The 2026 European Semester: a competitiveness test for Europe’s economy

As Europe enters 2026, its economic strategy faces a decisive moment. The European Commission’s 2026 European Semester comes against a backdrop of geopolitical uncertainty, accelerating green and digital transitions, and intensifying demographic pressures. However, the Semester is an opportunity to rebalance EU economic governance by better aligning competitiveness, fiscal sustainability and social cohesion in support of long-term growth.

In our Opinion, the perspective of EU employers is clear: without stronger productivity growth, Europe will struggle to sustain public finances, expand defense capacity, invest in innovation and preserve its social model.

Investment and capital markets

A central concern is Europe’s persistent investment gap. Environmental transformation, technological change and demographic ageing require sustained public and private investment, yet current levels remain insufficient. The Opinion stresses the need for a stronger EU-level fiscal capacity, supported by targeted joint debt issuance, to finance strategic investment priorities. Making crisis-response instruments, such as SURE, permanent could contribute to a more predictable environment for business and a more resilient labor market.

The fragmentation of EU financial markets remains a structural obstacle to growth and scale for European companies. Despite the Single Market, capital markets continue to operate largely along national lines, increasing the cost of capital. We call for decisive progress towards a more integrated Capital Markets Union and suggest exploring an EU-level framework inspired by the US National Securities Markets Improvement Act to increase cross-border investment. More effective mobilisation of Europe’s abundant savings would strengthen access to finance and support innovation.

Human capital

Human capital is another critical pillar as Europe’s competitiveness depends on its capacity to develop, attract and retain skills. 77% of companies considered skills gaps as a barrier to investment in 2024. Skills shortages are already affecting investment decisions, and this is why we call for sustained investment in education, training and upskilling as a driver of productivity.

Simplification

In the Opinion, we welcome simplification efforts to reduce unnecessary burdens for companies, while cautioning against indiscriminate deregulation. Smarter regulations should boost competitiveness without undermining market stability, legal certainty or long-term sustainability. The transparent involvement of social partners and civil society is essential to ensure that simplification delivers tangible economic benefits. The EESC Employers' Group has published a set of recommendations in its recent study "A Business-Centric Approach to Cutting Red Tape" and stands ready to help identify where rules can be made lighter or clearer to spur business activity.

Overall, the 2026 European Semester represents a moment of strategic choice. For employers, its success will be measured by its capacity to deliver a predictable investment framework, deeper capital markets, a skilled workforce and smarter regulations. But social partners and civil society organisations must be fully involved at all stages of the Semester cycle. If used effectively, it can become a key lever for sustainable competitiveness and long-term prosperity across the EU.

Adelina Dabu, EESC Employers' Group member and Study Group member of Opinion ECO/688 - 2026 European Semester – Autumn Package.