Program will drive U.S. leadership in semiconductors as well as provide the critical technology and skilled workforce needed for U.S. semiconductor packaging
Today, the Biden-Harris Administration issued a Notice of Funding Opportunity (NOFO) funded by the CHIPS and Science Act to enable the United States semiconductor industry to adopt innovative new advanced packaging flows for semiconductor technologies. This investment comes as part of the President’s overarching Investing in America agenda, which is increasing American competitiveness and boosting manufacturing in industries of the future.
Semiconductor packaging allows multiple components to be brought together as a single electronic device. Advanced packaging brings those components together in novel ways that improves performance of chips while reducing cost and power consumption. CHIPS for America anticipates making available up to approximately $1.6 billion for funding multiple awards across five research and development (R&D) areas, with the potential for follow-on funding for prototyping activities. This funding opportunity furthers the National Advanced Packaging Manufacturing Program’s (NAPMP) mission to establish a vibrant, self-sustaining, and profitable, domestic advanced packaging industry in the United States.
“Securing domestic packaging capabilities is a key part of our mission to expand domestic semiconductor manufacturing. The Biden-Harris Administration’s investments in the NAPMP, including the advanced packaging piloting facility, expected to be announced later this year, will bring innovative and new technologies directly to American manufacturers and consumers – helping achieve the economic and national security goals of the CHIPS and Science Act,” said Secretary of Commerce Gina Raimondo.
Investing in R&D has never been more important to drive advances in semiconductor technology and establish leading-edge domestic capacity for semiconductor advanced packaging. Emerging artificial intelligence (AI)-driven applications are pushing the boundaries of current technologies like high performance computing and low power electronics, requiring leap-ahead advances in microelectronics capabilities, especially advanced packaging. Solving technical challenges in advanced packaging will help U.S. manufacturers compete globally.
“This ambitious funding opportunity is designed to fill key technology gaps in advanced packaging to ensure U.S. leadership in the global semiconductor ecosystem,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology (NIST) Director Laurie E. Locascio. “CHIPS for America is delivering on its mission to create a domestic packaging industry where advanced node chips manufactured in the U.S. and abroad can be packaged within the United States.”
“Under President Biden and Vice President Harris’ leadership, we have moved out to bring leading-edge semiconductor manufacturing back to the United States,” said Assistant to the President for Science and Technology and Director of the White House Office of Science and Technology Policy Arati Prabhakar. “CHIPS R&D is the next step to create fresh opportunities for semiconductor manufacturing and jobs here at home. Investments like this one in innovative advanced packaging R&D will help American companies create the transformative pathways that we need to win the future.”
This funding opportunity spans five R&D areas to address key challenges and technology gaps in advanced packaging detailed in the NAPMP Vision Paper:

Equipment, Tools, Processes, and Process Integration
Power Delivery and Thermal Management
Connector Technology, Including Photonics and Radio Frequency (RF)
Chiplets Ecosystem
Co-design/Electronic Design Automation (EDA)

This multilayered approach targets R&D efforts that are complementary to one another, and will ultimately translate into results that can be integrated collectively and seamlessly into existing advanced packaging manufacturing processes for semiconductors. Expected outcomes from R&D efforts include new prototypes and innovative advanced packaging flows suitable for adoption by the U.S. semiconductor industry.
CHIPS for America anticipates making available up to approximately $1.6 billion in funding across multiple awards of varying size and scope. Anticipated amounts will vary by R&D area and range from approximately $10 million to approximately $150 million in Federal funds per award, with awards being made over a five-year period of performance. Additionally, CHIPS for America anticipates reserving up to $50 million to support awardees’ future prototyping activities, to be conducted at the anticipated National Semiconductor Technology Center (NSTC) Prototyping and NAPMP Advanced Packaging Piloting Facility.
 
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Five international organisations today released a landmark report that outlines pathways for co-ordinated approaches on climate action, carbon pricing, and the cross-border effects of climate change mitigation policies with a view to achieving global climate goals.
The report was presented on 23 October by the Joint Task Force on Climate Action, Carbon Pricing, and Policy Spillovers, convened by the World Trade Organization and joined by the International Monetary Fund, the Organisation for Economic Co-operation and Development, United Nations Trade and Development (UNCTAD), and the World Bank.
Entitled Working Together for Better Climate Action: Carbon Pricing, Policy Spillovers, and Global Climate Goals, the report arrives at a time when countries around the world are scaling up actions to curb climate change. Mitigation policies are on the rise, including carbon pricing policies, with 75 carbon taxes and emission trading schemes currently in effect worldwide, covering approximately 24 per cent of global emissions.
The report stresses that climate action needs to be stepped up to meet global emission reduction targets, while contributing to broader development goals. It also makes four important contributions to that end:

The report provides a common understanding of carbon pricing metrics to improve transparency on how countries are shifting incentives for decarbonisation.

The report examines the composition of climate change mitigation policies, emphasising the important role of carbon pricing as a cost-effective instrument that also raises revenues.

It outlines how international organisations can support the co-ordination of policies to foster positive and limit negative cross-border spillovers from climate change mitigation policies. The report also analyses the advantages and disadvantages of carbon border adjustment policies, including their impact on developing countries.

It shows how such co-ordination can help to scale up climate action by closing the transparency, implementation and ambition gaps.

The report also makes clear that international organisations’ future work can help fill important knowledge gaps. These include a need for more granular and better data on embedded carbon prices and embedded emissions, the design of border adjustment policies and their interoperability, and other approaches to enhance co-operation to increase ambition and ensure a just transition for all.
OECD Secretary-General Mathias Cormann said: “Countries currently take different approaches to reduce emissions, but achieving net zero requires us to align these efforts for a truly global impact. The OECD’s Inclusive Forum on Carbon Mitigation Approaches, now with 59 members, is bringing together national perspectives and building a common understanding of climate policies and their effects. More coherent and better-co-ordinated global mitigation policies can help prevent negative cross-border impacts such as carbon leakage or trade distortions, while maximising opportunities for innovation, cost savings and shared benefits from the climate transition.”
WTO Director-General Ngozi Okonjo-Iweala said: “Trade-related climate policies are on the rise, with over 5 500 measures linked to climate objectives notified to the WTO from 2009-22. Such policies lead to cross-border spillovers which can increase trade tensions and retaliatory trade actions. Future work by international organisations should focus on concrete ways to come to the co-ordination of more ambitious carbon pricing policies which help to close the climate action gap and address their cross-border spillovers. This may require a framework to ensure interoperability between carbon pricing and other climate mitigation policies.”
IMF Managing Director Kristalina Georgieva said: “This joint report of the five institutions highlights why carbon pricing and equivalent policies are important to scale up climate action. Global emissions need to be cut urgently to put the world on track to achieve the Paris goals and global ambition needs to be doubled to quadrupled. Carbon pricing should be an integral part of a well-designed policy mix, complemented with public investment support and sectoral policies, and international co-ordination on mitigation action could unlock progress.”
UNCTAD Secretary-General Rebeca Grynspan stated: “To ensure a just and green transition, UNCTAD encourages and supports developing countries in crafting the right policy mix to advance climate mitigation. We are strengthening our research and providing a safe space for dialogue to ensure that climate-related measures, including Border Carbon Adjustments mechanisms (BCAs) are evidence based and minimize negative spillovers on developing countries and other sustainable development goals. This is especially critical for less advanced economies, which often have limited productive capacity, infrastructure for monitoring, verification, reporting, and fiscal space. We are committed to helping developing countries decarbonise and diversify their economies by seizing environmental-related export opportunities and working with our member states to reduce the compliance and trade costs associated with these transitions.”
Axel van Trotsenburg, World Bank’s Senior Managing Director (SMD), said: “Through its technical assistance and financing, the World Bank helps countries make sure climate policies are tailored to each country’s context, capacities, political constraints, and development priorities. We think carbon pricing can play a central role in these policies, because it provides the right incentive for the private sector and creates public revenues to support broad development progress and help vulnerable populations manage the green energy transition. But with every country introducing their own climate policies, there is also a growing need for more co-operation and co-ordination. The product of in-depth exchanges across five international organisations, this report provides concrete ideas to make sure climate policies are designed in ways that benefit lower-income economies and help them accelerate their development, create jobs, and participate in global value chains.”
The report is available here.
 
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Non-Technical Summary
One of the most dramatic trends in financial markets over the last decade has been the rise of sustainable investing. Many prominent institutions, such as the European Central Bank, now publicly support sustainable investing. It is often argued that sustainable investing can incentivize firms to act more sustainably by decreasing the cost of capital firms have to pay for their green investments.
Despite the prominence of this idea, it is unclear whether sustainable investing influences firm behavior through a cost of capital channel. So far, it has been difficult to estimate firms’ cost of capital reliably using financial market data, leading to conflicting results and uncertainty about the impact of sustainable investing. Moreover, even if sustainable investing influences the cost of capital in financial markets, this influence may not be incorporated into firms’ perceptions of their cost of capital, eliminating potential real effects of sustainable investing through the cost of capital channel.
We directly study how firms’ perceptions of their cost of capital have responded to the rise of sustainable investing. We use data from corporate conference calls (meetings between firm managers, financial analysts, and investors). Our measures of firms’ perceived cost of capital directly capture an input into firms’ investment decisions and allow us to produce relatively precise estimates of how the cost of capital differs between green and brown firms.
Our main finding is that the perceived cost of capital has dropped substantially for green firms since the rise of sustainable investing. Up until 2016, the perceived cost of capital of green firms was close to that of brown firms. But as sustainable investing surged after 2016, the perceived cost of capital of green firms fell substantially relative to that of brown firms. On average, the perceived cost of capital of green firms is 1 percentage point lower than that of brown firms between 2016 and 2023.
We also find that some of the largest energy and utility firms have started applying a lower perceived cost of capital and discount rate to their greener divisions, such as renewable energy divisions, after 2016. Finally, firms facing a higher spread between the cost of green and brown capital in their sector have pledged to reduce emissions by more, consistent with changes in the cost of capital affecting real outcomes. Together, the results are consistent with the view that sustainable investing is associated with reductions in the perceived cost of green capital and with capital reallocation toward green investments.
Read the working paper here.
 
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The Commission has adopted today the first implementing rules on cybersecurity of critical entities and networks under the Directive on measures for high common level of cybersecurity across the Union (NIS2 Directive). This implementing act details cybersecurity risk management measures as well as the cases in which an incident should be considered significant and companies providing digital infrastructures and services should report it to national authorities. This is another major step in boosting the cyber resilience of Europe’s critical digital infrastructure.
The implementing regulation adopted today will apply to specific categories of companies providing digital services, such as cloud computing service providers, data centre service providers, online marketplaces, online search engines and social networking platforms, to name a few. For each category of service providers, the implementing act also specifies when an incident is considered significant.*
Today’s adoption of the implementing regulation coincides with the deadline for Member States to transpose the NIS2 Directive into national law. As of tomorrow, 18 October 2024, all Member States must apply the measures necessary to comply with the NIS2 cybersecurity rules, including supervisory and enforcement measures.
Next Steps
The implementing regulation will be published in the Official Journal in due course and enter into force 20 days thereafter.
Background
The first EU-wide law on cybersecurity, the NIS Directive, came into force in 2016 and helped to achieve a common level of security of network and information systems across the EU. As part of its key policy objective to make Europe fit for the digital age, the Commission proposed the revision of the NIS Directive in December 2020. After entering in force in January 2023, Member States had to transpose the NIS2 Directive into national law by 17 October 2024.
The NIS2 Directive aims to ensure a high level of cybersecurity across the Union. It covers entities operating in sectors that are critical for the economy and society, including providers of public electronic communications services, ICT service management, digital services, wastewater and waste management, space, health, energy, transport, manufacturing of critical products, postal and courier services and public administration.
The Directive strengthens security requirements imposed on the companies and addresses the security of supply chains and supplier relationships. It streamlines reporting obligations, introduces more stringent supervisory measures for national authorities, as well as stricter enforcement requirements, and aims at harmonising sanctions regimes across Member States. It will help increase information sharing and cooperation on cyber crisis management at a national and EU level.
For more information, please contact:

Thomas Regnier, Spokesperson
Roberta Verbanac, Press Officer

 
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Proposals around unfair dismissal and probationary periods not planned to come into force until autumn 2026

The government has today “unveiled” its Employment Rights Bill, as it looks to deliver “economic security and growth to businesses, workers and communities across the UK“.
Many of the proposed reforms have been heavily trailed in Labour’s Make Work Pay plan and in the media after the government’s election, but there has been increasing speculation as to what may or may not be included in this bill, the form the proposals will take and what measures will be immediate or subject to consultation and secondary regulations.
Indications are that some reforms are unlikely to have an impact in practice for some time, with the government expressly stating that the proposals around unfair dismissal and probationary periods will not come into force until autumn 2026.
The bill was presented before Parliament on 10 October and is stated to bring forward 28 individual employment reforms which cover a broad range of employment reforms.
 
Family-friendly rights
The bill makes a number of changes to support working families with caring responsibilities; while these are descried as “immediate” changes, this is qualified by the statement that the government feels “it is important to take account of a range of views, and… will develop the detail of the approach in consultation and partnership with business, trade union and third sector bodies“.
Flexible working
As expected, amendments are proposed to the existing statutory right to request flexible working. Despite it being stated that flexible working will become “the default for all“, there does not appear to be a substantial shift from the current statutory right: an employer remains able to refuse a request on commensurate statutory grounds but these are now subject to a statutory reasonableness requirement and an employer must explain to an employee in writing why any request is refused and why the refusal is reasonable.
Bereavement leave
The bill amends existing statutory provisions to provide that employees will be entitled to “protected time off work” of one week on a bereavement. Entitlement will be by reference to the employee’s relationship with the person who has died. Detail will be provided for in regulations. This sits alongside the existing right to statutory parental bereavement leave.
Paternity and parental leave
Paternity and parental leave to become day one rights.
Protections for those who are pregnant and new mothers
The government is proposing to provide stronger protections against dismissing those who are pregnant, on maternity leave and within six months of returning to work.
 
Fair pay
National minimum wage
The government is progressing plans for all adults to be entitled to the same minimum wage by removing discriminatory age bands. The national minimum wage is set to increase to take account of the cost of living.
Statutory sick pay
The bill also removes the lower earnings limit for statutory sick pay and cuts out the waiting period before statutory sick pay kicks in.
 
Ending ‘one-sided flexibility’
Zero-hours and low hours contracts
The bill seeks to address “exploitative” zero-hours contracts, while recognising that some individuals will wish to retain the right to remain on these arrangements where that is their preference.
It sets out detail on these proposals, including that workers on zero-hours contracts and workers with a “low” number of guaranteed hours, who regularly work more than these hours, will have the ability to move to guaranteed hours contracts which reflect the hours they regularly work over a 12-week reference period and ensure that workers get reasonable notice of any change in shifts or working time, with proportionate compensation for any shifts cancelled or curtailed at short notice. It is stated that these measures will also be adapted and applied to agency workers.
The government has stated that it will consult on these measures, including how review periods should work, what constitutes “low hours” and how they will apply to agency workers. Its intention is that workers on full-time contracts who occasionally pick up overtime hours are not affected and that where work is genuinely temporary, there will be no expectation on employers to offer permanent contracts. Those who are offered guaranteed hours will also be able to remain on zero-hours contracts if they wish.
Fire and rehire
The bill includes new statutory obligations around the use of “fire and rehire” to introduce a contractual variation.
A dismissal will be automatically unfair unless it falls within a very limited exception permitting this practice where the reason for the variation is to “eliminate, prevent or significantly reduce or significantly mitigate the effect of, any financial difficulties” which threaten the employer’s ability “to carry on the business as a going concern or otherwise to carry on the activities constituting the business” and it was reasonable in the circumstances. The employer must also adhere to a prescribed consultation process.
Unfair dismissal
The bill will remove the two year qualifying period for protection from unfair dismissal so that all workers have a right to this protection “from day one on the job“.
Probationary periods
The bill will allow employers to operate probationary periods by providing an initial period during which there will be “a lighter-touch and less onerous approach for employers to follow to dismiss an employee who is not right for the job“.
The government will consult on the length of that initial statutory probation period; its preference is nine months: “We will also engage further during the passage of the Bill on how we can ensure the probation period has meaningful safeguards to provide stability and security for business and workers”.
As a starting point, the government is inclined to suggest it should consist of holding a meeting with the employee to explain the concerns about their performance (at which the employee could choose to be accompanied by a trade union representative or a colleague). The government will consult extensively, including on how it interacts with Acas’ Code of Practice on Disciplinary and Grievance procedures. It also intends to consult on what a compensation regime for successful claims during the probation period will be, with consideration given to tribunals not being able to award the full compensatory damages currently available.
Existing day one rights that provide protection for employees from unfair dismissal will not be affected by the statutory probation period.
The government has committed to a full consultation on the detail of the proposals. Before the measures come into force there will be a substantial period – once the detailed rules in secondary regulations are confirmed – to allow employers to prepare and adapt: “To provide sufficient time for this, we are making clear now that the reforms to unfair dismissal will not come into effect any sooner than Autumn 2026, and until then the current qualifying period will continue to apply”.
The government hopes that this will give “more people confidence to re-enter the job market or change careers” and which in turn should improve their living standards. While detail is not included in the government’s press release, it has been reported that the proposed probationary period will be nine months following pressure from businesses to lengthen the six months sought by trade unions.
Collective redundancy consultation
As foreshadowed in Make Work Pay, the bill removes the “one establishment” requirement from collective redundancy consultation obligations meaning that 20 or more proposed redundancies within 90 days across a whole business will trigger the collective consultation requirements.
 
Equality at work
Harassment
While reforms around harassment law were not set out in the government’s press release, the bill does seek to take forward, reforms around protection from harassment in Make Work Pay.
It provides that the new duty on employers to take reasonable steps to prevent sexual harassment will be amended to provide for an employer to have to take “all” reasonable steps.
It also introduces liability for third party harassment extending to all the protected characteristics currently covered by harassment (age, disability, gender reassignment, race, religion or belief, sex, and sexual orientation) in the course of employment, unless an employer has taken all reasonable steps to prevent the third party from harassing them.
Regulations may also be introduced specifying what may be “reasonable steps” for these purposes including, among others, carrying out assessments of a specified description; publishing plans or policies of a specified description; steps relating to the reporting of sexual harassment; steps relating to the handling of complaints.
The bill also amends the existing statutory provisions on whistleblowing to explicitly include sexual harassment as a relevant failure in relation to disclosures qualifying for protection.
Equality action plans
The bill provides for regulations to introduce a requirement for large employers to produce equality action plans on how to address their gender pay gap and supporting employees through the menopause.
 
Enforcing rights at work
The government will establish the Fair Work Agency which will bring together existing enforcement functions, including minimum wage and statutory sick pay enforcement; the employment tribunal penalty scheme; labour exploitation and modern slavery; as well as introducing the enforcement of holiday pay policy.
 
Voice at work
The bill reflects a number of the proposals on trade union rights and industrial action set out in Make Work Pay and a number of which will be subject to consultation. The government is looking to simplify the union recognition process, bringing in a new right of access – with a transparent framework and clear rules designed in consultation with unions and business – for union officials to meet, represent, recruit and organise members. Proposals also include a requirement for section 1 statements to include a statement regarding union rights.
The government has already committed to repealing ineffective anti-union legislation, including the Strikes (Minimum Service Levels) Act
The above highlights some of the main provisions; the bill also contains a number of other specific measures, including measures around public-sector outsourcing and addressing sector-wide collective bargaining relating to school and adult social care workers.
The government’s ‘Next Steps’ document
Alongside the bill, the government has published a Next Steps document outlining reforms “it will look to implement in the future“. Subject to consultation, the specific proposals referred to include:

a Right to Switch Off, preventing employees from being contacted out of hours, except in exceptional circumstances.
ending pay discrimination by expanding the Equality (Race and Disparity) Bill to make it mandatory for large employers to report their ethnicity and disability pay gap.
a move towards a single status of worker and transition towards a simpler two-part framework for employment status.
reviews into the parental leave and carers leave systems “to ensure they are delivering for employers, workers and their loved ones“.

What does this mean for employers?
While the headline announcements in today’s press release do not contain any real surprises for businesses, the bill itself is detailed and encompasses many of the proposals set out by Labour in Make Work Pay.
Notably, the government has indicated that it will be consulting on a large number of the proposals with trade unions, employers and other interested parties and many of the proposed reforms will ultimately be implemented through secondary regulations. While there is no firm time-frame, we can expect the government to push forward with consultations on a number of proposals. It has also stated that it expects to begin consulting on these reforms in 2025 and anticipates therefore that “the majority of reforms will take effect no earlier than 2026” with reforms of unfair dismissal taking effect “no sooner than Autumn 2026“. There are also indications that a number of the proposals will be supported by codes of practice and government guidance.
The government’s intention is that the bill will “help drive growth in the economy and support more people into secure work” providing “flexibility for workers and businesses alike“. While the extension of workers’ rights in relation to family leave, pay, working conditions and protection from dismissal is likely to result in a shift in employment practices from employers; it remains to be seen whether in practice the government will achieve these aims.
The additional day one rights provided for by the bill will be additional costs for employers which could be substantial, particularly for those employers engaging lower paid workers. As employers seek to manage these changes, they will need to reassess staffing levels to reconcile the wage costsfor their businesses and adapt their existing policies and procedures to reflect these new rights – for example, the removal of the statutory sick pay waiting period may require careful management of short-term sickness absence through policies, line-management and return to work interviews to address any issues. In the short-term these changes may result in hiring freezes and workforce reorganisations before the measures come into force.
We may also see more cautious recruitment practices in light of the introduction of day one unfair dismissal rights (subject to a statutory probationary period); there is a risk that this could inadvertently drive practices of those who are not an obvious fit for their organisation which could work to the detriment of inclusivity, affecting those with protected characteristics.
Employers will also need to consider the potential repercussions where there is increased movement between competing employers within the same sectors, including how sensitive business information will protected. To address the risk of additional day one rights increasing job mobility, employers will need to consider what loyalty incentives can be provided to control attrition, for example, through share incentive arrangements or retention bonuses.
Much focus has been placed on the proposed changes to flexible working giving employees greater determination over their working arrangements, yet what is proposed appears to be existing rights in a different wrapper. For example, employees currently have a day one right to request a flexible working arrangement which can only be refused on specific statutory grounds and are already able within this right to request working arrangements such as compressed hours, part-time working, term-time working. The government’s emphasis appears to be premised on a flexible working arrangement being accepted unless it is not reasonably feasible – practically speaking this reflects the same grounds on which an employer is able to refuse a flexible working request under the current regime. While the announcement may raise awareness of the right to request flexible working, we do not anticipate this change making any substantial difference, subject to further detail being provided.
We are also expecting the Autumn Statement on 30 October 2024 to contain announcements of relevance to employers; for example, it has been reported that the prime minister may look to increase employer national insurance contributions, alongside other employment-related measures.
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More excellent research, impactful innovation and technology scale-ups are needed to make Europe more globally competitive, secure and sustainable. These are among the twelve expert recommendations presented today to the Commission to strengthen Horizon Europe, the EU research and innovation programme, and its successor.
The recommendations have been drafted by an independent group of 15 leading experts chaired by Manuel Heitor, former secretary of state for science, technology and higher education of Portugal. Their report, entitled ‘Align, Act, Accelerate: Research, Technology and Innovation to boost European Competitiveness’, highlights the European added value of the EU framework programme for research and innovation (R&I), and puts forward twelve recommendations:

Adopt a whole-of-government approach to align research and innovation with the EU strategy for competitiveness and a clean, digital economy.
Boost Europe’s global competitiveness by fostering impactful research, innovation and scale-ups through a stronger framework programme.
Deliver European added value via a portfolio of actions focused on competitive excellence, industrial competitiveness, societal challenges and a strong research and innovation ecosystem.
Establish an experimental unit to launch disruptive innovation programmes with fast funding options, such as “ARPA-style” initiatives.
Strengthen competitive excellence by expanding funding for European Research Council, European Innovation Council and the Marie Skłodowska-Curie Actions to attract top talent.
Create an Industrial Competitiveness and Technology Council to enhance industrial research and innovation investment and ensure relevance to strategic autonomy.
Form a Societal Challenges Council to address key societal issues, align with EU strategic priorities and engage with philanthropy and civil society.
Build an inclusive and attractive EU R&I ecosystem by securing long-term investments, fostering university alliances and encouraging Member States’ co-investment.
Simplify the programme by reducing administrative burdens, embracing agile funding and streamlining application processes.
Develop an innovation procurement programme to stimulate industrial scaling through demand-driven solutions.
Approach international cooperation with a nuanced strategy, tailoring partnerships to specific domains and global geopolitical considerations.
Optimise dual-use technology innovation by managing civilian and military R&I programmes separately, leveraging benefits for national security and civilian needs.

Building on these recommendations, the independent experts are calling for an increased, more focused and protected budget. According to their analysis, this investment would position Europe as a leader in international R&I collaboration and governance.
 
Background
The high-level group on the interim evaluation of Horizon Europe brought together 15 experts from across Europe with a wide range of backgrounds.
The group was tasked in December 2023 to provide concrete recommendations to the Commission on how to enhance the EU R&I programme in the short and longer term. The recommendations build on extensive stakeholder consultations and a wide body of evidence and analysis, including external studies.
For more information, please contact:

Thomas Regnier, Spokesperson
Roberta Verbanac, Press Officer

 
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Elevated risks to public debt call for enduring and carefully designed fiscal adjustments
Blog post by Era Dabla-Norris, Davide Furceri, Raphael Lam, Jeta Menkulasi | Global public debt is very high. It is expected to exceed $100 trillion, or about 93 percent of global gross domestic product by the end of this year and will approach 100 percent of GDP by 2030. This is 10 percentage points of GDP above 2019, that is, before the pandemic.
While the picture is not homogeneous—public debt is expected to stabilize or decline for two thirds of countries—the October 2024 Fiscal Monitor shows that future debt levels could be even higher than projected, and much larger fiscal adjustments than currently projected are required to stabilize or reduce it with a high probability. The report argues that countries should confront debt risks now with carefully designed fiscal policies that protect growth and vulnerable households, while taking advantage of the monetary policy easing cycle.
Worse than expected
The fiscal outlook of many countries might be worse than expected for three reasons: large spending pressures, optimism bias of debt projections, and sizable unidentified debt.
Previous IMF research has shown that fiscal discourse across the political spectrum has increasingly tilted toward higher spending. And countries will need to increasingly spend more to cope with aging and healthcare; with the green transition and climate adaptation; and with defense and energy security, due to growing geopolitical tensions.
On the other side, past experience suggests that debt projections tend to underestimate actual outcomes by a sizable margin. Realized debt-to-GDP ratios five-years ahead can be 10 percentage points of GDP higher than projected on average.
The Fiscal Monitor presents a novel “debt-at-risk” framework linking current macro-financial and political conditions to the entire spectrum of possible future debt outcomes. This approach goes beyond the typical focus on the point estimates of debt forecasts and helps policymakers quantify risks to the debt outlook and identify their sources.

This framework shows that in a severely adverse scenario global public debt could reach 115 percent of GDP in three years—nearly 20 percentage points higher than currently projected. This could be due to several reasons: weaker growth, tighter financing conditions, fiscal slippages, and greater economic and policy uncertainty. Importantly, countries are increasingly vulnerable to global factors affecting their borrowing costs, including spillovers from greater policy uncertainty in systematically important countries, such as the United States.
Sizable unidentified debt is another reason for public debt to end up being significantly higher than projected. An analysis of more than 30 countries finds that 40 percent of unidentified debt stems from contingent liabilities and fiscal risks governments face, of which most are related to losses in state-owned enterprises. Historically, unidentified debt has been large, ranging from 1 to 1.5 percent of GDP on average, and it increases sharply during periods of financial stress.

Larger fiscal consolidation
If public debt is higher than it looks, current fiscal efforts are likely smaller than needed.
Fiscal adjustment plays a crucial role in containing debt risks. With inflation moderating and central banks lowering policy rates, economies are better positioned now to absorb the economic effects of fiscal tightening. Delaying would be both costly and risky, as the required correction grows as time goes by; and experience shows that high debt and lack of credible fiscal plans can trigger adverse market reaction, constraining room to maneuver in the face of turbulence.
Our analysis, accounting for country-specific risks surrounding the debt outlook, suggests that current fiscal adjustments—on average, of 1 percent of GDP over six years by 2029—even if implemented in full, are not enough to significantly reduce or stabilize debt with a high probability. A cumulative tightening of about 3.8 percent of GDP over the same period would be needed for an average economy to ensure a high likelihood of debt stabilization. In countries where debt is not projected to stabilize, such as China and the United States, the required effort is substantially greater. But these two largest economies have a much richer set of policy choices than other countries.
Focus on people
Such large fiscal adjustments, if not well calibrated, will entail large output losses as aggregate demand falls and can harm vulnerable groups and lead to higher inequality. A careful design is thus needed to mitigate the costs of the adjustment and to garner public support for needed fiscal adjustment.
The choice of fiscal measures matters because the impacts are not alike and involve trade-offs. For example, cuts in public investment have the largest output losses and hurt long-term growth prospects, while reducing social transfers hurts vulnerable households and raises inequality.
A judicious mix of people- and growth-focused fiscal measures is needed and will vary across countries. Advanced economies should advance entitlement reforms, reprioritize expenditures, and increase revenues where taxation is low. Emerging market and developing economies have greater potential to mobilize tax revenues—by broadening tax bases and enhancing revenue administration capacity—while strengthening social safety nets and safeguarding public investment to support long-term growth.
Speed also matters. Our analysis suggests that a measured and sustained pace of adjustment would alleviate fiscal risks, while limiting the negative impact on output and inequality by about 40 percent less than a more abrupt tightening. That said, some countries with high risk of debt distress will need front-loaded adjustments.
Adjustments need to be accompanied by stronger fiscal governance, including credible medium-term frameworks, independent fiscal councils, and sound risk management. Enhancing fiscal risk assessment, monitoring closely contingent liabilities in state-owned enterprises, and publishing granular and timely debt statistics can reduce unidentified debt.
High public debt is a concern. Even for some countries where the public debt levels seem manageable, the Fiscal Monitor argues that risks are elevated, and actual debt outcomes in coming years may be worse than projected. Current adjustment plans are not enough to stabilize or reduce debt confidently. The report also shows that well-designed fiscal adjustments can help reduce debt risks, improve public debt outlooks, and mitigate the adverse impact on society.
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The second meeting of the Accession Conference with Albania at ministerial level was held today in Luxembourg.
The European Union delegation was led by Mr Péter Szijjártó, Minister of Foreign Affairs and Trade, on behalf of the Hungarian Presidency of the Council of the European Union, with the participation of Commissioner for Neighbourhood and Enlargement Olivér Várhelyi. The Albanian delegation was led by Mr Edi Rama, Prime Minister of Albania.
The meeting served to open negotiations with Albania on Cluster 1: Fundamentals, including the following areas and negotiating chapters:

Functioning of democratic institutions
Public administration reform
Chapter 23 – Judiciary and fundamental rights
Chapter 24 – Justice, freedom and security
Economic criteria
Chapter 5 – Public procurement
Chapter 18 – Statistics
Chapter 32 – Financial control

The EU also set interim benchmarks, both on the horizontal level for the cluster, and for chapters 23 and 24 (the rule of law chapters) that would need to be met before the next steps in the negotiating process of this cluster can be taken.
In addition, the EU set benchmarks for the provisional closure of chapters 5, 18 and 32.

Albania is performing well in the accession process, and with the opening of the first, fundamental chapters in the EU accession negotiations, the country has reached another important milestone in its enlargement efforts. One of the key priorities of the Hungarian Presidency is to advance EU enlargement, as the European Union requires renewed momentum, fresh energy, and new perspectives, which the Western Balkans can provide. I look forward to Albania’s continued progress on its path to EU membership.
Péter Szijjártó, Minister of Foreign Affairs and Trade, on behalf of the Hungarian Presidency of the Council of the European Union

Monitoring of progress in the alignment with and implementation of the EU acquis and relevant European standards will continue throughout the negotiations.
The Accession Conference will return to this cluster at an appropriate moment.
Background
Following the introduction of the revised methodology for the accession negotiations in 2020, negotiating chapters are divided in six thematic clusters:

Fundamentals
Internal market
Competitiveness and inclusive growth
Green agenda and sustainable connectivity
Resources, agriculture and cohesion
External relations

Negotiations on the Fundamentals cluster are the first to be opened and the last to be closed. Progress under this cluster will determine the overall pace of negotiations.
 
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The implementation of the Recovery and Resilience Facility (RRF), at the heart of the EU’s recovery instrument NextGenerationEU, is speeding up, fostering continuous reform and investment progress in Member States. As shown in the Commission’s third Annual Report on the RRF adopted today, the Commission is supporting Member States in the full and timely delivery of their plans through more streamlined processes, and has further improved both transparency and mechanisms to protect the EU financial interests.
The RRF, with €650 billion in grants and loans, is a critical driver of ambitious investments and reforms across Member States, in initiatives that advance the green and digital transition, and strengthen the resilience and competitiveness of the EU.
Since its inception, the RRF has driven over €82 billion in investments directly supporting businesses. Over 900 reforms are being delivered to cut red tape and speed up business processes to obtain permits and licenses for example, helping EU industry become more competitive. With RRF support, 34 million megawatts hours in energy consumption have been saved, over 11.8 million people have participated in education and training, and 9.8 million people benefitted from protection measures against climate-related disasters.
The Commission, Member States, and all relevant stakeholders, along with the European Parliament and Council, have worked closely together to achieve these results.
Over €300 billion in RRF funds expected to be disbursed by the end of 2024
Implementation and disbursements under the RRF have accelerated after some delays in 2023 largely linked to Russia’s illegal invasion of Ukraine, high inflation, supply constraints and the need to adopt REPowerEU chapters. To date, the Council has endorsed 26 such chapters, which provide additional funds to roll out reforms and investments that diversify the EU’s energy supplies, accelerate the green transition, and support vulnerable households.
As of today, the Commission received 69 payment requests from 25 Member States and disbursed over €267 billion, i.e. more than 40% of the available RRF funding. By the end of the year, over €300 billion in RRF funds are expected to be disbursed. The report details numerous examples of how progress with reforms and investments across the six RRF policy pillars is having a tangible and positive impact on citizens and businesses alike.
The Union has also continued to successfully raise funds on the capital markets to finance the Facility, with more than €60.2 billion issued in NextGenerationEU Green Bonds to date.
Implementation by Member States made simpler
In view of the time-bound nature of the RRF, all efforts should remain focused on the full and timely implementation of the plans by 2026. Member States must continue to swiftly implement their RRPs in full, and the Commission is actively supporting them in these efforts.
In this context, the Commission took further steps in 2024 to support Member States in the implementation of the RRF. In July this year, the Commission introduced simpler processes in updated guidance to Member States, with a focus on how to revise plans, which will remain relevant to address implementation bottlenecks. Reporting requirements for Member States have also been streamlined. In addition, further clarity has been provided on ways to combine RRF with other EU funds to enhance synergies.
Reinforced transparency
The Commission is striving for high clarity and transparency in the implementation of the RRF, even beyond legal requirements.
For example, the report adopted today includes an in-depth analysis of Member States’ data on the 100 largest final recipients of funding under the RRF. The Commission is also providing further guidance on key concepts in the RRF Regulation, for transparency and clarity, which are laid out in the annexes to the report:

clarifying how the Commission determines when a reform or investment has started to ensure eligibility under the RRF;
clarifying what the Commission considers as a recurring expenditure, which is prohibited as a general rule, and the criteria used to determine when an exemption is duly justified;
the concept of double funding in the RRF context, and
the notion of final recipients of RRF funds.

Robust protection of the financial interests of the Union
The protection of the EU’s financial interests is a top priority for the Commission. Therefore, it continuously strengthens its audit and control framework, also taking into account the recommendations of the European Parliament, the Council and the European Court of Auditors. The Commission carried out 17 risk-based ex-post audits over the September 2023–August 2024 period on the satisfactory fulfilment of milestones and targets. Four system audits of national control systems were also carried out. By the end of 2023, the Commission had audited all Member States at least once.
Background
This report is the third of a series of annual reports by the Commission, which cover the implementation of the RRF during its entire lifespan, as required by the RRF Regulation. It will feed into the ongoing dialogue on the RRF implementation both among the Union institutions and with stakeholders.
The information provided in the report is based on the content of the adopted recovery and resilience plans, as assessed by the Commission, on the data reported by Member States until April 2024 as part of their bi-annual reporting obligations, and on developments in the implementation of the RRF until 31 August 2024.
Progress in the implementation of recovery and resilience plans can be followed on the Recovery and Resilience Scoreboard, an online portal the Commission set up in December 2021. You can find more information on the RRF on this page, which features an interactive map of projects financed by the RRF.
For more information, please contact:

Veerle Nuyts, Spokesperson
Quentin Cortes, Press Officer

 
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Today, the Council approved conclusions on climate finance ahead of the United Nations framework convention on climate change (UNFCCC) meeting in Baku, Azerbaijan, from 11 to 22 November 2024 (COP 29).
In its conclusions, the Council underlines that the EU and its member states are committed to the current goal of developed countries to collectively mobilise $100 billion per year in climate finance until 2025. This goal was met for the first time in 2022.
The Council also highlights its strong commitment to continue delivering on climate finance in the future and its intention to support reaching ambitious new collective quantified goals after 2025.
The EU and its member states are the world’s largest contributor to international public climate finance, and since 2013 have more than doubled their contribution to climate finance to support developing countries.
As in previous years, the conclusions do not yet include the figure of the EU contribution for the year 2023. It will be made available by the Commission and to be approved by the Council separately, in time before the start of COP29.
Background
The main objective for the upcoming COP29 will be to negotiate the new collective quantitative goals (NCQGs) after 2025.
Every year, the conference of the parties (COP) to the UN framework convention on climate change (UNFCCC) meets to determine ambition and responsibilities, and identify and assess climate measures.
The EU and its member states are parties to the Convention, which has 198 Parties (197 countries plus the European Union) in total. The rotating presidency of the Council, together with the European Commission, represent the EU at these international climate summits.
Later in October 2024, the Council is expected to approve conclusions that set the general mandate for the EU’s negotiators at the COP29 climate conference. The conclusions approved today will complement the EU’s general mandate.
 
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