Keep on keeping on: state aid law and EU competitiveness

During 2025, strengthening European competitiveness was once again a priority of many reform projects in the EU, accompanied by an increased focus on defence capabilities. As Mario Draghi suggested in his widely noted report from 2024, state aid law continues to play a major role in this process.

Improving competitiveness by decarbonising industry

In February 2025, the European Commission put forward the Clean Industrial Deal (“CID”) – a kind of business plan for the EU intended to make European industry more competitive while driving decarbonisation.

In June 2025, the Clean Industrial Deal State Aid Framework (“CISAF”) was then adopted to implement the CID, replacing the old Temporary Crisis and Transition Framework (TCTF). Two of the CISAF’s objectives are to work towards strategically enhancing the EU’s competitiveness and improving its carbon neutrality by 2050, including by promoting projects in the areas of industrial decarbonisation and clean technologies, and reducing the risks of private investment.

When it comes to clean technologies, some progress was in fact made towards implementing these targets in 2025. Under the CISAF, the European Commission approved initiatives such as a €11 billion French state aid scheme promoting offshore wind power projects and a €700 million Spanish state aid scheme intended to facilitate strategic investments in the expansion of cleantech manufacturing capacities.

Defence capabilities through investments by member states

At almost the same time as the CISAF, the European Commission published the Defence Readiness Omnibus, a package of measures aimed at strengthening the EU’s defence capabilities and aligning the national security strategies of the member states on a common European footing. The European Commission assumes that investments of up to €800 billion will be needed over the next four years.

The Defence Readiness Omnibus examines possibilities for arranging funding without an approval procedure under state aid law. The European Commission draws particular attention to the exception for defence in Article 346(1b) TFEU allowing member states to also subsidise defence projects outside the strict requirements of state aid law.

2026 to feature further reform projects

Further revisions to state aid rules are eagerly awaited in 2026. These include updates to the “Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty”, the term of which was recently extended until the end of 2026, and revisions to the General Block Exemption Regulation (GBER) intended to further simplify state aid procedures and reduce bureaucracy in the future.

2026 could also be another landmark year when it becomes apparent how far the reforms already implemented (including under the CISAF) will actually bear fruit and help the EU compete globally. In any event, it is clear that companies across a range of sectors will have valuable opportunities to claim state subsidies for their businesses. 

This article is part of the Competition Outlook 2026. You can find all Competition Outlook articles here.