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The new European agreement on competitiveness, concluded by EU leaders, is aimed at bringing the EU economy out of stagnation and closing the gap with the US and China.
The document was signed at an informal summit held in Budapest. They want to breathe new life into the European economy through the deepening of the single market, increased implementation of innovations, reduction of bureaucracy for startups and improvement of the investment climate. The next composition of the European Commission has to implement the plan.
This is reported by RFI and reported by Other TV.
The EU leaders built the discussion around the September economic report of the former director of the European Central Bank, Mario Draghi. At the request of the European Commission, the Italian economist prepared a thorough analysis of the state of the European economy and recommendations on how to save it from "slow agony" and reduce the lag behind the world leaders - the USA and China. Draghi sees the main problems in insufficient investment, excessive dependence on energy and technology imports, and lack of coordination at the EU level. In his report, he advised urgently filling the 800 billion euro annual investment deficit in the economy.
This question became especially acute against the background of the change of power in the USA. During the election campaign, Donald Trump threatened to start a trade war with Europe by increasing import duties on products from there by 100-200%. Even during his first term in the White House, the future president pursued the America First policy (America first — Ed.). He introduced restrictions on the import of European goods, introduced tariffs on steel and aluminum, which provoked mirror actions from the EU. At the same time, both sides were and remain concerned about China's growing economic influence, but have different approaches to solving this problem.
Draghi himself states: there is no doubt that Trump's presidency will greatly change relations between the United States and Europe. Not necessarily negatively, but it is necessary to prepare for it, says the economist. In his opinion, the new administration will give an impetus to the development of the technological sector, where Europe is already lagging behind. Draghi calls this industry a driver of productivity. In addition, the author of the economic report suggests that Trump will provide an incentive to innovative sectors and significantly protect traditional industries in which Europe exports the most to the United States.
"In this case, we will have to negotiate with our American ally as a united front to protect European producers as well. So, there are big changes ahead and I believe that Europe can no longer delay making decisions. As you have seen in recent years, many important decisions have been delayed due to the expectation of consensus. But the consensus never came, we got slower development, less growth, and now - stagnation. So now I hope we can find unity to make the most of these significant changes. Working alone, we are too small and will get nowhere," Draghi told reporters at the summit.
Ready for change
Competitiveness is not just a buzzword. It means that it is necessary to focus on economic growth, - believes the President of the European Parliament, Roberta Metzola. Because it means more jobs and turnover. "If we had developed at the same pace as the United States since the beginning of the century, we would have 11 million more jobs," the politician cited statistics.
At the same time, America is not a competitor of the European Union, says Belgian Prime Minister Alexander de Croo. Both partners have a common rival, and that is China. "We need to have a clear dialogue with Donald Trump and explain what impact a tariff war between Europe and the United States could have. Whereas I think we have a common competitor, which is China."
No more business as usual
The President of the European Commission, Ursula von der Leyen, emphasized the strengths that the Union has compared to other countries. According to her, these are the highest life expectancy, a good education system that does not depend on the income of parents, the smallest income inequality, which provides many social guarantees, the most significant reduction in CO2 emissions.
At the same time, she emphasized several main directions in which the European Commission should work in the next five years to strengthen competitiveness. This is the introduction of innovations in the economy and the reduction of bureaucratic procedures for startups. A single rulebook will be prepared for them, which will be valid in all EU countries, so businesses will not have to adapt to different rules in each of the countries of the Euro bloc.
"We have about 182 innovative small and medium-sized enterprises, so this will give them access to the entire single market and allow them to expand. The goal, indeed, is to use the full single market to scale up," said the president. The European Union also needs more capital, in particular, private capital. For this, the EU will create a more favorable environment for investment, so that private funds do not lie in bank accounts or in cash, but work on the capital market.
"Another task is not only to close the innovation gap, but also to solve the secondary priority, namely to have a common plan for competitiveness, decarbonization and digitalization," said the head of the European Commission. It has pledged to propose an agreement on clean industry within the next hundred days of the new term.
Energy was a separate topic of discussion. According to von der Leyen, overcoming the energy crisis caused by Russia's war in Ukraine has been a huge challenge, but energy prices are still too high and need to be reduced, which is one of the tasks for the new commission in the future.
In addition, strengthening the strategic security of the EU remains an important priority. "We know that overdependence can quickly turn into vulnerability, which is why stable and secure supply chains are needed to secure the future of our economy," the president said. To solve this issue, she sees two ways: diversification of supply and implementation of a circular economy, when critical raw materials can be replaced with recycled ones.
New European agreement
The leaders consolidated the results of the summit in the "New European Agreement on Competitiveness". It contains a step-by-step plan for improving the economic situation. The document is mostly aimed at implementing Mario Draghi's recommendations, but one element is missing from it. EU leaders have ignored a proposal to create joint debt obligations to inject 800 billion euros annually into the EU economy. Germany and the Netherlands opposed this idea. Instead, leaders commit to making the most of existing financial instruments and exploring the possibility of creating new ones.
