Swedish EU minister calls for action on competitiveness agenda

As the bloc’s economy struggles under high energy prices and an uncertain financial outlook, EU legislators are trying to find ways to strengthen the competitiveness of EU companies.

At an event organised by EURACTIV, the Swedish minister for EU affairs Jessika Roswall told participants that the crisis management of the past years, and especially the US Inflation Reduction Act (IRA), forced the EU to think about competitiveness more seriously again.

“The IRA caused great concern amongst a lot of EU member states and institutions, but I would say that it also highlighted the need for the EU to take our own long-term competitiveness more seriously,” she said.

The EU Commission reacted to the large-scale subsidy scheme from the other side of the Atlantic by allowing member states to subsidise their industries more heavily. The executive also proposed a Net-Zero Industry Act, designed to boost the uptake and production capacity of technologies that are necessary for the green transition.

However, Roswall warned that competitiveness was not just about reacting to imminent crises.

“We must also consider that the EU has been lagging behind for quite some time, long before the IRA and, in fact, before COVID,” she said, pointing to the low European growth rates over the past four decades.

“Our productivity is lower than [in] other important [countries] and, maybe even more worrying, we continue to spend less on R&D [research and development].”

That is why, according to her, the Swedish presidency of the EU Council put an emphasis on long-term competitiveness, focusing on research and development, skills, access to private capital, and “better regulation”.

Calls for more movement on competitiveness are being heard elsewhere as well.

In March, the European Commission presented its communication on the 30th anniversary of the EU Single Market. It proposed a variety of levers to promote European competitiveness, such as removing barriers within the single market, progressing towards a Capital Markets Union that would allow more access to private capital, and concluding more trade agreements.

In a statement, Commission President Ursula von der Leyen said: “We must also make sure that regulatory and administrative frameworks are responsive to business needs.”

To make the administrative framework more business-friendly, the Commission also announced that it would table proposals by the autumn of this year to rationalise reporting requirements across the EU’s green, digital and economic legislation “with the aim of a 25% reduction in burden”.

While it is unclear how this burden will be measured, the recent rhetoric from EU legislators regarding the need for competitiveness and having a check on the regulatory burden is clearly an answer to the outcry from business associations.

They have been complaining that recent regulatory initiatives like the due diligence law and environmental legislation are adding undue administrative duties to companies that already struggle under high energy prices and a lack of workers.

In contrast to these complaints, however, corporate profits in the euro area have risen strongly over the past quarters, as the chart below shows. This means that at least in aggregated numbers, corporations do not seem to suffer financially from their burden.

Nevertheless, EU competitiveness will remain high on the agenda. Swedish EU Affairs Minister Roswall pointed to the Competitiveness Council on 22 and 23 May, when member state ministers of industry meet in Brussels, as a moment to bring forward the policy debate to boost EU competitiveness.

At said meeting, ministers will discuss the Net-Zero Industry Act, the Critical Raw Materials Act and also have an exchange of views on the EU’s long-term competitiveness.

This article follows the EURACTIV-organised policy debate “Building a competitive Europe – What can the EU Swedish Presidency do?” supported by Microsoft.

[Edited by Nathalie Weatherald]

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