The European Council concluded its special two-day summit in Brussels on Thursday, with EU leaders emphasizing the urgent need to enhance the bloc’s competitiveness in the face of rapid global shifts. “No time to waste,” they stressed, as they outlined strategies to close the economic gap with the United States and strengthen the European Union’s position on the world stage.
European Council President Charles Michel highlighted concerns over the EU’s reliance on external economic and security bases, warning that it undermines the union’s competitiveness and global influence. “In the face of a new geopolitical reality and increasingly complex challenges, the EU is committed to acting decisively to ensure its long-term competitiveness, prosperity, and leadership,” he stated.
Addressing Economic Sluggishness
Amid intensified geopolitical tensions, continued monetary tightening, and weak global demand, the European economy has been sluggish, particularly in manufacturing and energy-intensive industries. Preliminary data from Eurostat showed zero economic growth in the Eurozone and the EU during the fourth quarter of last year compared to the previous quarter. The European Trade Union Confederation reported that nearly one million manufacturing jobs have been lost in the EU over the past four years.
Strategizing for Competitiveness
The summit identified nine key areas to drive competitiveness, including deepening the single market, developing effective industrial policies, and increasing investments through the Capital Markets Union (CMU) and the European Investment Bank. European Commission President Ursula von der Leyen emphasized that completing the CMU could potentially raise an additional €470 billion annually in funding from capital markets.
Concerns Over U.S. Policies
EU leaders discussed a proposal for an EU-wide effort to subsidize industrial companies in response to the United States’ Inflation Reduction Act (IRA). The IRA, which provides substantial funds, tax credits, grants, and loans to sectors that reduce carbon emissions, has raised concerns among EU leaders. There is fear that U.S. subsidies for domestic production could draw investment away from Europe and threaten industrial jobs on the continent.
Former Italian Prime Minister Enrico Letta presented a report cautioning that rising protectionism threatens the EU’s economic security and technological development in areas like artificial intelligence and clean technology. He underscored the critical need for funding to support the EU’s goals in green and digital transitions, EU enlargement, and defense enhancements. Letta pointed out that approximately €300 billion of EU family savings are redirected abroad each year, primarily into the American economy managed by U.S. asset managers.
Divisions Among Member States
Despite general support for the CMU, divisions among EU leaders remain. While France and Germany back the initiative, many of the EU’s 27 member states express reservations about losing national control and expanding EU regulatory powers. Estonian Prime Minister Kaja Kallas voiced concerns about potentially losing competitive advantages such as their tax systems. Irish Prime Minister Simon Harris emphasized the need for careful implementation without excessive centralization, particularly opposing the harmonization of corporate taxes.
Other Summit Highlights
The summit communique reiterated the EU’s support for Ukraine, though analysts believe limitations in the bloc’s own defense industrial base make it challenging to fulfill more commitments. Regarding the Middle East situation, EU leaders urged all parties to exercise utmost restraint and avoid actions that could escalate tensions. They agreed to implement more restrictive measures against Iran, specifically targeting unmanned aerial vehicles and missiles.
As the EU grapples with internal divisions and external economic pressures, the urgency to bolster competitiveness is clear. The outcomes of this summit signal a commitment to address these challenges, but the path forward requires consensus and decisive action among all member states.
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EU summit urges boosting competitiveness, saying 'no time to waste'
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