The European Commission today presented Competitiveness Compass, the first major initiative of this mandate, which provides a strategic and clear framework to guide the Commission's work.
The Compass sets the path for Europe to become the place where future technologies, services and clean products will be invented, produced and marketed, and the first continent to become climate neutral.
Over the past two decades, Europe has not kept pace with other major economies due to a persistent productivity growth gap. The EU has what it needs to reverse this trend, with its talented and educated workforce, capital, savings, single market and unique social infrastructure, if it acts quickly to remove the long-standing obstacles and structural weaknesses that are holding it back.
President of the European Commission Ursula von der Leyen she said: "Europe has everything it needs to succeed in the race to the top. But at the same time we need to address our weaknesses to regain competitiveness. The Competitiveness Compass translates the excellent recommendations of Draghi's report into a plan. So now we have a plan. We have the political will. What is important is speed and unity. The world is not waiting for us. All Member States agree on that. So let's turn that consensus into action."
"In the Compass, the Commission presents its economic doctrine for the next five years. This doctrine is simple and can be summarised in one key word: competitiveness. Competitiveness in every euro we spend and in every initiative we propose. From this ambition comes a threefold work programme: simplify, invest and accelerate our economic priorities. The compass must signal a change in the mindset of Europe and Europeans. It will make Europe more predictable while maintaining the direction of our European model - decarbonised, social and respectful of our values," added the Executive Vice-President for Prosperity and Industrial Strategy Stéphane Séjourné.
Three main areas for action: innovation, decarbonisation and security
The Draghi report identified three transformational imperatives for increasing competitiveness and the compass sets out an approach and a selection of key measures to translate each of these imperatives into reality:
* Bridging the innovation gap: The EU needs to restart its innovation engine. We want to create an environment for young innovative start-ups, foster industrial leadership in high-growth, deep-technology-based sectors, and encourage technology diffusion between established companies and SMEs. In this respect, the Commission will propose "AI Gigafactories" and "Apply AI" initiatives to support the development and industrial deployment of AI in key sectors. It will present action plans for advanced materials, quantum, biotechnology, robotics and space technologies. A specific EU strategy on business start-ups and scaling-up will address barriers to the creation and expansion of new companies. The draft 28th legal regime will simplify the existing rules, including relevant aspects of company, insolvency, labour and tax law, and reduce costs in case of failure. This will allow innovative companies to benefit from one set of rules wherever they invest and operate in the Single Market.
* A common plan for decarbonisation and competitiveness: The Compass identifies high and volatile energy prices as a key challenge and identifies areas for intervention to facilitate access to clean and affordable energy. The forthcoming Clean Industrial Agreement sets out a competitiveness-based approach to decarbonisation aimed at making the EU an attractive location for manufacturing, including energy-intensive industries, and promoting clean technologies and new circular business models. The Affordable Energy Action Plan will help reduce energy prices and costs, while the law on accelerating the decarbonisation of industry will extend fast-track permitting to sectors in transition. In addition, the Compass foresees tailor-made action plans for energy-intensive sectors such as steel, metals and chemicals, sectors that are the backbone of the European production system but are most vulnerable at this stage of the transition.
* Reducing over-reliance and increasing safety. The EU's ability to diversify and reduce dependence will depend on effective partnerships. The EU already has the largest and fastest growing network of trade agreements in the world, covering 76 countries accounting for almost half of EU trade. To continue to diversify and strengthen our supply chains, the Compass points to a new set of clean trade and investment partnerships that will help secure supplies of raw materials, clean energy, sustainable transport fuels and clean technologies from around the world. Within the internal market, the revision of public procurement rules will allow for the introduction of a European preference in public procurement for critical sectors and technologies.
Five horizontal competitiveness drivers
These three pillars are complemented by five horizontal factors that are essential to promote competitiveness in all sectors:
1) Simplification: The aim of this instrument is to significantly reduce regulatory and administrative burdens. It also includes systematic efforts to simplify, speed up and streamline procedures for accessing EU funds and obtaining EU administrative decisions. The forthcoming Omnibus proposal will simplify sustainability reporting, due diligence and taxonomy. In addition, the Commission will make it easier for thousands of small and mid-cap companies to do business. The Compass sets a target to reduce the administrative burden for companies by at least 25 % and for SMEs by at least 35 %.
2) Reducing barriers to the Single Market: The Single Market has been a proven engine of European competitiveness for 30 years. To improve its functioning in all sectors, a horizontal Single Market Strategy will modernise the governance framework, remove barriers within the EU and prevent new ones from emerging. In addition, the Commission will seize the opportunity to make standard-setting processes faster and more accessible, especially for SMEs and start-ups.
3) Financing competitiveness. The EU lacks an efficient capital market that converts savings into investment. The Commission will present a European Savings and Investment Union that will create new savings and investment products, provide incentives for venture capital and ensure a smooth flow of investment across the EU. A redirected EU budget will streamline access to EU funds in line with EU priorities.
4) Promoting skills and quality jobs. Europe's competitiveness is based on its people. To ensure a good match between skills and labour market requirements, the Commission will put forward an initiative to build a Skills Union that will focus on investment, adult and lifelong learning, building skills for the future, skills retention, fair mobility, attracting and integrating skilled talent from abroad and recognising different types of training so that people can work across our Union.
5) Better policy coordination at EU and national level. The Commission will put in place a Competitiveness Coordination Instrument to work with Member States to ensure the implementation of common EU policy objectives at EU and national level, identify cross-border projects of European interest and promote related reforms and investments. In the next Multiannual Financial Framework, the Competitiveness Fund will replace several existing EU financial instruments with similar objectives and will provide financial support for the implementation of actions under the Competitiveness Coordination Instrument.
On 27 November 2024, President von der Leyen announced the Competitiveness Compass as the Commission's first major initiative in this mandate, building on the Draghi report and providing a framework for the Commission's work on competitiveness in this mandate.
In her State of the Union address in 2023, President von der Leyen announced that she had asked former Italian Prime Minister Mario Draghi to prepare a report on the future of European competitiveness. The report warns that Europe will no longer be able to rely on many of the factors that have supported growth in the past. It sets out a clear diagnosis and makes concrete recommendations to set Europe on a different trajectory. Many of these recommendations have already been translated into policy orientations and letters from the President of the College to its members.
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