2023: Time to take in a competitiveness agenda

As 2022 draws to an end, we can very easily conclude that this has been an annus horribilis for Europe. At a time when Russia has brought war back to the European continent, assumptions and expectations of a lasting peace have been shattered in the wider European space. The war has prompted serious reflection about the instruments and tools available to safeguard peace in times of geopolitical aggression and of weakened multilateral institutions.

One thing is crystal clear: without peace, there can be no prosperity.

The effects of the war on Ukraine are evident in the form of diminishing food and energy security, inflationary pressures, economic crises and global polarisation. New types of threats and destabilising factors such as pandemics, climate change, foreign interference in democracy, cyber-attacks and bio-terrorism, as well as various types of hybrid warfare, call for innovative thinking and new types of resources and solutions.

While the EU has made significant progress on further strengthening its presence and efficiency in the area of peace and security, more remains to be done, particularly in terms of thinking about how to rebuild Ukraine.

Ukrainian President Volodymyr Zelenskyy said earlier this month that his country will need around EUR 56 billion to address next year's budget deficit and to repair damaged infrastructure. The International Monetary Fund (IMF) has estimated that, for 2023, Ukraine will need between EUR 3 and 4 billion in foreign aid on a monthly basis to keep its public services running against the backdrop of Russia's invasion. European Commission President Ursula von der Leyen announced that the EU is set to provide Ukraine with up to EUR 18 billion in financial assistance in the course of 2023 to cover the basic budgetary needs of the war-torn country.

• The Employers’ Group has been fully supportive of EU action to assist Ukraine in its time of need and to start work on rebuilding Ukraine, even before the war is over, which we hope will happen in the very near future. We have engaged with our employer counterparts in Ukraine and have pushed our EU policymakers to do whatever it takes to help Ukraine first to survive and then to defeat Russia's aggression. The EESC, and especially the Employers’ Group, was the first EU body to call for EU Candidate Status for Ukraine.

While we continue to invest energy in helping Ukraine, however, we have also continued to push for the EU's recovery, which must be based on a competitive economy and a fully revamped Single Market. We have been assertive in our work for the Conference on the Future of Europe to call for a more decisive focus on competitiveness, by establishing the good practice of having a competitiveness check to build a stronger and more resilient economy. The Commission and the EU presidencies have been very receptive to this call and that instrument is now being prepared. More importantly, it is becoming increasingly clear to all that the EU must adopt a Competitiveness Agenda that centres on the sustainability and strength of enterprise. Only in this way can we guarantee a heathy society in which we can afford to provide citizens with a good quality of life.

Looking towards 2023, we need to maintain the sense of urgency. We cannot allow ourselves to be lulled into a false sense of "business as usual", because these are extraordinary times, and such times call for extraordinary measures. The competitiveness check has to be incorporated into the wider debate on a competitiveness agenda. Businesses of all sizes across Europe face an existential threat as a result of the unprecedented energy crisis. They are also struggling with record shortages of skilled labour, the many and various requirements of the green and digital transitions, and now face the prospect of higher borrowing costs and lower consumer demand. The imminent threat of production losses, the permanent relocation of energy-intensive industries to non-European countries and the closure of thousands of European companies cannot be ignored.

As the European Commission announced in its Autumn 2022 forecast, growth will slow significantly at the turn of the year. Given that the EU's share of the global economy has been declining for some time, these poor growth prospects will further exacerbate Europe's relative decline.

Against this backdrop, we must step up efforts to develop an ambitious and forward-looking agenda that takes due account of the needs and concerns of business, not only to mitigate the effects of the energy crisis in the short term, but above all to strengthen Europe's competitiveness and resilience, enhance its global influence and ultimately create a favourable environment for businesses to operate and thrive, creating jobs and boosting growth and prosperity. The current situation calls for a number of fundamental objectives:

1. Competitive access to the factors of production (energy, raw materials, labour, capital and data)

2. Realise the full potential of the Single Market and its freedoms, by creating a fully-fledged Digital Single Market.

3. Ensure that open and rules-based foreign trade is made another pillar of the EU economy.

4. The green and digital transition - which we strongly support - must be achieved in a cost-effective way that fosters entrepreneurship and innovation

The first six months of 2023 are the right time to push for the competitiveness agenda to be made a top priority. Sweden, taking the helm of the EU presidency, ranks in the top 10 of the world competitiveness index and is well placed to take on the very important work done by the Czech Presidency and to drive this agenda forward. In a world rife with uncertainty, there is one thing we can be sure of: without a prosperous and competitive Union, the social wellbeing of our society is at serious risk.

Stefano Mallia,
President of the EESC Employers’ Group