European economic security

Economic security in a nutshell

The EU is one of the most attractive destinations for global companies and for investment, largely thanks to its single market, which enables the free movement of goods, services, people and capital. The EU’s economy thrives on open and rules-based trade and investment, on secure cross-border connectivity and on collaboration in research and innovation.

Given the increased geopolitical tension, accelerated technological shifts and deeper global economic integration, certain economic transactions and activities can pose a risk to the EU’s security and undermine its competitiveness.

To address these issues, in June 2023 the European Commission and the EU High Representative for Foreign Affairs and Security Policy presented the European economic security strategy, which identifies four risk categories:

resilience of supply chains

technology security and leakages

security of critical infrastructure

economic coercion

The strategy sets out to address these risks by means of the following three pillars for action:

promote the single market
protect our economic security
partner with other countries and regions

In January 2024, this strategy was further complemented by five initiatives in the areas of trade and research, related to the screening of foreign direct investment, export controls, outbound investments, research and development in technologies with dual-use potential, and enhanced research security.

These and future initiatives, as well as ongoing risk assessments, will help implement the strategy and minimise risks to the EU’s economic security

Screening of foreign direct investment

Foreign direct investment (FDI) in the EU benefits the European economy, but certain investments may pose a risk to the EU’s security and public order.

To prevent investments that could pose a security risk, in 2019 the EU adopted the FDI screening regulation (2019/452). However, a review of the regulation indicated certain shortcomings. To address these shortcomings, the Commission proposed that the rules be updated to improve the screening of foreign investments. Building on a review of 1 200 FDIs between 2021 and 2024, the proposed revision of the FDI screening regulation includes measures to:

ensure that all EU countries have a screening mechanism in place
cover investments by EU subsidiaries of foreign investors
better coordinate national rules
clarify the scope of the investments screened

On 8 June 2026, the Council formally adopted the revised regulation. The updated framework will strengthen the EU’s ability to identify, assess and address risks posed by certain foreign investments, while preserving its openness to global trade and investment.

To ensure a higher degree of harmonisation across the EU, all member states will establish screening mechanisms that cover a clearly defined set of sensitive areas. As a minimum, these will include:

dual-use items and military equipment
hyper-critical technologies
critical raw materials
critical entities in energy, transport and digital infrastructure
electoral infrastructure
a limited set of financial system entities

While screening decisions remain the exclusive responsibility of the member state in which the investment is being made, the new rules will also bring in a stronger cooperation and accountability mechanism.

The rules will start to apply 18 months after the revised regulation enters into force.

A globe highlighting Europe with red and blue arrows indicating connections, accompanied by a stack of coins symbolising financial investment.

Foreign direct investment screening explained

Outbound investments

The EU is one of the largest foreign investors in the world and recognises the importance of open global markets. Amid growing concern regarding investments made abroad in a specific set of critical technologies, the Commission has proposed measures to monitor outbound investments and assess the issue in detail.

In a recommendation issued on 15 January 2025, the Commission called on member states to review outbound investments by their companies in non-EU countries in three areas that are considered both to be strategically important and to pose a high risk if technologies from those areas, such as semiconductors, artificial intelligence and quantum technologies, fall into the wrong hands. This recommendation was discussed further by trade ministers in the Council in May 2025.

Export controls on dual-use items

Dual-use items are goods, software and technology that can be used for both military and civilian purposes. Examples of these goods include cyber-surveillance items, advanced electronics, toxins, nuclear or missile technology, and drones.

The aim of export controls is to contribute to international peace and security and to prevent human rights violations and the proliferation of weapons of mass destruction. In recent years, export controls on dual-use items have also become intricately linked to economic security.

Pursuit of technological leadership and unilateral actions by some third countries, sometimes targeted at the EU member states, has meant that the EU needs to better coordinate and harmonise export controls to make them more agile and effective.

To foster uniform and effective export controls across the EU, the Commission put forward specific proposals in a white paper in January 2024. Four months later, the Council adopted conclusions that largely endorsed these short-and medium-term actions. In April 2025, the Council and the Commission also published a recommendation on better coordination of national control lists. It provides a framework that helps member states to align their national controls with both EU and multilateral standards, enhancing the EU’s unified stance on export control issues.

Research and development in dual-use technologies

Many critical technologies have dual-use potential, which means that they can be used for both civilian and military purposes and can help enhance EU objectives related to competitiveness, defence and security.

To maintain a competitive edge, in a white paper in January 2024, the Commission proposed options to strengthen research and development in dual-use technologies, including a review of current funding programmes to assess whether they adequately support those technologies. As a follow-up, the Commission launched a public consultation between January and April 2024 on the options, which gathered input from industry representatives, research organisations, national authorities, civil society and other actors across the EU.

In July 2025, the Commission put forward a proposal on the new Horizon Europe, the EU’s leading research initiative, in which they suggest to open the programme to dual-use and defence related research under two different pillars on competitiveness and European Innovation Council respectively. The proposal on the new Horizon Europe, set to run from 2028 to 2034, will be first discussed and then adopted by the Council and the Parliament.

Enhanced research security

Openness, international cooperation and academic freedom are at the core of world-class research and innovation. However, with growing international tensions and the increasing geopolitical relevance of research and innovation, researchers and academics in the EU are exposed to more risks and possible malign influence when cooperating internationally.

To counter these risks, in May 2024 the Council adopted a recommendation on enhancing research security. The main aim is to guide and support the Commission and EU member states in addressing the research security risks, including:

undesirable transfer of critical knowledge and technology
malign influence on research
ethical or integrity violations

In the recommendation, the Council emphasised the importance of keeping research cooperation open and secure, in line with the principle of as open as possible and as closed as necessary. To that end, the recommendation takes into account criteria such as proportionality of safeguard measures and respect for fundamental rights, while also preventing protectionist measures and the unjustified use of research for political ends.

The Commission, together with EU member states, will monitor and implement the recommendation and report on it every two years. In so doing, the Council has proposed that the Commission should use the existing governance structure of the European Research Area.