The European Commission has issued five key recommendations to Croatia as part of its latest assessment of EU member states, urging the country to strengthen fiscal discipline, accelerate reforms and focus investments on long term economic growth. The recommendations form part of the European Semester process, through which Brussels evaluates economic performance and outlines priorities for the years ahead.
A major focus of the report is public spending, with the Commission warning that Croatia’s expenditure growth is significantly exceeding recommended limits. According to EU projections, net public spending is expected to continue rising rapidly through 2026, creating additional pressure on public finances at a time when governments across Europe face growing costs linked to ageing populations, climate adaptation, defense, and the digital transition. Brussels is calling on Croatia to improve the efficiency of state spending, strengthen oversight mechanisms and continue modernizing its tax system, including further reforms related to property taxation.
The Commission also emphasized the importance of maintaining momentum in reforms financed through the EU’s Recovery and Resilience Facility. Croatia has been among the stronger performing member states in absorbing EU funds, and officials in Brussels want to see that progress continue through investments that deliver measurable economic benefits. At the same time, the report highlights the need for stronger research and innovation policies, closer cooperation between universities and research institutions, and improvements to capital markets to help businesses access new sources of financing.
Energy and infrastructure remain another priority area. The Commission urged Croatia to speed up the deployment of renewable energy projects, modernize electricity networks and invest in energy storage systems to improve energy security and reduce costs. Additional recommendations include simplifying approval procedures for green energy projects, expanding sustainable transport infrastructure and gradually reducing reliance on fossil fuel subsidies. These measures are viewed as essential for meeting both climate targets and long term economic competitiveness.
Labor shortages, housing availability and healthcare challenges also featured prominently in the report. Brussels called for greater efforts to increase workforce participation, improve education outcomes, strengthen vocational training and address skills gaps, particularly in science and technology sectors. The Commission additionally recommended expanding affordable housing options, improving access to healthcare services and investing in digital health solutions, especially in underserved regions.
Overall, the recommendations reflect the European Commission’s view that Croatia’s economy remains on a positive trajectory but faces growing structural challenges that require long term planning. While the country has made progress in areas such as EU fund absorption and economic growth, Brussels believes further reforms will be necessary to maintain competitiveness, improve living standards and ensure fiscal sustainability in the years ahead.
