One Fund to Rule Them All: An analysis of the proposed European Competitiveness Fund
In July 2025, the EU Commission proposed a Competitiveness Fund as a response to Draghi’s call for a European “investment shock.” This analysis, which examines the main elements and the governance of the new fund, shows that it could have a huge impact on the EU’s ability to act as an industrial policy player, the EU’s internal balance of power and the future of the internal market.
The European Commission’s proposal for a European Competitiveness Fund (ECF) is the EU’s principal response to Mario Draghi’s call for a European “investment shock.” This €409 billion initiative is designed to boost competitiveness in strategic sectors such as defence, space, AI, clean tech and biotech. In addition, the fund aims to mobilise and coordinate many billions of euros in private sector and public financing. In this sense, it is “One Fund to Rule Them All”.
This analysis examines the governance of the new fund. It shows that the ECF would entail a fundamental shift in the EU’s traditional investment governance. Specifically, the ECF would: (i) pool resources from several current programmes into a more flexible 7-year funding pot; (ii) shift strategic decisions towards a more political and dynamic annual cycle; and (iii) substantially expand the European Commission’s executive discretion over implementation. The overall effect would be to hugely enhance the EU’s ability to act as an industrial player.
The fate of the fund now hinges on complex negotiations in the Council and the European Parliament, covering both the proposal itself and the wider EU budget. The outcome could influence not only the Union’s industrial policy and internal balance of power, but also the future of the internal market and the EU’s global role in a geopolitical era.
Johannes Jarlebring is a Senior Researcher in Political Science at SIEPS.
The opinions expressed in the publication are those of the author.