New year, new European Commission – but the same… old battles.

From the revitalization of European markets to keep up with the China and them USA to promoting digital and green initiatives, Brussels faces a critical year of economic and fiscal challenges.

What are the key economic policy battles shaping 2025?

The “savings and investment union”

The long-dormant EU capital markets union has been rebranded as “Savings and Investments Association” – but the name change didn’t make it any less controversial.

Two major legislative efforts are already underway: the overhaul of the EU’s retail investment (RIS) rules and its attempt to plug the ‘holes’ (gaps) in the banking crisis management (CMDI) rules. Both have weakened in the negotiations, disappointing the Commission.

When it comes to RIS, Brussels faces a difficult choice: reject and rewrite the proposal, or settle for a “relaxed” version that may soon need further revision.

Meanwhile, efforts to revive the resold debt market, known as securitization, evoke memories of the 2008 financial crisis. Southern EU countries remain wary, while industries such as insurance companies – whose huge investment pools the Commission wants to tap into the securitization market – are largely indifferent.

The Commission is also weighing ideas such as the integration of financial markets and the creation of simple EU investment products, although many member states are still resisting.

Defense spending

For years, Western European countries have largely ignored calls from anti-Russia “hawks” to increase their military spending.

However, the Russia’s invasion of Ukraine in 2022 and the prospect of a second presidency Donald Trump in the US have reignited defense debates in the EU. While most countries agree on the need for stronger defense capabilities, the challenge lies in funding.

Debt-laden countries such as Italy and France, which fall short of NATO’s defense spending target of 2 percent of gross domestic product, have little room to increase their military budgets without making cuts in other sensitive areas.

They favor issuing common EU debt to finance defense – an idea staunchly opposed by fiscally conservative states such as Germany and the Netherlands. The European Commission must navigate a path that satisfies the hawks, southern states far from Ukraine and fiscal hardliners.

The EU’s long-term budget

Negotiations on the next seven-year EU budget will begin in earnest this summer when the European Commission will formally submit its proposal for the period 2028-2035.

Although the amounts under negotiation are negligible, the bottom line is considered bell of power of a country in Brussels. Therefore, the EU’s major powers are already dusting off their abacus and forming coalitions.

The countries of Eastern Europe and the Nordic countries, such as Poland and the Swedenwish to boost EU defense spending, while the countries of the South, such as Italy and the Greecethey would prefer more money to stop the arrivals of immigrants from Africa.

In 2025, EU countries will define their red lines for negotiations. But if the past is any indication, it’s that leaders will fight over the details until the last minute.

The fire of green rules

Green finance rules were already set to dominate the 2025 agenda, with amendments to the Sustainable Finance Disclosure Regulation widely expected to iron out flaws in a text that has significantly affected the industry.

But now the President of the Commission, Ursula von der Leyenhas taken future amendments to another level by announcing a “sheltered” law that is expected to merge a number of green rules. The package is already sparking political battles over which laws will be included, with the financial sector bracing for a heated legislative battle.

The “open finance” revolution

Lawmakers are debating key financial reforms, including a bill on data access to financial instruments and rules for the payments sector, confronting big technologies with traditional financing.

The data bill would force insurance and other financial firms to share customer data with third parties in a bid to drive innovation.

While consumer advocates are wary of big tech’s growing role, policymakers have added oversight provisions for large digital platforms designated as “gatekeepers.”

However, there is no official ban on their direct entry into the financial data market to offer new products.

Payment service providers vs. digital platforms

When it comes to payments, the biggest battle centers on liability for fraud.

Payment service providers want digital platforms to be held partly responsible for fraud in their systems, as online communication channels have become a key tool for fraudsters, a move in which online platforms they react strongly.

So far, the EU executive has remained neutral, arguing that payment reform may not be the best way to tackle the issue. As a result, governments and legislators will have the final say.