Sections in this chapter



All across Europe, people depend on quality local public services every day. From reliable buses and insulated public housing, to good schools and the provision of clean and affordable energy, we all count on our municipality, city or region to deliver. But all of these services depend on healthy and sustainable local public finances.

That's why we at CEMR, the Council of European Municipalities and Regions, have produced this special digital report on "Local Finances and the Green Transition in Europe."

In the current context of uncertainty and crisis, it is more important than ever to understand how subnational finances and investment work across Europe and how they can be further strengthened and prepared for future shocks. In this unique study, we analyse the most important trends for local finances in Europe over the last 10 years, from the aftermath of the financial crisis to the beginning of the COVID pandemic.

As the pan-European local government association, we were able to gather local and regional data from 40 European countries, providing a wealth of information and insights for politicians and policymakers. This includes detailed local and regional data on taxes and spending. For example, 46% of all local spending in Europe, almost half, is dedicated to education, social protection and health: areas crucial for our citizens' well-being.

At the same time, local debt is low and stable: a mere 4.8% of GDP on average. The study also reveals that local and regional governments are critical to achieving the structural changes our societies need to be fit for the future. Indeed, they finance 54% of all public investment. This reflects municipalities and regions' leading role in investing in energy efficient housing, smarter public transport and local environmental protection.

The data is clear: the climate and energy transition will happen by working with local and regional governments, or not at all.

The study also includes a special chapter on the impact of the EU's 720-billion-euro post-COVID recovery plan on local and regional governments. This chapter looks at the implications for the green transition and territorial cohesion.

I hope you will enjoy exploring this report and having the data and analysis at your fingertips. Local finances have repeatedly come under pressure in recent years with the COVID pandemic and now again with the Russian invasion of Ukraine and resulting energy crisis. Yet, if the data shows one thing, it is that well-funded municipalities, counties and regions are essential to taking caring of our people and realising the environmental transition.

Only by unlocking local investments can we achieve the sustainable and resilient societies our people and planet need.