The EC presents its Competitiveness Compass to strengthen its global positioning

On Wednesday, January 29, the European Commission presented the Competitiveness Compass, a plan aimed at positioning the European Union (EU) as a global leader in the face of powers such as the United States and China. Ursula von der Leyen, President of the Commission, along with Vice President Stéphane Sejourné, unveiled the roadmap that will guide the bloc’s priorities during this legislative term.

The launch of the plan comes at a critical moment: over the past two decades, the gap between the EU’s GDP and that of the United States has doubled, increasing from 15% to 30%, while China continues to establish itself as a growingly competitive economic rival. Inspired by reports from former Italian Prime Ministers Mario Draghi and Enrico Letta, the plan seeks to close decades of slow growth and stagnant productivity compared to other major economies.

The Competitiveness Compass, defined as a guide for action, is based on three strategic pillars: closing the innovation gap, advancing decarbonization, and strengthening economic security through reducing dependencies.

1. Innovation to drive growth

One of the main goals of the Competitiveness Compass is to foster innovation in Europe. To this end, measures have been designed to create a favorable environment for startups and small businesses, promote industrial leadership in high-growth sectors based on advanced technologies, and strengthen areas such as artificial intelligence, biotechnology, advanced materials, robotics, quantum technologies, and space exploration.

The plan includes initiatives like AI Gigafactories and Apply AI to drive the development and adoption of artificial intelligence in key sectors. In addition, a strategy dedicated to startups and scale-ups will be presented to address the barriers that prevent new businesses from emerging and growing.

A unique legal framework in the European market is also proposed, which will simplify applicable rules, including key aspects of corporate law, insolvency, labor law, and taxation, allowing innovative companies to operate under a single set of rules across the Single Market.

2. Energy transition and green competitiveness

The transition to a sustainable economy is another priority of the plan. Among the proposals is the Clean Industrial Deal, which establishes a competitiveness-focused approach to decarbonization, ensuring the EU becomes an attractive location for manufacturing, including energy-intensive industries, while promoting clean technologies and circular business models.

Additionally, an Affordable Energy Action Plan will be introduced, aimed at reducing energy prices and costs, providing access to clean and affordable energy sources for both businesses and citizens.

3. Strengthening strategic autonomy

To reduce excessive dependencies and increase security, the EU seeks to diversify its sources of critical raw materials and reduce reliance on third countries. The Competitiveness Compass calls for the creation of strategic trade alliances, with a focus on new partnerships in clean trade and investment, which will secure the global supply of raw materials, clean energy, sustainable fuels for transport, and clean technologies.

Within the internal market, public procurement rules will be reviewed, enabling the introduction of European preferences in public contracts for critical sectors and technologies, ensuring that European companies are the main beneficiaries of key projects.

Financing, coordination, and administrative simplification

The plan places special emphasis on removing bureaucratic barriers that hinder access to European funds, especially for small and medium-sized enterprises (SMEs). A 25% reduction in administrative burdens for businesses and 35% for SMEs is planned.

In the financial realm, a Union of Savings and Investments will be launched to create new savings and investment products, stimulate venture capital, and ensure smooth investment flows across the EU. Furthermore, in the next EU budget, a Competitiveness Fund will be established to replace various existing financial instruments, supporting key projects and reforms aimed at strengthening Europe’s competitiveness.

Coordination between Member States will also be key. A Competitiveness Coordination Instrument will oversee the implementation of policies at both national and European levels, identifying cross-border projects of common interest and aligning reforms with the bloc’s objectives.