The abundance of public funds for digital and sustainable transformation, such as Next Generation EU, low interest rates, the expansion of tourism and other variables are causing a certain euphoria and optimism. But we know that the economy is cyclical and this situation will not last forever. In fact, from 2027, when much of the Next Generation funding ends, many companies, regions and economic sectors could face a much more complex environment.
While the outlook for 2028 suggests possible economic difficulties, those who invest in innovation will now be in a much more resilient and competitive position to face them. What does this mean in practice?
Next Generation EU funds have been designed to accelerate the transition towards a green, digital and resilient economy. Since 2021, billions of euros have been allocated to transformation projects in key sectors such as energy, sustainable mobility, the digitalisation of SMEs and technological innovation.
Strategic areas include:
Digitalisation of small and medium-sized enterprises: Process improvement, adoption of advanced technologies and automation.
Renewable energy and energy efficiency: Investment in solar, wind, green hydrogen and technologies for energy efficiency.
Development of sustainable industries: Circular economy, waste reduction and clean technologies.
However, these funds are not unlimited. The flow of public funding is expected to be drastically reduced in 2027, limiting access to resources for those companies that have not taken advantage of this opportunity.
Although it is difficult to accurately predict the economic future, there are several factors that point to a possible contraction in Europe from 2028:
End of massive support from European funds: Without the public investment that has driven the recovery, many companies and regions could be left behind.
Crisis in large issuing markets: Germany and the United Kingdom, pillars of the European economy, face structural challenges that could affect internal and external demand.
Energy volatility and incomplete transition: Dependence on gas and oil, together with an energy transition still in progress, could lead to unpredictable increases in production costs.
Climate impacts: Heat waves, droughts or extreme events could affect key sectors such as tourism, agriculture and logistics.
In this scenario, companies that have not undergone a deep transformation in the coming years will have more difficulties competing, while those that have innovated will be able to better adapt to new challenges.
Investing in innovation is not only a strategy for growth, but also a way to protect against future crises. I would say that doing so now is important because:
Companies that adopt advanced technologies and sustainable models will have lower operating costs, greater efficiency and flexibility to adapt to unexpected changes in the market.
Today, there are multiple avenues for financing innovative projects, both through European funds and private investors interested in sustainable projects.
Digitizing processes or investing in sustainability is not just a matter of survival, but an opportunity to differentiate yourself from the competition.
The green and digital transition is also a regulatory issue. Complying with future regulations will be easier for those who started earlier.
History has shown that economic crises do not affect all companies equally. Those that have invested in innovation and transformation are usually the ones that survive best and, in many cases, those that emerge stronger, among other things because they are more flexible.
Europe is offering the resources necessary to make this transformation. The question is not whether we should transform, but how much longer we can afford to wait. Those who do not act now could find themselves facing an economic downturn in 2028 without the resources or preparation necessary to compete.