BRUSSELS: Promising a “simplification shock”, the EU unveiled a much-anticipated blueprint to revamp Europe’s economic model on Wednesday, as the bloc struggles to keep up with China and the United States.
Coming early in EU chief Ursula von der Leyen’s second term, the publication of the “competitiveness compass” aims to mark a change of tack towards a more business-friendly Brussels.
“We need to reignite Europe’s innovation engine,” von der Leyen told a news conference to present the roadmap — vowing the bloc remained committed to meeting its ambitious carbon-reduction goals while also cutting red tape for businesses.
“I want to be very clear: the European Union stays on course for the Green Deal objectives without any question,” said the European Commission head.
Faced with US President Donald Trump’s tariff threats and China’s fast ascent in key industrial and digital sectors, the 27-nation bloc is under pressure to make life easier for its firms.
It hopes to get back in the race by implementing recommendations made last year by former Italian leaders Enrico Letta and Mario Draghi.
The European Commission’s recent focus on climate change and business ethics has left many companies complaining about excessive regulation compounding high energy costs and weak investments.
Commission Vice-President Stephane Sejourne has promised “a simplification shock without affecting environmental targets”.
Dozens of laws will be revised, with rules on environmental and human rights supply chain standards, reporting on corporate sustainability and chemical safety all facing a trim.
A new category of mid-sized company will be created to reduce the regulatory burden for around 30,000 firms, according to the text.
A European legal regime, distinct from the 27 national jurisdictions, is to be set up to allow innovative companies to benefit from a single, harmonised set of rules on insolvency, labour law, and taxation.
Europe is suffering from energy costs that are much higher than those of its international competitors after the war in Ukraine cut off supplies of cheap Russian gas.
Von der Leyen told a gathering of the world’s elite in Davos last week the bloc must “continue to diversify our energy supplies” and “expand clean sources of generation” including nuclear power — once a Brussels taboo.
The compass also recommends facilitating long-term power purchase agreements and boosting investment in the energy grid to improve transmission and storage.
“Targeted, simplified aid” will encourage industrial decarbonisation, with Sejourne hoping the priority goes towards greening the “top 100 CO2-emitting sites”, which alone account for more than half of Europe’s industrial emissions.
The plan also envisages the creation of labels to spur demand for low-carbon products — such as “green” steel, which Brussels is keen on but is low in demand due to its prohibitive costs.
Specific plans are to be drawn up for troubled sectors such as chemicals, steel and automotive.
The EU would like its competition watchdog to take into account the huge investment needs of technology companies when assessing mergers.
At present, the focus is on the potential impact on prices, which hinders the creation of European behemoths.
The plans thus call for “revised guidelines for assessing mergers” that give adequate weight to “innovation, resilience and the investment intensity of competition in certain strategic sectors.”
To reduce dependency on China and other countries for rare earths and raw materials, Sejourne wants more of the stuff to be mined in Europe.
The commissioner said he has already received 170 mining exploitation or research projects — which often face local opposition over environmental impacts — and has vowed to “facilitate” the issuance of permits.
The compass envisages the creation of a platform for the “joint purchase” of critical raw materials and the development of international partnerships to strengthen supply lines for green technologies, like solar and wind power, chips and pharmaceutical ingredients.
A “European preference in public procurement” for critical sectors and technologies is also mentioned.
More than three decades after its launch, the EU’s single market is still overly fragmented when it comes to sectors such as telecoms, energy and defence, where different national rules hamper competitiveness.
“Removing remaining barriers” is among the priorities cited in the compass’ draft.
Unifying European capital markets — something that has long been stalled by competing national interests — is top of the list.
While Europe boasts a single currency, its start-ups remain incapable of matching the giant fundraising drives enjoyed by their US competitors.
To address that, von der Leyen in Davos promised to create a “European savings and investments union”.
Comments