Competitiveness and industry

Article by Rapporteur Andrés Barceló Delgado

Competitiveness is now back on the political agenda. While this has long been requested from the business community, the need to guarantee the competitiveness of the EU economy, and in particular its industry, is now high on the list of political priorities. The Swedish and Spanish Presidencies of the EU have been tirelessly promoting the concept, urging the whole EU to guarantee competitiveness as the best way to keep and improve society's wealth and to achieve strategic autonomy.

At the request of the Spanish Presidency, the EESC drafted an exploratory opinion on Competitiveness and Industry, which was adopted at the EESC's October plenary.

We have pointed out several key topics to enhance the competitiveness of industry that I would like to summarise as follows.

Enhancing industry competitiveness is crucial for the EU's economic growth. It will support the green and digital transitions toward a net-zero economy, create quality jobs, and maintain the European social model.

Industrial policy has a twofold approach: from the EU and from each Member State. A coordinated governance is needed to avoid mismatches between countries. The EU institutions must take the lead, ensuring that their approach is pragmatic and realistic.

Nothing can be done if we lack a highly skilled and digitalised public administration. This "updated public administration" and a growth-enhancing regulatory framework are vital for preventing market distortions and unfair competition. Better regulation will mean less regulation. As Montesquieu said, "useless laws weaken the necessary laws", and we in the EU have many examples of useless laws in every layer of activity, from EU level down to the local communities.

The single market is the real cornerstone of the EU. We must enhance and strengthen it, all while avoiding fragmentation. It is therefore crucial to maintain a sound EU-wide State aid regulation that would avoid stronger economies essentially "doping" their companies with excessive resources, providing an unfair competitive advantage.

Europe has made the decision to be fully carbon-neutral by 2050. We must now turn decarbonisation challenges into opportunities by developing sustainable products and services, making the EU a worldwide leader in technology.

Strategic autonomy must be coupled with a fierce promotion of open, free, fair and rules-based trade, securing reliable suppliers that reduce our strategic dependence.

Nothing, however, can be done without people, and it is essential that we reinforce workers' skills to meet the new demands of the green and digital transitions. Organised and strong social dialogue is the best way to keep workers and their representatives involved.

One problem we cannot avoid is demographic decline. The EU must deal with demographic decline by trying to raise the birth rate and easing access to our economy for skilled workers.

Basic science, research, development and innovation must be supported by the whole society. We cannot afford to continue to lag behind other main trade partners in several fields, such as artificial intelligence and green technologies. Promoting STEM studies among young people is therefore crucial and requires a consistent effort.

No paper on industry competitiveness is complete without addressing energy issues. Energy is a genuine problem in the EU that does not exist in other areas. The request from consumers – both households and industries alike – is rather clear: we need competitive, reliable and stable energy prices, in particular for electricity and gas. The solution cannot be to punish the use of fossil fuels, but to reduce the cost of electricity and gas for consumers. Nowadays we have a higher market penetration of renewable energy, however without the expected price reductions that this should bring (including grid charges, taxes, and all the surrounding levies that the consumers must cover).

Western Europe is now fully involved in the digital revolution, and the EU as a whole cannot afford to be left behind. We need to put more money into real R&D&I without falling into the temptation to spread resources thin among many. This approach might be good as a short-sighted political approach, but will not help to develop the proper industry footprint we need.

Industry and society as a whole need modern, interoperable European infrastructure to support the creation of a smart, competitive, green and resilient industry. New investments will be needed.

Maintaining a level playing field within the single market is crucial, and coordinated/funded State aid schemes should be favoured.

Digitalisation can enhance industrial comparative advantages, and thus efforts should focus on the digital single market, infrastructure and investment support.

Encouraging the provision of resources for innovative companies, especially SMEs, is important and requires incentives for private investments and growth capital.

Infrastructure development should ensure interconnection, interoperability and support for circular economy needs.

In conclusion, the EU should prioritise coordinated governance, strengthening the single market, decarbonisation, open trade, skills development, R&D support and infrastructure development to enhance industrial competitiveness in a changing global landscape.

Read the EESC opinion INT/1033 "Competitiveness and Industry" here: https://europa.eu/!Gc8mnX