Background
Europe today is one of the most competitive, dynamic and innovative regions in the world. However, the few last years have brought some historic challenges, including the COVID-19 pandemic and Russia’s war of aggression against Ukraine.
Although the European Union has managed to successfully weather these crises, they have taken a toll on our overall competitiveness.
The past four years have proven beyond a shadow of a doubt the importance of strengthening our competitiveness and our Single Market. [...] It is true for our ability to develop and deploy at scale the technologies we need for the twin transition. It is also indispensable if we want to have world-class players in the digital field and not simply be consumers of digital products or services produced somewhere else.
Growing challenges such as climate change, artificial intelligence and geopolitical tensions are changing the world we live in. In order to thrive in this new landscape, we need to ensure that Europe is a place where growth and innovation can continue to be fostered.
A more competitive EU will allow European businesses to successfully compete in the global marketplace. We can achieve this by creating an environment where they can develop products, services, or solutions that are better, more efficient, and more innovative than those of their international competitors.
Restoring our competitive edge
We have been strengthening our industrial base and making Europe more investment-friendly by
- implementing our REPowerEU Plan to secure our energy supplies and reduce our dependence on Russia
- developing the Green Deal Industrial Plan to enhance the competitiveness of Europe's net-zero industry
- building a European Health Union where medical supplies are available, affordable and innovative
A five-point plan for a more competitive Europe
To ensure that we can continue to deliver high levels of prosperity for all people in the EU, we are placing competitiveness at the heart of our economic agenda for 2024 and beyond.
Following Enrico Letta's report on the EU’s Single Market, President von der Leyen detailed five major areas of action to further strengthen European competitiveness:
- Unlocking more capital for European businesses
- Ensuring energy independence and cheaper energy
- Addressing the skills shortage
- Nurturing digital innovation
- Unlocking the full potential of trade
Public investment is essential, but it is not enough to ensure that we remain competitive in today’s world.
To allow businesses to tap into Europe’s immense private capital, we must complete the Capital Markets Union (CMU), launched almost 10 years ago.
Every year, €300 billion of European savings are diverted abroad due to the fragmentation of our capital markets system. If we complete the CMU, companies in the EU could raise an additional €470 billion a year in funding. This capital could be used to fuel innovation, growth and job creation across the continent.
To complete the CMU we need to
- harmonise national rules on insolvency
- create cross-border savings products for retail investors
- strengthen supervision at European level of the most important market players
Ensuring energy independence and cheaper energy
EU actions following Russia’s invasion of Ukraine have allowed us to return to pre-war level energy costs. However, the price of energy continues to affect European competitiveness. In order to regain our competitive edge, we must continue to lower energy costs.
Things are now changing for the better, as we move from a world of gas shortfalls to a potential gas abundance. In 2025, a large wave of new liquified natural gas (LNG) export projects will increase the global supply of LNG by 50%, which will significantly lower gas prices.
Meanwhile, our investments in clean energy have allowed us to produce more electricity from wind than from gas in 2023 for the first time ever. This locally-generated renewable energy is good for industry, the environment, and people’s wallets.
However, the work does not stop here. We now need to further develop the energy infrastructure, namely by
- doubling the capacity of cross border electricity transmission
- installing smart grids and charging infrastructure
There are more people at work than at any other time in the European history. However, we are still facing labour shortages that the EU can help address by
- training as many people as possible and address youth unemployment
- increasing women's access to the labour market
- offering more flexible solutions for elder people
- attracting talent from abroad
In order to remain competitive in a green and digital economy, the EU must concentrate on upskilling and reskilling its workforce. This is why we are investing €65 billion via NextGenerationEU and the European Social Fund Plus to ensure that people have the skills they need to thrive in their careers and contribute to European innovation.
According to an EU survey, companies are facing severe difficulties in recruiting staff with cybersecurity skills. In 2022, the shortage of cybersecurity professionals across the EU ranged between 260 000 and 500 000.
To bridge this gap, the Commission has launched the Cybersecurity Skills Academy, which aims to be a single entry-point for European-wide training opportunities and initiatives for cyber skills.
Boosting innovation and competitiveness in the digital area is crucial for remaining competitive in today’s world.
This is why the EU is investing €150 billion from NextGenerationEU in cybersecurity, supercomputers and the skills we need to make this Europe’s Digital Decade
To facilitate the digital transition, the EU has also:
- created the AI Act, the world’s first ever regulatory framework for AI and AI applications
- put in place the Data Governance Act, which enables the creation of common European data spaces for pooling and sharing data
- proposed the Data Act to facilitate data sharing by companies, individuals and the public sector
To ensure that the digital transition is safe, fair and transparent, the Commission has:
- developed the Digital Markets Act, which increases legal certainty for businesses and platforms and empower SMEs and start-ups
- introduced the Digital Services Act, which helps prevent false information from spreading online
Europe is a trading continent, and trade has contributed massively to the prosperity of the European Union today. Trade is essential for the EU because it allows us to
- export our products to a global market
- access critical raw materials that are essential to the green and digital transition
- tap into the growth potential of other regions
This is why the EU will continue to work towards open and fair trade that provides opportunities for our companies. We will do this by negotiating more trade agreements to safe and open markets and reforming the World Trade Organization to better address digital trade and climate change.
The EU will also continue to protect its market and work towards a global level-playing field. This will be achieved by working with partners (such as the G7) to address issues of structural overcapacity, and leaning on our set of over 170 trade defence measures, which have so far protected over 500 000 jobs in the EU from the effects of unfair trade conditions.