The € billion Next Generation EU fund, with its focus on green and digital spending, is a good tool for ensuring that investment flows where it is needed over the next few years. But this will ultimately need to be matched by higher investment elsewhere – not only by the private sector, but also by national governments.
According to one estimate, the public sector will need to fund between a quarter and a fifth of climate-related investment. [10] This means that, when the time comes for national governments to consolidate their fiscal policies, it will make a difference whether they do so by reducing transfers and public consumption and raising taxes or by cutting public investment.