The European Commission issues five recommendations for Croatia

BRUSSELS, 5 June 2026 (Hina) – The European Commission has called on Croatia to strengthen control of public spending, improve the efficiency of state expenditure and prioritise investments that support long-term economic growth.

The recommendations were published as part of the European Semester spring package, in which the Commission assesses the economic and social developments of EU member states, reviews progress on previous recommendations and outlines priorities for the coming period.

Croatia received five recommendations, the same number as last year.

Public spending and fiscal sustainability

The Commission highlighted concerns over Croatia’s net expenditure growth, stating that the country is significantly exceeding recommended spending limits.

According to Commission projections, Croatia’s net expenditure is expected to increase by 5.7 percent in 2026, while cumulative growth between 2024 and 2026 is projected to reach 37.5 percent.

The Commission noted that this exceeds recommended thresholds and represents a deviation from agreed fiscal targets.

Brussels warned that public finances will face increasing pressure in the coming years due to the need for productive investment, an ageing population, climate adaptation, defence spending and the green and digital transitions.

The Commission therefore urged Croatia to improve the quality and efficiency of public spending and focus investment on areas that support economic growth, including at the local level.

It also called for stronger defence preparedness, more effective spending reviews, continued reform of property taxation and the gradual introduction of a value-based property tax system.

While welcoming recent property tax reforms, the Commission said the current framework remains limited as it applies mainly to vacant and secondary properties and is based largely on location and size rather than market value.

Maintaining reform momentum

The second recommendation focuses on ensuring the continuation of reforms and investments carried out through the Recovery and Resilience Facility, while maintaining strong implementation of EU cohesion policy programmes.

The Commission noted that Croatia is performing above the EU average in the use of cohesion funds, both in project selection and payments.

It stressed the importance of maintaining this momentum while maximising the impact of investments on the ground.

Research, innovation and capital markets

The third recommendation calls for stronger support for research and innovation through greater cooperation, consolidation and, where appropriate, mergers between public research institutes and universities.

The Commission also urged Croatia to strengthen its capital market by improving access to diverse sources of financing, encouraging participation by retail and institutional investors, expanding venture capital opportunities and addressing barriers to stock market listings.

Further recommendations include reducing administrative burdens through better coordination between different levels of government, greater use of digital tools and simpler permitting procedures to support the clean industrial transition.

The Commission also called for improvements in local public administration, human resource management, judicial efficiency and broadband internet coverage, particularly in rural areas and on islands.

Renewable energy and infrastructure

The fourth recommendation centres on energy and climate policy.

The Commission urged Croatia to accelerate the deployment of renewable energy sources to help reduce wholesale electricity prices. It recommended modernising electricity grids, investing in energy storage capacity and introducing smart metering systems and dynamic energy contracts.

Brussels also called for faster permitting and grid connection procedures for renewable energy projects and energy communities.

Additional measures include improving energy efficiency, promoting sustainable heating and cooling solutions, supporting sustainable urban transport and rail development, and advancing the electrification of road transport.

The Commission further recommended the gradual phase-out of fossil fuel subsidies, particularly in the transport sector, alongside measures to strengthen the circular economy and improve resilience to climate-related risks.

Labour shortages, housing and healthcare

The fifth recommendation focuses on addressing labour and skills shortages.

The Commission called for the removal of barriers to labour market participation, stronger education systems, particularly in basic and STEM skills, and ensuring an adequate supply of qualified teachers.

It also recommended expanding upskilling and reskilling programmes, improving work-based learning opportunities and strengthening employment measures targeting vulnerable groups.

To tackle social challenges, the Commission urged Croatia to reduce poverty and income inequality through better-targeted social support while maintaining fiscal sustainability.

Further recommendations include improving access to long-term care services, ensuring a more balanced geographical distribution of healthcare workers and facilities, investing in e-health solutions and strengthening preventive healthcare measures.

The Commission also highlighted the need to increase housing supply in high-demand areas and improve monitoring of affordable and social housing availability.