Faced with the end of the EU’s post-pandemic fund, the bloc’s leaders are using the cash to finance new sovereign investment funds.
Benjamin Fox
EU countries have continued to funnel billions of euros from the bloc’s post-Covid recovery fund to finance new sovereign investment funds, according to new research published on Friday (10 July).
Europe now accounts for 16 percent of global sovereign assets, with funds increasingly focused on bolstering strategic autonomy and industrial competitiveness, according to the Sovereign Wealth Funds Report 2026.
The recent surge in sovereign funds across the EU has, in large part, been driven by “a new generation of European funds” based on “seed capital” from the Covid recovery funds, added the report, which was developed by IE University’s Center for the Governance of Change and ICEX-Invest in Spain.
The recovery fund was launched in 2022 to help EU economies recover from the gigantic hit caused by the Covid-19 pandemic. Composed of loans and grants, it offered a total of €648bn to the EU-27 who submitted national recovery plans to the EU Commission in order to access the cash.
In January, Spanish prime minister Pedro Sánchez set out plans to set up a ‘Spain Grows’ fund based on using €10.5bn from the EU’s recovery funds programme to drive €120bn in private debt to finance investments in housing and national security. The EU funding programme is set to expire at the end of this year.
Spain has established itself as a leading European destination for sovereign capital, attracting 18 deals valued at €6.7bn, placing it behind only Germany in the EU and sixth worldwide by value of transactions involving sovereign wealth funds.
“The impact of NextGenerationEU effect is clear and measurable,” states the report, pointing to France’s FOCO, managed by Cofides, and Spain Grows which, it added, “could drive a second wave of European sovereign wealth fund creation between 2026 and 2030.”
For its part, the Portuguese government’s plans to launch a sovereign wealth fund were approved by its national parliament in June.
The research also found that investment in AI accounts for one out of every three dollars invested by sovereign wealth funds during the period analysed.
The NextGenerationEU differs from sovereign wealth funds in that it is not state-owned or funded by revenue surpluses from oil or mineral exports – the model of Norway’s sovereign wealth fund which, at a value of $2.1 trillion in March 2026, is a higher figure than Spain’s GDP.
Instead, NextGenerationEU is funded entirely through debt raised by the EU Commission on the bond markets.
