Spring Paper 15 EN | springeurop.eu

Springeurop Paper 15

For a more competitive European industry

« From words to action! »

Europe's major challenges in terms of industrial competitiveness

For decades, Europe's economic policy has been based on consumer protection and free competition, with free access to its market.

The policy has failed to protect its industries, many of which have disappeared or have been relocated, and has prevented the emergence of leading European industrial and service companies.

Several formerly prosperous regions have become industrial deserts with a high unemployment level. The Union now finds itself in a situation of dangerous dependency in strategic and cutting-edge areas and is lacking world-class leaders to stand up to the American and Chinese giants.

Europe needs to react, and fast, and create a more competitive industry!

Recommendations for action to the European Executive

1 . As already highlighted in various Springeurop papers since 2019, the EU urgently needs to simplify its highly complex and slow governance and move to a qualified majority decision-making process under the leadership and authority of the President of the Commission. This will allow the Commission to draw up a recovery plan to boost an industrial competitiveness in close consultation with European employers.

2. The European Innovation Council (EIC) should be strengthened with a Board made up of industrialists, assisted by a small number of academics and European civil servants with experience of innovation. The EIC will ensure the revival of the industrial competitiveness by massively encouraging R&D and the registration of European patents filings through tax reductions.

3. Since the introduction of the US Inflation Reduction Act (IRA), the competitiveness of European industry has been seriously challenged. The European Commission must respond:

a) By speeding up the "Green Pact" industrial plan with tax credits.

b) By relaxing the rules on state aid by reallocating existing funds to allow entrepreneurs (especially SMEs) to receive direct aid

without having to go through a long bureaucratic procedure.

4. The competitiveness of our industries is still too heavily burdened by energy prices that are higher than in the USA. The EU must choose energy and new technologies as its priority markets. More specifically:

a) A part of the recovery must be devoted in securing energy supplies at more competitive prices.

b) Another part to the development of the IT/ AI industry, semiconductors, cybernetics, and defence where our American and

Chinese competitors are leaders.

5. EU industrial policy must be oriented towards ecology and climate transition in practical areas:

a) Reconsider the legislation on conformity obligations for products sold in the EU area and making them easily repairable

thanks to parts built according to ecological criteria, optimized technical performance and energy consumption.

b) Encourage R&D and rethink the granting of European patents with this in mind.

c) Protect the EU market from the threat of competing products that do not meet its criteria by introducing dissuasive taxes.

6. Implement measures to defend our strategic interests:

a) Strengthening opportunistically the existing legislative framework on personal data protection, as well as compliance

requirements for products imported into the EU (use of manufacturing processes protected by EU patents, etc.).

b) Quickly optimizing entry taxes from a "law of retaliation" perspective.

7. The EU must change its competition strategy by modifying its approach to mergers in the context of globalization. It must therefore allow the creation of European giants that can compete on a playing field level, specifically with their Chinese and American counterparts.

8.The talent shortages resulting from the decline and ageing of the European population will by default lead to an acceleration of immigration to Europe. The EU must therefore:

a) Strengthen and simplify its migration rules and laws.

b)Implement more effective integration plans.

c) Promote an adequate and continuous training program of immigrants for its industrial needs.

9. Finally, Springeurop recommends that the European Commission include in its communication a specific section devoted to the need to promote the entrepreneurial spirit by regularly publishing success stories from large companies, SMEs, start-ups, and public organizations.

September 2023