Fighting not to be behind powers such as the US and China or at least minimizing the existing gap is the great challenge of the European Union ahead. And the challenge to which a lot of effort has dedicated with reports, analysis and proposals. Ursula von der Leyen committed to presenting a ‘competitiveness compass’ in the first 100 days of his second term to mark the strategy of the coming years. It has fulfilled it, but the road map leaves the key issue without answering: financing.
The president of the European Commission commissioned a report to the former president of the ECB Mario Draghi, who raised the need to invest 800,000 million in the next few years to get out of the “slow agony” in which the old continent is located. That money is essential to close the productivity gap of 20% of the EU with respect to the US and that is enlarged in key sectors such as the technological.
The document presented by Von der Leyen this Wednesday mentions it, but does not come in depth in how to achieve those funds. What reiterates is the need to deepen the banking union and the union of the capital market that are choking. Despite the lack of concretion and aware of the division within the EU on the formulas to finance investments, especially in what has to do with the issuance of joint debt through Eurobons, the president has said that the Keys are “speed and unity.”
“The EU must integrate and have deeper and liquid capital markets as a necessary step to mobilize private sector resources and direct them to future -oriented growth sectors. It is also necessary to stimulate a greater appetite for the assumption of risks by private investors, using public money as an anchor. We must overcome the old hesitations, and the Commission will present in 2025 a strategy for a union of savings and investment, followed by a series of concrete proposals, to allow the creation of wealth for EU citizens and mobilize capital for projects carried out In Europe ”, collects the document.
The bulk of public financing for competitiveness by the EU is relegated to the next European budget, which will begin to be negotiated this year for the 2028-2034 period. “The next multiannual financial framework will be an opportunity to go further and rethink the structure and allocation of the EU budget in support of competitiveness. The EU budget spending is currently fragmented into too many programs, often with a limited coordinated strategic direction and great complexity for the beneficiaries, ”says the Von der Leyen roadmap, which will promote a European specific competitiveness fund in the frame of that budget that allows investing in strategic technologies (from AI to clean technologies). It also points to the European Investment Bank that Nadia Calviño chairs to attract “private investment and fill the investment deficit of Europe in priority areas.”
37.5 billion savings by simplifying procedures
“The EU Competitiveness Compass, which emphasizes the necessary simplification measures, remains without clearly addressing the need for a substantial investment in clean technology and cheaper energy solutions,” laments former political minister Marcin Marcin Korolec, chaired by the Institute of green economy.
“Europe runs the risk of lagging with China in important future technologies: wind energy and car industry are the most prominent examples. The greatest task will be to reinforce Europe as attractive place for business and value creation center, and for this investment is needed. This is where the proposal can be insufficient: many companies cannot wait for the next budget and the union of capital markets to mobilize funds, ”says Linda Kalcher, executive director of the Think Tank Strategic Perspective.
One of the most concrete proposals that outlines the document has to do with the simplification of the administrative processes faced by companies to operate in the EU and that the European Commission hopes that it reduces the costs in the next five years at 37.5 billion. The commitment is that throughout the month of February the community government presents the first “Bus Package” to achieve “a great scope simplification in the information on sustainable financing, due diligence in matters of sustainability and taxonomy.” The risk of some experts is to become a deregulation.
The ‘Made in Europe’ in public procurement
As the European Commission in the field of energy proposed a couple of years ago, promoting that green technologies were ‘Made in Europe’, now proposes to introduce “a European preference in public procurement for strategic sectors and technologies” They suppose 14% of European GDP.
Now, it will not be immediate but the review of the directive is scheduled for 2026. “The public sector has to play a central role. In a context in which other great actors impose access restrictions on their markets and seek to boost their manufacturing capacity in critical technologies, Europe must safeguard their own capabilities, ”explains the document.
Along the same lines, Brussels insists on the need to improve the situation regarding access to strategic or critical raw materials and undertakes to create a joint purchase platform.
Although the European Commission argues that the ‘green’ objectives of emission reduction will be maintained, the climate tax that will be applied to imports of steel, cement, aluminum or fertilizers will be reviewed from 2026. The claim is to minimize “unwanted consequences” of this tariff and avoid the closure or relocation of industrial plants. “Europe needs to combat carbon escape in its industries,” the document establishes, which has been published two weeks after the European Popular Party bet on delaying the entry into force of that rate two years.
“Europe maintains the course,” said Von der Leyen in reference to the green agenda that in recent years has been decaffeinating by electoral and economic interests and she has admitted it: “We have to be flexible and pragmatic.”
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