Our plan to reignite Europe’s economy
Over the last two decades, Europe's potential has remained strong, even as other major economies have grown at a faster pace.
The EU has everything it takes to unlock its full potential and drive faster, more sustainable growth: we boast a talented and educated workforce, capital, savings, the single market, and a unique social model. To restore our competitiveness and unleash growth, we need to tackle the barriers and weaknesses that are holding us back.
In January 2025, the Commission presented the competitiveness compass, a new roadmap to restore Europe’s dynamism and boost our economic growth.
Three necessities for a more competitive EU
The compass builds on the analysis of Mario Draghi’s report on the future of European competitiveness.
The Draghi report originally identified three necessities for the EU to boost its competitiveness:
- Closing the innovation gap
- Decarbonising our economy
- Reducing dependencies
The compass sets out an approach to translate these necessities into reality.
Closing the innovation gap
The compass spells out how the European Union will boost innovation by:
- creating a friendly environment for young companies to start and expand, with a dedicated EU start-up and scale-up strategy
- helping big companies adopt new technologies such as artificial intelligence (AI) and robotics, thanks to an “Apply AI” initiative
- making it easier for companies to operate across the EU by simplifying rules and laws, with a proposal for a 28th legal regime that will guarantee one set of rules across the EU
- supporting the development of new technologies, with action plans for advanced materials, quantum, biotech, robotics and space technologies
Decarbonising our economy
The compass sets out how we can shift to clean and affordable energy by:
- putting forward the Clean Industrial Deal, to help reduce carbon emissions, especially for energy intensive companies, and facilitate their transition to low carbon technologies
- presenting tailor-made action plans for energy intensive sectors, such as chemicals, steel and metals, which are the most vulnerable at this phase of the transition
- developing an affordable energy action plan to help bring down energy prices and costs
Reducing dependencies
The EU already has the largest and fastest growing network of trade agreements in the world, covering 76 countries.
The compass identifies how we can further diversify and strengthen our supply chains by:
- developing a new range of clean trade and investment partnerships to help secure supply of raw materials, clean energy, sustainable transport fuels, and clean tech from across the world
- reviewing the public procurement rules to allow for the introduction of a European preference in public procurement for critical sectors and technologies
Five additional ways to increase our competitiveness
To complement these three pillars, the competitiveness compass introduces five horizontal enablers to increase our competitiveness across all sectors:
Cutting red tape
The omnibus proposals will simplify EU sustainability reporting obligations to create a favourable business environment where European companies can thrive.
Removing barriers in the single market
The horizontal single market strategy will modernise the single market’s rules, removing barriers and preventing the creation of new ones.
Enabling more efficient financing
The savings and investments union will create new savings and investment products, provide incentives for risk capital, and ensure investments flow seamlessly across the EU.
Promoting skills and quality jobs
The union of skills will ensure high quality education, training and lifelong learning to fill the skills and labour gaps that are holding us back.
Ensuring better coordination
The competitiveness coordination tool will ensure implementation at EU and national level of shared EU policy objectives. It will be supported by the competitiveness fund, which replaces multiple existing EU financial instruments with similar objectives.