Whether it is EU investment in third countries (outward) or investment from third countries in the EU (inward), Europe ranks among the world leaders in foreign direct investment  (FDI). This refers to non-EU investors acquiring a significant stake in, or taking control of, an EU company, and vice versa. FDIs can pose risks to security and public order if, for example, control over European critical infrastructure, key technologies or sensitive data lies outside the EU. Moreover, investments in one Member State may also jeopardise the security of other Member States or pan-European projects. These investments should therefore face stricter scrutiny in future and, in some cases, be subject to conditions.

The EU Strategy on Economic Security

In June 2023, in response to geopolitical tensions and technological changes, the Commission presented an EU approach to enhancing economic security. It rests on three pillars: promoting competitiveness, protecting against risks, and deepening cooperation with as many countries as possible. Against this backdrop, the Commission adopted five initiatives in January 2024 to strengthen economic security. The first initiative introduces mandatory screening of FDIs in critical sectors. The other four focus on better coordination of sensitive goods exports, assessing security risks linked to investments in third countries, promoting dual-use research, and protecting universities from third-country influence.

Foreign Direct Investment Screening

To improve FDI scrutiny, the Regulation on foreign direct investment screening, which has been in force since 2020, is now being revised. The revision was aimed at improving cooperation between Member States on FDI screening, whilst ensuring that the EU remains an open investment area. The European Parliament adopted the revised regulation on 19 May 2026. The Council must now formally approve the regulation before it enters into force. The revised Regulation requires mandatory scrutiny of investments in sensitive sectors such as defence, semiconductors, artificial intelligence, critical raw materials and financial services. At the same time, screening procedures are to be streamlined to make the EU a more attractive place to invest. Cooperation between Member States should also be further encouraged. In addition, the scope has been extended to include investments within the EU where the investor is based in the EU but is ultimately owned by individuals or entities from a non-EU country.

In addition, in March the Commission proposed certain conditions for FDIs as part of the Industrial Accelerator Act (IAA). These measures would apply to investments of €100 million or more in selected sectors, including batteries, electric vehicles and critical raw materials. Investors from third countries who control more than 40 % of global production capacity must meet at least four out of six conditions. This includes, for example, a minimum of 50% of the workforce coming from the EU, or a commitment to transfer knowledge to European companies. The IAA is set to be adopted by the Council and Parliament in 2026.

AK supports foreign direct investment controls

The Chamber of Labour welcomes the expansion of FDI controls, as these serve as an early warning system to protect the public interest. However, this function should be extended to other critical sectors such as infrastructure, health and public services. The assessment criteria should also consider potential risks, such as to security of supply and employment, climate protection, and technological independence. Furthermore, there is a need for uniform screening thresholds across Europe, which should apply from the point at which a ten per cent stake is acquired. To improve transparency, public information and participation requirements should also be strengthened. In AK’s view, the conditions set out in the IAA for foreign direct investment in sensitive sectors are urgently needed. However, the €100 million threshold is too high, as it excludes investment in smaller companies, including many ‘hidden champions’ and start-ups in strategically important sectors.

Further links

AK EUROPA: Revised FDI Screening in the EU
AK EUROPA: Industrial Accelerator Act (German only)
European Commission: An EU approach to enhance economic security
European Commission: Commission proposes new initiatives to strengthen economic security
European Commission: Frequently asked questions on Regulation (EU)
European Commission: Commission proposes Industrial Accelerator Act to strengthen industry and create jobs in Europe
European Parliament: Protecting EU strategic sectors from risky foreign investments