Competitiveness on trial: Europe must accelerate the pace of transformation

By Stefano Mallia, President of the EESC Employers’ Group

When Mario Draghi delivered his report on European competitiveness last year, he warned: either Europe reforms radically or it drifts into decline. A year on, the question remains: have we changed course?

The Commission has rightly put prosperity and competitiveness at the top of its agenda for 2025. Initiatives such as the Clean Industrial Deal, a European Competitiveness Fund and InvestAI show the Union is responding. Regulation is also being streamlined through six ‘omnibus packages’, tackling areas from sustainability reporting to defence.

Yet these steps are incremental when compared to Draghi’s call for a transformation. The Capital Markets Union has still not been implemented, savings flow abroad and start-ups struggle to scale up. No ARPA-style innovation engine exists and governance reform – essential for faster decision-making – has been ignored.

Meanwhile, global dynamics are harsher. The USA is turning protectionist, China is intensifying its state-led industrial strategy and wars are fracturing supply chains. Europe risks remaining large but powerless, unable to convert aggregate wealth into influence. Businesses already feel the cost: start-ups depart in search of deeper US financing, SMEs remain fragmented and major firms hesitate to invest. Decline happens not through collapse, but via a steady leakage of capital, talent and opportunity.

The way forward requires acceleration, not hesitation. Four priorities stand out: making competitiveness the guiding principle of policy-making; channelling savings into productive equity; completing the single market; and launching a genuine skills revolution.

President von der Leyen’s State of the Union address is the chance to highlight the urgency. Entrepreneurs and investors will look for tangible outcomes: lower administrative costs, easier up-scaling for SMEs and stronger flows of capital into productive investment. Without this shift, strategies alone will not restore confidence.