{"id":17257457,"date":"2026-08-27T11:58:00","date_gmt":"2026-08-27T09:58:00","guid":{"rendered":"https:\/\/felss.com\/?post_type=blog&#038;p=17257457"},"modified":"2026-09-21T12:03:55","modified_gmt":"2026-09-21T10:03:55","slug":"capital-on-the-wrong-track-europes-billion-dollar-programs-and-why-industry-is-still-stumbling","status":"publish","type":"blog","link":"https:\/\/felss.com\/en\/blog\/capital-on-the-wrong-track-europes-billion-dollar-programs-and-why-industry-is-still-stumbling\/","title":{"rendered":"Capital on the wrong track? Europe&#8217;s billion-dollar programs \u2013 and why industry is still stumbling"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Special funds, transformation funds, recovery plans. Never before in the history of the European Union have such large public funds been mobilised in such a short time. And yet the number of insolvencies is increasing \u2013 especially in the automotive SME sector. How does that fit together?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The provocative thesis: <strong>Europe has historically invested a lot \u2013 but often in the wrong places, at the wrong speed and without sufficient industrial leverage.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Europe&#8217;s New Funding Architecture: Volume, Goals, Narratives<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Since 2020, several large-scale programmes have been launched, some at EU level, some at national level. The main instruments:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>NextGenerationEU (NGEU)\u00a0\u2013 \u20ac750 billion, of which \u20ac723.8 billion in the Recovery <em>and Resilience Facility (RRF) core instrument<\/em><\/li>\n\n\n\n<li>REPowerEU\u00a0\u2013 Energy Independence and Infrastructure<\/li>\n\n\n\n<li>National Transformation and Climate Funds (e.g. Germany, France, Italy)<\/li>\n\n\n\n<li>IPCEI initiatives (batteries, hydrogen, semiconductors)<\/li>\n\n\n\n<li>Industrial Policy Countermeasures to the US Inflation Reduction Act<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">According to data from S&amp;P Global (October 2025), expansionary German fiscal policy alone is likely to generate positive spillover effects in Central and Eastern Europe \u2013 especially in countries with a high share of exports to Germany. At the same time, the analysis shows that the fiscal stimulus varies greatly between the member states.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Overview: Central funding programmes 2020\u20132026<\/h2>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Country\/Level<\/th><th>Program<\/th><th>Funding volume<\/th><th>Period<\/th><th>Purpose<\/th><\/tr><\/thead><tbody><tr><td><strong>EU<\/strong><\/td><td>NextGenerationEU\/RRF<\/td><td>EUR 723.8 billion<\/td><td>2021-2026<\/td><td>Digitalisation, decarbonisation, resilience<\/td><\/tr><tr><td><strong>EU<\/strong><\/td><td>REPowerEU<\/td><td>~300 billion EUR<\/td><td>2022-2027<\/td><td>Energy infrastructure, independence<\/td><\/tr><tr><td><strong>Germany<\/strong><\/td><td>Climate and Transformation Fund (KTF)<\/td><td>EUR 200 billion (2023-2027)<\/td><td>2023-2027<\/td><td>Industrial decarbonization, hydrogen, e-mobility<\/td><\/tr><tr><td><strong>France<\/strong><\/td><td>France 2030<\/td><td>EUR 54 billion<\/td><td>2021-2030<\/td><td>Semiconductors, Batteries, Aerospace<\/td><\/tr><tr><td><strong>Italy<\/strong><\/td><td>PNRR (RRF share)<\/td><td>~EUR 191.5 billion<\/td><td>2021-2026<\/td><td>Digitalization, Infrastructure<\/td><\/tr><tr><td><strong>Spain<\/strong><\/td><td>Recovery Plan<\/td><td>~163 billion EUR<\/td><td>2021-2026<\/td><td>Energy, Mobility, SMEs<\/td><\/tr><tr><td><strong>Poland<\/strong><\/td><td>National recovery plan<\/td><td>~EUR 59.8 billion<\/td><td>2021-2026<\/td><td>Energy, Digitalization<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><em>(Sources: European Commission, national budget laws, RRF Reports 2023\u20132025)<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Where is the money? Three uncomfortable realities<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">1. A significant proportion flows along global supply chains<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Industrial promotion is not a closed national cycle.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Battery projects in Germany source intermediate products from Poland, Hungary or Asia.<\/li>\n\n\n\n<li>Semiconductor programs secure plants in Europe, but equipment comes partly from Japan, the USA or South Korea.<\/li>\n\n\n\n<li>E-mobility promotion increases import volumes for cell chemistry and raw materials from China.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This means that although subsidies have a local investment effect, they generate considerable leakage effects along international value chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is particularly evident in the automotive sector: OEM investments stimulate suppliers in Central Eastern Europe (Slovakia, the Czech Republic, Hungary), while critical intermediate products partly come from Asia.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Capital-intensive large-scale projects dominate<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A large part of the funds goes to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Battery Gigafactories<\/li>\n\n\n\n<li>Semiconductor fabs<\/li>\n\n\n\n<li>Hydrogen infrastructure<\/li>\n\n\n\n<li>Energy Networks<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These projects make strategic sense \u2013 but are extremely capital-intensive, long-term and low-employment during the construction phase.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traditional SMEs \u2013 such as specialized automotive suppliers \u2013 often benefit only indirectly or with a time lag.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Insolvencies rise despite record production<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Data from national statistical offices show a significant increase in corporate insolvencies in Germany, France and Italy since 2022 \u2013 especially in the manufacturing and automotive sectors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Drivers:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Energy prices 2022\/23<\/li>\n\n\n\n<li>Weak demand in China<\/li>\n\n\n\n<li>Electromobility transformation<\/li>\n\n\n\n<li>Overcapacities in the supplier sector<\/li>\n\n\n\n<li>Financing conditions due to interest rate turnaround<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">In short, subsidy programs do not automatically compensate for structural disruption.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Spillover to Eastern Europe: Winner of German expansion?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The data analyzed by S&amp;P Global (NYB 2026 in Frankfurt) shows that countries with a high share of exports to Germany \u2013 especially the Czech Republic, Slovakia and Hungary \u2013 benefit disproportionately from German fiscal expansion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Mechanism:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>German infrastructure or industrial project<\/li>\n\n\n\n<li>OEM Investment<\/li>\n\n\n\n<li>Supplier call-off from Eastern Europe<\/li>\n\n\n\n<li>Value creation impulse in the CEEC region<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These effects are real, measurable and economically plausible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, the benefits are asymmetrical. Western peripheral countries benefit less than core industrial suppliers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Case Studies<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Case 1: Battery production<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Several IPCEI battery projects in Germany and France have been approved. The goal: European cell production.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, a significant proportion of the intermediate products (cathode materials, lithium chemistry) are still imported.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conclusion:<\/strong>&nbsp;Europe subsidizes the last stage of the value chain, while upstream dependencies remain.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Case 2: Semiconductor offensive<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">France and Germany are investing massively in chip production.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Production itself remains capital-intensive, highly automated and globally intertwined.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The economic multiplier is there \u2013 but less than politically suggested.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Europe promotes supply \u2013 not competitiveness<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The funding logic is strongly supply-oriented:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Infrastructure<\/li>\n\n\n\n<li>Production Capacity<\/li>\n\n\n\n<li>Climate-neutral technologies<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">What is often missing:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Market Demand Stimulation<\/li>\n\n\n\n<li>Scaling programs for medium-sized companies<\/li>\n\n\n\n<li>Venture financing in industrial depth<\/li>\n\n\n\n<li>Reducing bureaucracy<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Subsidies do not replace a business model.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Those who are not structurally competitive are only temporarily stabilized by subsidies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Where does the money really go?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Viewed in aggregate:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Part of it will remain in the investment location<\/li>\n\n\n\n<li>A significant share goes to suppliers in Central and Eastern Europe<\/li>\n\n\n\n<li>Critical intermediate products and technologies flow in from Asia and the USA<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The reality is a <strong>networked, cross-border circulation of capital<\/strong>&nbsp;\u2013 not national isolation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Strategic implications for the mobility industry<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">For OEM executives, engineers and technology decision-makers, there are clear fields of action:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rethinking supply chain risk analysis<\/li>\n\n\n\n<li>Strategic use of funding in R&amp;D depth<\/li>\n\n\n\n<li>Integrating SMEs into transformation chains<\/li>\n\n\n\n<li>Regionalisation without the illusion of self-sufficiency<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Industrial policy can provide impetus \u2013 but competitiveness comes from technology, speed and scale.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion: Capital is there \u2013 effect is selective<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Europe is mobilizing historically high sums. But capital alone does not create an industrial renaissance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The decisive question is not: How much money is available? Rather: Where does it generate real, sustainable value creation \u2013 and where does it fizzle out along global supply chains? <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is no coincidence that insolvencies in the automotive sector are rising despite billion-dollar programs. It is an indication of structural shifts that funding policy alone cannot compensate for.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Is Europe&#8217;s industrial policy strategically clever \u2013 or are we losing time and capital in global competition?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Author:<\/strong>\u00a0Wolfgang A. Haggenm\u00fcller<br><strong>Click here for the original article:<\/strong>\u00a0<a href=\"https:\/\/haggenmuellerfreel.wixsite.com\/mobilityandmore-eng\/post\/capital-on-the-wrong-track-europe-s-billion-dollar-programs-and-why-industry-is-still-stumbling\" target=\"_blank\" rel=\"noreferrer noopener\">Mobility &amp; More<\/a>, the blog focusing on mobility, technology and sustainability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"author":11,"featured_media":17257452,"template":"","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","_ppma_block_editor_authors":""},"categories":[],"ppma_author":[293],"class_list":["post-17257457","blog","type-blog","status-publish","has-post-thumbnail","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/blog\/17257457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/blog"}],"about":[{"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/types\/blog"}],"author":[{"embeddable":true,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/users\/11"}],"version-history":[{"count":2,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/blog\/17257457\/revisions"}],"predecessor-version":[{"id":17257473,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/blog\/17257457\/revisions\/17257473"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/media\/17257452"}],"wp:attachment":[{"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/media?parent=17257457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/categories?post=17257457"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/felss.com\/en\/wp-json\/wp\/v2\/ppma_author?post=17257457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}