Local leaders support boost to defence spending, without harming poorer areas

Ongoing geopolitical and economic crises demand a robust Cohesion Policy and enhanced funding to strengthen the EU's defence industry as the European Commission works on its proposal for the next long-term budget beyond 2027: this was the main topic on the agenda of the meeting of the Commission for Economic Policy (ECON) on 11 December. Fostering the proximity economy to support SMEs in regional value chains and the implementation of the European trade policy were also discussed at the meeting.  

A strong European defence industry  

ECON members adopted a draft opinion demanding sufficient funding for a strong European defence industry, integrating regional innovation and defence investments. This is particularly important for existing defence clusters and regions exposed to military threats.  

ECON members urged for the next long-term budget of the EU, the so-called Multiannual Financial Framework (MFF), to allocate dedicated resources to defence-related initiatives without undermining Cohesion Policy, which is critical for promoting territorial, economic, and social development. They stressed that any transfer between funds must not have a negative impact on local and regional authorities nor jeopardise cohesion in Europe, with territorial impact assessments ensuring regional needs are met.  

Rapporteur Fernando LÓPEZ MIRAS (ES/EPP), President of Murcia region: "European regions have much to contribute to a strong security and defence policy in the European Union, a goal that strengthens democracy. The main asset is businesses, particularly SMEs, which need resolute support to integrate into European supply chains and to internationalise.” 

The opinion is scheduled to be voted at the plenary session on 20-21 February 2025. 

Supporting SMEs in regional value chains  

ECON members stressed the importance of proximity economies – regional short value chains driven by local SMEs – often family-run that are crucial for boosting regional resilience and enabling green and digital transitions. With growing concern over the declining competitiveness of Europe’s economy, especially SMEs, ECON members adopted a draft opinion, calling on the European Commission to embed the proximity economy into key EU strategies. Small and medium enterprises face supply chain constraints, labour shortages or high energy costs, therefore it must be ensured that policies and funding promote regional resilience, cohesion, and sustainable growth.  

Rapporteur Oszkár SESZTÁK (HU/ECR), Member of the County Council of Szabolcs-Szatmár-Bereg Megye: "Proximity economy holds great potential to improve EU economic resilience and territorial cohesion. SMEs in proximity economy rely on local and short supply chains and are, as such, a different kind. These local, often family-run SMEs need tailor-made support and SME-friendly legislation to cope with the current economic challenges, and to be able to carry on their unique added value and contribution to long-term economic growth in regional value chains.” 

The opinion is scheduled to be voted at the plenary session on 20-21 February 2025. 

Also during the meeting:  

Members of the ECON commission held a debate on the implementation and enforcement of EU trade policy with a representative of the European Commission, stressing the importance of Free Trade Agreements in boosting economic relations and addressing trade barriers in regions and cities but raised concerns about delays caused by complex standards and uneven regional benefits. Members emphasised the need for targeted support to help less advantaged regions access markets and ensure fair competition within the global context.  

More information:  

On 5 March 2024, the European Commission and the High Representative presented the European Defence Industrial Strategy to strengthen the European Defence Technological and Industrial Base (EDTIB) and achieve defence industrial readiness. The EDTIB is a competitive global player capable of producing world-class advanced systems. 

Rewatch the meeting.