As the new European Commission prepares to take office on December 1, 2024, its leadership, under President Ursula von der Leyen, has unveiled a comprehensive strategy to ensure that the European Union remains competitive on the global stage. The strategy, outlined in a recent speech by von der Leyen, revolves around three key pillars designed to tackle the EU’s most pressing challenges: innovation, decarbonization, and economic security. This ambitious plan, which von der Leyen referred to as the "competitiveness compass," aims to address Europe’s current economic and technological vulnerabilities while setting the stage for long-term growth.
The first pillar of this new competitiveness agenda focuses on closing the significant innovation gap that currently exists between the EU, the US, and China. According to von der Leyen, the EU must make greater strides in research and development to match the rapid technological advancements seen in these two economic giants. While the EU has made considerable progress in several areas, such as the digital economy and clean technologies, it still lags behind in terms of private sector investment in R&D. Currently, business spending on R&D in Europe is around 1.3% of GDP, which is lower than China’s 1.9% and the United States’ 2.4%. To bridge this gap, von der Leyen proposed the creation of a European Savings and Investment Union. This initiative will help European companies access the capital they need to fund innovation, fostering a more vibrant ecosystem for startups, SMEs, and larger industries.
The second pillar of the new plan addresses the EU’s goal of decarbonization, which was first set out by the European Green Deal nearly five years ago. Von der Leyen emphasized that the EU is committed to meeting its environmental targets, but achieving these goals requires a more flexible approach and stronger support for both businesses and individuals. To facilitate the green transition, the Commission will introduce the Clean Industrial Deal within the first 100 days of its mandate. This deal aims to accelerate the adoption of clean technologies across Europe’s industrial base, while ensuring that industries and SMEs are not left behind in the transition. As part of the decarbonization effort, the EU will also focus on creating a level playing field for its industries by encouraging clean energy adoption and decarbonizing the production of key materials, such as steel and cement.
The third pillar of the “competitiveness compass” is centered on enhancing economic security and reducing Europe’s dependency on external sources, particularly in critical areas such as energy, raw materials, and technology. Von der Leyen highlighted that ensuring the EU’s economic security is essential to safeguarding its long-term stability. This involves diversifying supply chains, investing in strategic sectors, and improving the resilience of Europe’s industrial base. A key aspect of this pillar is reducing reliance on countries like China for essential goods and resources, which has become a growing concern in recent years. The European Commission will focus on strengthening partnerships with like-minded countries, ensuring that Europe can secure its supply of critical materials while maintaining strong global trade relationships.
To achieve these ambitious goals, von der Leyen emphasized the importance of public investment. While EU funding is essential for driving these initiatives, she pointed out that the current system is often too fragmented and complex, with similar projects being funded in multiple ways across different programs. To address this, the European Commission will work to simplify the budgetary processes, making investments more targeted and efficient. This streamlined approach will allow for more focused funding in areas like R&D, green technologies, and economic security. Von der Leyen’s plan is to create a more cohesive financial strategy that aligns with the EU’s long-term priorities, ensuring that public funds are used in the most effective manner possible.
In addition to public investment, the European Commission will work to attract more private investment into Europe. The lack of sufficient private capital for R&D has been a major hurdle for the EU, and von der Leyen sees this as a critical issue that needs to be addressed. By facilitating access to capital and encouraging private companies to invest in the future of Europe’s technological and industrial sectors, the Commission aims to stimulate innovation and ensure that European businesses remain competitive. This will be especially important in sectors such as clean energy, digital technologies, and advanced manufacturing, where private sector involvement is crucial for driving progress.
A major part of the European Commission’s focus will be on simplifying the regulatory burden for businesses. The current regulatory framework in Europe can be cumbersome and complex, placing a heavy administrative load on companies, particularly small and medium-sized enterprises. Von der Leyen stressed the need to streamline these regulations to make it easier for businesses to operate and innovate. By reducing unnecessary bureaucracy, the Commission aims to foster a more business-friendly environment that encourages entrepreneurship and investment.
The "competitiveness compass" is a comprehensive and forward-looking strategy that seeks to address the key challenges facing the EU in the coming years. By focusing on innovation, decarbonization, and economic security, the European Commission aims to ensure that Europe remains a global leader in technological and industrial development. With the proposed actions and initiatives, the EU will not only improve its competitiveness but also safeguard its economic future and build a more resilient and sustainable economy.
