2024-02-19 12:49:11
In recent years, Covid, war or inflation have tested the limits of the European market and competitiveness. It turns out that Europe is not very successful in attracting venture capital or developing research sufficiently. The domestic economy is also slowed down by high energy prices or poor academic results of schoolchildren. Two former Italian prime ministers have to turn the situation around for the better.
The European Commission published its annual report on Wednesday, February 14, in which it summarizes how it looks with the competitiveness of the European economy. It tracks a total of nine factors, including the functioning of the single market, access to private capital, public investment and infrastructure, research and innovation, energy, the circular economy, digitalisation, education and skills, as well as trade.
Photo: EU
Although the mentioned indicators have been monitored in this form only since last year, and it is thus difficult to identify clear trends, the Commission is trying to do so. In his conclusions, he claims, for example, that the European Union is successfully deepening integration in the single market and at the same time reducing the administrative burden on businesses. The share of renewable sources in the energy mix is increasing. Europe can also boast of decent employment or the number of IT experts.
“Of the positive things, I would like to single out digitization. The report shows that every year the proportion of European companies that use at least basic digital tools in their daily operations is increasing. We are thus on the best way to meet the goal we set for ourselves by 2030, which is 90 percent. At the same time, digitization is key to higher labor productivity,” assessed MEP Marcel Kolaja (Pirates).
According to his MEP colleague Luďek Niedermayer (TOP 09), the Commission’s report underlines the importance of the single market and its potential for the development of the economy and the strengthening of the EU’s competitiveness on the global market. “The single market and competitiveness are continuous vessels, and a functioning single market is also one of the prerequisites for the success of the green and digital transformation,” added Niedermayer.
Where the problems lie
On the other hand, when it comes to problems or challenges, an unflattering trend can be seen in the interest of so-called risk capital investors (in the original “venture capital”), i.e. investments in breakthrough companies and technologies.
“It is about the state of the European capital market. It has not yet reached the level we would like. Its improvement would mean easier access for companies to funds, and thus more innovation,” MEP Kolaja is convinced.
According to Luďek Niedermayer, there is also room for improvement in access to private financing, the same applies to the simplification of the regulatory framework and “the introduction of national regulations beyond the scope of EU requirements”. “It is also necessary to make progress in decarbonisation and investments in infrastructure, including networks and cross-border connections,” added the MEP.
The report also says that European 15-year-old students are not doing very well in the international PISA comparison, which assesses their knowledge and skills necessary for adult life. High electricity prices or the share of GDP invested in research and development also remain a problem.
“I am glad that all available data are used, so that we have a clear idea of the development of the European economy and competitiveness. The report points to what we often hear from business, that Europe is lagging behind in both directions and that we need to focus much more on the competitiveness of the EU, ” European Parliament Vice President Dita Charanzová (formerly ANO) also commented on the report.
Tasks for two Italians
The Union believes that the topics of the internal market and competitiveness currently deserve special attention. In addition to the annual analyses, it therefore approached two former Italian prime ministers to prepare plans outlining the necessary reforms.
Enrico Letta led the Italian government briefly between 2013 and 2014, having previously held the positions of Minister for European Affairs and Minister of Industry, Trade and Labor at the turn of the millennium. Now, as president of the prestigious Jacques Delors Institute, he has been tasked with drawing up a report on the state of the EU’s internal market. He is to present it in March.
As Politico found, Letta plans to propose changes to state aid rules to make them fairer and not distort the market. The politician will also focus on the problem of “brain drain” from poorer countries towards France or Germany. “The essence of the single market so far has been freedom of movement. That has been at the center of everything. I would like to add to that the freedom to stay (in your own country),” Letta stated.
The Czech Republic, as the leader of the group of “friends of the internal market” and a pro-export-oriented country, is impatiently awaiting his report. According to the chief director of the Section for European Affairs at the Government Office, Štěpán Černý, the market is mainly asking for “regulatory detox” and “facilitation of the free movement of goods”.
“Available and clean energy will be a necessary condition for global competitiveness for industrialized countries. However, this must also be ensured by private investment, because it will not be possible to continue subsidizing European economies through public support.” added on the X Černý platform.
And it is precisely European competitiveness that is to be addressed in the second expected report. Mario Draghi, the former president of the European Central Bank and “savior of the euro”, who led the Italian government during the covid pandemic, is to present this by the end of June. The respected economist has the seeds of his ideas on how to sustainably invest in green and digital transformation and better compete with China or the US, to present to the finance ministers of EU member states next week.
As Česká spořitelna economist Michal Skořepa previously pointed out to Euractiv.cz, this type of recommendation has its limits. “I suspect that different countries have difficulties in different areas, so if Draghi tries to stay on a pan-European level, his proposals will either be very general or very numerous, with each country having to choose what concerns them ,” Skořepa pointed out.