Vulcan View: The latest EU developments 3 March – 7 March

EU leaders approve “ReArm Europe” plan to boost defence spending

European Commission President Ursula von der Leyen unveiled the key elements of her proposed “ReArm Europe” plan on Tuesday (4 March), aimed at strengthening the EU’s defence spending and capabilities in response to the current era of rearmament. The plan includes €150 billion in subsidised loans to help member states bolster their defences. EU leaders endorsed its main lines on Thursday (6 March) during a special European Council meeting. Finally, Ms. Von der Leyen pledged to advance a legal framework for the plan, which could be presented at the next European Council meeting in two weeks.

Specifically, the ReArm Europe Plan is structured around five key initiatives:

1. Unleashing EU public funding for defence at the national level
   This includes activating the national escape clause of the Stability and Growth Pact to allow increased defence spending without triggering the Excessive Deficit Procedure. This could create a “fiscal space” of €650 billion over four years.
2. Establishing a new common instrument to provide €150 billion in loans for defence investment: This new fund will allow Member States to finance joint defence investments. This initiative would enhance pan-European military capabilities through the joint procurement of artillery, missiles, drones, and anti-drone systems. Ms. von der Leyen declared that, by pooling demand, Member States could reduce costs, improve interoperability, strengthen the European defence industry, and increase military aid to Ukraine.
3. Harnessing the power of the EU budget: by directing additional EU funds towards defence-related investments. Member States will also have the option to use cohesion  funds -those that have not been used,- to boost defence spending

 

The final two proposals outlined by Ms. von der Leyen focused on mobilising private capital:

4. Accelerating the Savings and Investment Union
5. Enhancing the role of the European Investment Bank in defence spending: allowing the bank to grant and increase the credits for defence investments.

 

Ms. von der Leyen underscored that ReArm Europe could mobilise nearly €800 billion in defence spending, reinforcing Europe’s security and resilience. She also reaffirmed the EU’s commitment to close cooperation with NATO partners and emphasised that this is Europe’s moment to step up on defence.

Although EU leaders formally approved the plan in the European Council conclusions, key figures argued it falls short of its goal to rearm the bloc. Spanish Prime Minister Pedro Sánchez insisted that the €150 billion allocated as loans should instead be direct grants from the Commission to member states. Meanwhile, French President Emmanuel Macron dismissed the sum as simply too low.

Furthermore, other actors have raised concerns about using cohesion funds for defence. Committee of the Regions President Kata Tüttő warned it would be a “catastrophic mistake,” while S&D leader in the European Parliament, Iratxe García, affirmed that it should remain a one-time exception.

Conclusion

ReArm Europe could mark a historic effort to consolidate Europe’s defence capabilities through financial innovation, joint procurement, and enhanced coordination. If implemented effectively, the plan could transform the EU into a stronger geopolitical actor while reducing its reliance on the U.S. security umbrella.

 

European Commission announces new Industrial Action Plan for the automotive industry

On Wednesday, 5 March, European Commission President Ursula von der Leyen announced a new Industrial Action Plan to strengthen the global competitiveness of the European automotive industry. Speaking after a press statement, she emphasised the need to harness untapped potential in innovation and clean technologies.

President von der Leyen shared: “There is so much untapped potential in the global market when it comes to innovation and clean solutions. I want to see our European automotive industry taking the lead. We will promote domestic production to avoid strategic dependencies, especially for battery production.”

The European automotive sector is consistently challenged by rapid technological changes and increasing competition. In January, President von der Leyen launched a Strategic Dialogue on the Future of the European Automotive Industry – an inclusive process designed to tackle the sector’s most pressing challenges. As part of this effort, €1.8 billion will be allocated to developing a secure and competitive supply chain for battery raw materials. Other parts of the process include:

Accelerating Innovation and Clean Mobility Transition 

A dedicated European Connected and Autonomous Vehicle Alliance will bring together Europe’s automotive stakeholders to shape the development of next-generation vehicles and help develop the shared software and hardware needed for this technology. These actions will be supported by joint public-private investments of around 1 billion backed by the Horizon Europe Programme over the 2025-2027 period.

More flexibility for CO2 Standards compliance

The Commission will propose a focused amendment to the CO2 Standards Regulation for cars and vans this month. This target would allow  car manufacturers to offset any shortfalls in one or two years with excess achievements in the other years while keeping the overall ambition on the 2025 targets.

Supporting Supply Chai Resilience and Workers in the Sector

To help the automotive sector address skills shortages, the European Fair Transition Observatory will help to pinpoint expected future “hot spots” of employment dislocations and skills gaps. The Commission will also expand the European Globalisation Adjustment Fund for Displaced Workers (EGF) support to make it faster and broader.

Boosting the Industry’s Resilience to Compete Successfully on a Global Stage  

The Commission will ensure a level playing field by using trade defence instruments, such as anti-subsidy measures, to protect European companies from unfair competition.

The European Commission’s latest initiatives signal a strong commitment to strengthening the automotive sector amid global competition and technological shifts. With significant investments, regulatory flexibility, and workforce support, these measures aim to position Europe as a leader in the future of mobility.

 

IDA Ireland presents its new strategy

The IDA recently launched a new five-year strategy titled ‘Adapt Intelligently: A Strategy for Sustainable Growth and Innovation, 2025-29’. This comprehensive framework outlines IDA’s ambitions for sustained growth through four key strategic objectives:

1. Strengthen long-term investment: sector-specific opportunities, opportunities associated with supply chain diversification and regionalisation.
2. Scale cutting-edge innovation: Enhance the Disruptive Technologies Fund, and partner with RD&I opportunities internationally – Projects of Common European Interest.
3. Encourage sustainable change: Support the ‘Powering Prosperity’ national strategy.
4. Maximise regional opportunities:

 

The strategy will look to build on and maintain long-term investment with existing and new clients, secure 1,000 new investments to bring €250bn to the Irish economy, bring RD&I investment to €7bn, fund the upskilling of 40,000 employees within the IDA client base, bolster 75,000 new jobs across priority sectors, work towards a 35 per cent reduction of carbon emissions by IDA clients and attract new green investment.

Acknowledging the challenges facing FDI investment, such as increased competition, geopolitical uncertainty and rapid technological advancements, IDA has identified four essential drivers of growth:

1. Digitalisation & AI: Cross-sectoral opportunities – cloud computing, cybersecurity, AI-enabled services, regulation and compliance, fintech and ethical AI.
2. Semiconductors. 
3. Health: Capitalise on Ireland’s existing life sciences ecosystem – next-generation therapies, smart medical technologies, digital health, drug development, and advanced manufacturing.
4. Sustainability: Green hydrogen production, offshore wind.

 

FDI ambitions can only be achieved if Ireland has the necessary infrastructure, capacity and policies to remain competitive. Securing ongoing investment depends on five key enabling conditions.

1. Maintaining relative cost competitiveness.
2. An efficient planning system.
3. Consistent infrastructure delivery.
4. Talent development and innovation.
5. Incentive offering – grants and tax.

 

Speaking at the launch of the strategy, Michael Lohan cautioned that substantial U.S tariffs on Ireland’s pharma trade would be “disruptive”. However, he suggested that as the majority of the exports were intermediate products they may not be subject to tariffs.

Finally, the agency has identified the development of industrial sites across the country as a key driver for attracting FDI-strategic forward planning, sites that offer property, utility, and sustainable infrastructure. Achieving this will demand a “whole-of-government commitment” and a “new funding and operating model.”

 

Compliments of Vulcan Consulting – a member of the EACCNY