some supervisory tasks to EU-level bodies to ensure consistency—a move facing resistance from member states.

Financial Services Commissioner Maria Luis Albuquerque, speaking at the launch of the initiative, stressed the transformative potential of the SIU. She stated that the SIU “represents an opportunity to step forward for Europe’s financial and economic future. This is a defining moment for the EU.” Her remarks underlined the urgency of reform, noting that if Europe fails to act swiftly and collectively, it risks missing out on crucial opportunities for wealth creation and economic stability.

European Council discussions

EU Heads of State and Government convened in Brussels on Thursday (20 March) to discuss the SIU, among other topics. EU leaders broadly supported the initiative. The conclusions on the SIU remained mostly unchanged, with even the contentious issue of single supervision for non-banks passing without significant debate. However, the topic was diluted into a lengthy, ambiguous statement, pledging only to assess the conditions for enhanced supervision rather than committing to concrete action.

Nonetheless, the real challenges will emerge later this year when the Commission translates its commitments into concrete policies. This process will demand tough compromises from national governments to advance a unified financial framework. Among these challenges, centralised oversight remains a contentious sticking point. France champions EU-level oversight to curb fragmentation, while 11 countries—including Ireland and Luxembourg—prefer national control, fearing loss of sovereignty. During the summit, French President Emmanuel Macron proposed a hybrid model inspired by EU competition law, where enforcement is shared between the Commission and national authorities. However, the proposal fell short of reaching a compromise.

Conclusions 

In summary, the Savings and Investment Union is a critical step towards modernising the EU financial system. By linking household savings with corporate investment needs and addressing longstanding challenges such as regulatory fragmentation and supervisory inefficiency, the strategy could boost economic growth and financial stability in the EU. As the Commission embarks on the next phase of consultations and legislative proposals—targeting key areas for impactful action in 2025—the success of the SIU will largely depend on the collective commitment of EU institutions, Member States, and private stakeholders.

NTMA forecasts a continued surplus for Ireland in 2025 despite external risks and infrastructure gaps

The National Treasury Management Agency published its Investor Presentation for March 2025. Key themes included: Ireland’s strong fiscal position, the presence of external risks, Ireland’s main trade flows and infrastructure deficits.

Ireland’s fiscal position

It is anticipated that the Irish government’s surplus, observed in 2024, will continue into 2025. The NTMA forecasted a general governmental surplus of 2.9 per cent of Gross National Income*, adjusted to remove distortions caused by the profits of multinational companies. Ireland’s economy is projected to grow in 2025, with the country’s growth following a stronger trajectory post-Covid compared to the Euro Area Average. Furthermore, Ireland boasts a strong labour market, with the unemployment rate remaining below 5 per cent for three years.

In 2024, Modified Investment rose by 2.2 per cent. However, there is an “underlying weakness” in the building and construction sector, indicating that while overall investment is rising, this sector is potentially limiting broader growth in investment.

External risks 

The NTMA identified a number of short/medium-term risks to Ireland’s small open economy, which is strongly linked to the U.S. These include, geopolitical tensions, deglobalization and corporate taxation (CT).

Corporate tax revenue in Ireland has been growing rapidly, with CT accounting for 29 per cent of tax receipts in 2024. However, as Ireland’s tax base is over-reliant on U.S multinationals, the risk of concentration is high. The NTMA stated that if windfall gains from CT revenue and the apple tax case ruling were excluded, Ireland would have experienced a budget deficit in 2024.

Trade 

According to the NTMA, Ireland’s main trade connections are goods exported to the EU and the U.S., services exported to the EU, and service imports from the U.S. of intellectual property/R&D assets. In January 2025, the U.S. was Ireland’s largest market for both goods exports and imports, representing 48.4 per cent of total exports and 19.7 per cent of total imports.

Multinationals play a leading role in Ireland’s export sector. Specifically, U.S. is the key export sector for MNCs, with pharma being the main sector. This has drawn Trump’s attention, particularly the significant investments made by American pharmaceutical companies in Ireland. This theme was raised during the Taoiseach’s Oval Office meeting with Trump, who described Ireland as having the “entire U.S. pharmaceutical industry in its grasp”. 

The Trump administration is focusing on countries running goods trade surpluses. This is of particular concern to Ireland, which had a goods trade surplus with the U.S. of more than €50 billion in 2024. However, NTMA data indicates that since 2019, Ireland’s trade surplus with the U.S. has become a deficit when services trade is included.

Infrastructure 

The presentation highlighted the continued need for infrastructure investment. Ireland’s physical capital stock has not kept pace with infrastructure demand and remains below average for high-income countries, according to the NTMA. Despite minor improvements in housing delivery, supply remains below the required level. The rise in net migration is driving up housing demand, leading to an increase in property prices, while other countries are experiencing a decline in prices. This comes as the Central Bank issued projections indicating that the Government will miss its housing targets for the next three years.

Compliments of Vulcan Consulting – a member of the EACCNY