Derisking Europe: How Public Money Is Being Used to Protect Private Profit Derisking Europe

As the European Union pushes ahead with its industrial ambitions, a new financial approach has quietly become central to its strategy: derisking. It sounds technical, and it is, but it is also deeply political. Derisking is also not limited to industrial policy. In times of austerity, tight fiscal rules, limited public funds, higher interest rates, and political resistance to raising taxes, policymakers have turned to derisking instruments in other policy areas, such as social, climate, and infrastructure, to close investment gaps.

Derisking has become a central part of Europe’s response to multiple crises, including industrial decline, the climate crisis, and social pressures. Increasingly, these challenges are framed as problems of finance and investment rather than problems of public provision and ultimately political will. With public budgets self-constrained, governments are relying more on private finance and using derisking tools to direct private capital toward public goals, often at the cost of democratic control and public ownership.

Derisking is not just a financial tool. It marks a profound shift in how Europe conceives public investment, industrial policy, and the role of the state. Instead of expanding public capacity, it often shifts risks from private investors to the public while giving private actors greater influence over which projects move forward.

Derisking is closely linked to deregulation. By reducing regulatory barriers, speeding up permitting, and simplifying state aid rules, the EU creates an “investment-friendly” environment designed to attract private capital. In practice, this means public institutions take on more financial risk while loosening oversight and conditions for private investors. Together, derisking and deregulation shift Europe’s economic model away from direct public provision and control toward one focused on supporting, subsidising, and absorbing risk for private finance.

This brief aims to outline some risks behind this approach and present alternatives.