Brussels, 28 January 2025
“Check against delivery”
Distinguished guests, friends, ladies and gentlemen.
Thank you for your warm welcome.
It is an honour to join you this evening to speak about the Commission’s agenda to deliver a competitive, sustainable, and prosperous Europe.
Tonight, I would like to share my thoughts on what is at stake, what challenges we face and how the Commission plans to confront them.
As a starting point, it is important to frame a conversation about Europe’s competitiveness in the right context.
We find ourselves in a rapidly changing world. Old certainties are being challenged. Technological change is accelerating. Trade tensions are rising. Europe’s foundational values are being tested.
Our ability to preserve and protect these values depends in large part on our economy’s capacity to adapt to and compete in this changing and sometimes hostile world.
That is what is at stake when we discuss competitiveness.
Today, our freedom, security, social market economy and prosperity depend more than ever on our ability to innovate, compete and grow.
At the same time, climate change continues to represent an existential risk.
We have made historic progress in showing that we can reduce our emissions while growing our economy.
We must build on this progress and achieve the goals set out in the European Green Deal.
Taking these challenges together explains why this Commission has given delivering its new plan for Europe’s sustainable prosperity and competitiveness the highest priority.
The good news is that the European economy has all of the fundamental assets needed to successfully compete in a changing global economy.
We have a well-educated and skilled workforce, a large pool of private capital, a stable and predictable legal environment, the rule of law, and strong social safety nets.
We also, of course, have one of the greatest achievements of the European Union: the Single Market. When considering external competitiveness, Europe does not stand out as a particularly problematic area. In fact, the EU and euro area’s trade and current account balances have generally been in balance or in surplus.
You might therefore ask, what is the problem? The competitiveness issue is best understood when considering the prospects of the living standards for Europe’s citizens.
Raising living standards sustainably is only possible if productivity growth remains strong. This is where the key problem lies.
For over two decades, Europe has not kept pace with other major economies, due to a persistent gap in productivity growth. In terms of labour productivity, the EU has stopped catching up with the United States.
The euro area has fallen behind by about 20% since the early 1990s, and the gap with China is narrowing. The slowdown in total factor productivity growth since the early 2000s has, to a certain extent, also been experienced in other advanced economies.
However, for the EU, this tendency has been aggravated by a number of factors. Europe has a relatively weak presence in areas that have seen strong productivity growth in recent decades.
This includes, notably, information and communication technology manufacturing and digital services. We have also witnessed a growing innovation gap, with Europe losing ground in terms of total number of registered patents.
Young, innovative firms experience difficulties in scaling-up and competing in innovative sectors worldwide, as evidenced by the small number of so-called “unicorns” from Europe.
Finally, we are faced with a complex geopolitical context resulting in higher energy costs for European firms.
Last year’s Draghi report provides a timely analysis of the competitiveness issues facing Europe and a blueprint of the policy action needed to overcome them.
The report identified three imperatives to boost competitiveness:
- Closing the innovation gap
- A joint roadmap for decarbonisation and competitiveness
- Reducing excessive dependencies and increasing security
Research and innovation must be at the heart of our economy. We need a Europe that remains home to cutting-edge scientific and research innovation. To realise this objective, we need to increase our research spending and focus more on advanced technologies.
The Commission’s political guidelines have committed us to accelerate these efforts by expanding the European Research Council and the European Innovation Council.
We will also propose a new European Biotech Act in 2025 to make it easier to bring biotech from the laboratory to factory and then onto the market.
To lead on innovation, we need to create the conditions for researchers to thrive. This means providing the infrastructure and innovative laboratories they need to test and develop ideas through new public-private partnerships, such as joint undertakings.
Europe must be the place where tomorrow’s technologies, services, and clean products are invented, manufactured and marketed.
Europe has set out an ambitious framework to become a decarbonised economy by 2050. As noted in the Draghi report, this commitment has the potential to drive competitiveness if objectives and policies are well aligned.
Tackling high and volatile energy prices for European companies and households must be a priority.
Energy prices are much higher than in competitor regions and vary significantly across the EU, disadvantaging European companies.
Furthermore, Russia has weaponised Europe’s dependency on imported fossil fuels in its war of aggression against Ukraine.
This dependence must be further reduced, with a greater share of energy being produced from decarbonised electricity generation.
Decarbonisation can also an opportunity for European industry, as we remain world-leaders in green technologies.
The Commission will put forward an Industrial Decarbonisation Accelerator Act to support industries and companies through the transition.
This will channel investment in infrastructure and industry, in particular for energy intensive sectors.
It will support the development, production and diffusion in industry of clean technologies.
It will also help to speed up related planning, tendering and permitting processes.
Over time, decarbonisation will help shift power generation towards secure, low-cost, clean energy sources.
This shows how improving sustainability and boosting competitiveness can and must work hand in hand.
I have already referred to the challenging and changing global context that Europe finds itself in.
We need a new economic foreign policy for today’s realities based on economic security, trade, and investment in partnerships.
In order to ensure reliable access to what we need, including critical raw materials, we must develop diversified and resilient supply chains, including through new Clean Trade and Investment Partnerships.
We must also be more ambitious in enforcing our trade agreements and not hesitate to use all of our trade defence instruments where and when needed.
We can boost our competitiveness by investing more in research into dual-use technologies that are essential for our economy and security.
I would like to place a special emphasis on the importance of reducing administrative burdens to enhancing competitiveness. The EU is emerging from a period of very intense regulatory activity. These regulatory efforts aimed to deal with the sweeping changes brought by technological transformations and the challenges resulting from climate change. However, the intense regulatory activity also brought challenges in terms of the consistency of the various legislative pieces, as well as additional burdens for business.
Now is an appropriate opportunity to take stock, listen to stakeholders and, where possible, streamline regulations to make them more coherent and simple. Essentially, we need to make doing business easier and faster in Europe to facilitate European companies competing around the world.
The new Commission has committed to an agenda of simplification, decluttering, and regulatory burden reduction. This means making sure that European companies spend less time and resources on red tape and more on innovation and growth.
Every hour saved on paperwork that can now be employed for production of innovation is a win for Europe’s competitive position.
This is our goal. I am driving the Commission’s work on this important priority in my role as Commissioner for Implementation and Simplification. I look forward to continuing to engage with stakeholders in the weeks and months ahead to inform our work in this area.
We will present our first proposals in this area in the coming weeks with our so-called “omnibus” proposal. We will maintain momentum by following this up with further proposals.
To conclude, the Commission is ready to take the bold action needed to build a more competitive, sustainable Europe.
We will present our Competitiveness Compass tomorrow. This will guide our work on reigniting Europe’s economic dynamism over the next five years. Member States also have a crucial role to play.
Most of the actions required in terms of implementing much needed reforms are in the hands of the Member States.
That is where the European Semester can help in coordinating economic and social policies to ensure that we all remain focused on competitiveness in the years ahead.
The scale and urgency of the challenges facing us is clear. The means to overcome them have been identified.
There is no time to waste. I am looking forward to playing my part in delivering a competitive, sustainable Europe.
Thank you for your attention.
Source – EU Commission