Investment Report 2025/26: Capitalising on Europe’s strengths

European Investment Bank – Report Overview

The Investment Report 2025/26 is published by the European Investment Bank (EIB), the EU’s multilateral development bank. It is authored by senior economists and researchers including Debora Revoltella (Director of Economics), Laurent Maurin, Atanas Kolev and a large team of specialists from the EIB Economics Department. The study analyses the latest trends in investment across the Union, with a particular focus on the role of public and private capital in driving sustainable growth, including the housing sector.

Housing Shortage Challenges Europe Faces

Across EU cities, 51 percent of residents consider a lack of affordable housing the most pressing problem. The report notes that insufficient supply hampers labour mobility and limits access to better‑paid jobs, thereby constraining overall economic performance.

Economic Gains from Solving the Housing Gap

Modelling by the EIB suggests that fully addressing affordable‑housing shortages could raise EU gross domestic product by 1.7 percent and reduce wage inequality by roughly 1.5 percent. These gains stem from increased construction activity, higher household consumption and reduced commuting costs.

Productivity Decline in Construction

Since 2000, labour productivity in the European construction sector has fallen by 15 percent. The drop is linked to ageing workforces, fragmented markets and limited adoption of modern techniques, which together raise the cost of new homes and infrastructure projects.

Digitalisation as a Boost for Sustainable Building

The report highlights that digital technologies—such as Building Information Modelling, off‑site prefabrication and data‑driven project management—can improve coordination, reduce waste and speed up delivery. Digitalisation is presented as a key lever to restore productivity and support greener construction practices.

Public Investment Outpacing GDP

Public investment in the EU now grows faster than gross domestic product, with government spending on infrastructure and housing remaining a core driver of this trend. The Recovery and Resilience Facility (RRF) continues to channel funds toward climate‑friendly and digital projects, including energy‑efficient housing retrofits.

Funding Gaps and Private Capital Needs

Despite strong public outlays, the report stresses that a sizeable financing gap persists for sustainable housing. Private capital is essential to complement public funds, especially for mid‑term and large‑scale developments that incorporate renewable energy, low‑carbon materials and innovative design.

👷‍♀️Policy Instruments Supporting Housing Investment

The EIB points to several policy tools that can mobilise private resources: grants and subsidies, concessional loans, risk‑sharing mechanisms, venture‑debt programmes and the wider Savings and Investment Union. These instruments lower investors’ risk exposure and encourage long‑term commitments to eco‑friendly housing projects.

Regulatory and Market Integration Benefits

A more integrated single market reduces administrative burdens and harmonises building standards across member states. The report estimates that removing market fragmentation could raise overall firm investment intensity by 10 percent, with even larger effects for intangible and green‑technology investments, including sustainable construction.

Strategic Importance of Housing for Europe’s Future

Secure, affordable and energy‑efficient homes are presented as a strategic pillar for the EU’s competitiveness and social cohesion. By aligning public financing, private capital and digital innovation, Europe can meet its climate targets while delivering the housing needed for a growing and mobile workforce.