The European Commission lays out its policy plans for the next five years to help turn the continent’s economy around.
European Commission President Ursula von der Leyen called on governments to help turn around the region’s sluggish economy, laying out her Competitiveness Compass with policies to boost growth.
« Our business model has basically relied on cheap labor, from China presumably, cheap energy from Russia and partially outsourcing security and security investment, » she told a press briefing. « These days are gone. »
« We have a plan, we have a road map. We have the political will. Now, what matters and really matters is speed and unity, » she said, touting efforts to boost innovation, push on with decarbonization and secure energy supplies and trade flows.
The plan comes with a stark warning: Do nothing and Europe « risks to be stuck on a low-growth path, with less income for the employed, less welfare for the disadvantaged, and less opportunities for all. »
Bowing to European Union capitals’ calls to slash red tape that hampers businesses, she’s promising to make an “unprecedented effort to produce simpler rules” and speed up administration.
Some of that will mean cutting back new climate-friendly regulations even as von der Leyen insisted that « the EU stays on course for Green Deal objectives without any question. »
But her policy roadmap stresses that governments will have to step up since « many key levers, from taxation to labour markets to industrial policies, are largely or partly in the hands of EU governments » and they should coordinate national reforms and investment via a Competitiveness Coordination Tool.
It offers a high-level blueprint for how von der Leyen wants to direct the EU during her second term. The message is unequivocal, if vague: Europe must become more business-friendly to match the United States and China, without sacrificing its climate goals in the process. Making that happen, however, will be a titanic feat.
Energy is a big focus as companies complain that high power prices, which soared after Russia invaded Ukraine, make it difficult for them to compete with other parts of the world. The Commission pleads with governments to step up investments in Europe’s power grids and storage facilities to enable the switch toward more renewable power sources.
The compass also vows to help carbon-belching industries cut their planet-warming emissions, promising targeted plans for steel and chemical manufacturers. Notably, it explicitly mentions a 2040 goal to cut 90 percent of EU emissions — a figure some conservatives have criticized that still needs to be enshrined in law.
One big problem with von der Leyen’s overarching vision is the limited funding available for new investment. Even large countries like France and Germany are struggling with debt and deficits, a situation that trade tensions with the United States and China could worsen.
The Commission is planning to repurpose unspent regional funding for projects that meet its competitiveness agenda and call on state-backed lenders like the European Investment Bank to funnel funding towards programs such as a TechEU investment program to bridge the financing gap for innovative firms. A forthcoming Competitiveness Fund will also try to make funds flow toward key projects and there’ll be a new push to unlock private funding with a Savings and Investment Union.
The plan is wide-ranging, picking up on criticisms from Mario Draghi’s competitiveness report of a range of policy areas where the EU is slow or fragmented.
It also touches on social issues usually outside of the Commission’s purview by asking governments to open up labor markets as the working population ages and pushing for action to address failings in education where children’s math and reading skills have worsened.
None of these things can be remedied overnight, the plan warned: “Boosting competitiveness is not a quick fix. »
This article has been updated with additional comment from Ursula von der Leyen.
Giovanna Coi, Hanne Cokelaere and Cory Bennett contributed to this report.