European Public Transport Budgets Require 36% Annual Spending Increase by 2035, Arthur D. Little and Polis Research Finds

Europe’s public transport sector currently accounts for €130 billion in annual expenditure, yet faces a growing funding gap as demand rises and environmental and resilience requirements intensify. New research from Arthur D. Little (ADL)’s Future of Mobility Lab and POLIS, a network of European cities and regions collaborating to develop innovative and sustainable urban transport solutions, outlines the scale of this financial shortfall and provides radical recommendations for overcoming it.

Based on research with senior transport and policymakers, in-depth literature reviews, and real-world data from Paris, London, Amsterdam, Berlin and New York, the report estimates that additional spending will require a 36% increase in overall annual expenditure from now to 2035 onwards. This is made up of a 13% rise in operating expenditure (OPEX) and 56% in capital expenditure (CAPEX), driven by:

• Hidden debt caused by historic underinvestment in existing infrastructure (6% of additional funding needs)
• The need to build climate change resilience (32% of additional funding)
• Fleet electrification/decarbonization (2% of additional funding)
• Modal shift and network and service expansion (60% of funding needs)

To illustrate the scale of these requirements, the report's Metropolis model — a representative urban area based on data from five major cities — estimates €1.83 billion in additional annual spending needs from 2035 onwards, through to 2050. This includes approximately €117 million to address historic underinvestment, €574 million for climate resilience, €23 million for electrification, and €1.12 billion for network and service expansion.

Summer 2026’s extreme weather events demonstrates that these investments are more necessary than ever. Bridging this funding gap requires new thinking, stronger partnerships between transport authorities and operators, and embedding sustainability metrics into funding decisions, while considering local challenges and priorities. Bold choices must be made, include challenging expectations that public transport should be cheap or free, optimizing networks by reducing coverage, and breaking down silos between organizations responsible for transport, urban planning, energy, and finance.

François-Joseph Van Audenhove, Managing Partner, Global Practice Leader, Travel, Transport & Hospitality practice, Arthur D. Little, comments: “If cities and regions aim to deliver on their ambitions in terms of modal shift towards sustainable transport mode and climate change, as well as ensure the required resilience of transport infrastructures, they will be facing unprecedented investment challenges over the coming decades to get urban mobility back in track. Getting the required funding will require cities to expand into a different set of approaches which are being explored in this report, developed together with POLIS.”

Karen Vancluysen, Secretary General, POLIS, adds: “Public transport faces a perfect storm: tighter budgets and rising expectations for smarter, greener, more accessible mobility. Meeting this challenge requires every bright mind around the table. The bold ideas proposed by the ADL team push the funding debate forward and remind PTAs that they are not alone in their mission to deliver affordable, high-quality mobility for all.”

Download the report here: Funding storm ahead | Arthur D. Little

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