Europe’s share in the global economy is shrinking. While the economies of the European Union (EU) and the United States were roughly the same size in 2010, a decade later, in 2020, the EU found itself significantly below the American level. “Soon, the only thing Europe will be able to offer the world will be consumers,” says MEP Ewa Zajączkowska-Hernik. She suggests that restoring the EU’s economic attractiveness should be a priority for the new European Commission, but this cannot be reconciled with tightening climate policy.
“From the perspective of Europeans, the most important tasks facing the European Commission are to ensure competitiveness and strengthen the European economy, which is in a downward trend, and to ensure security. We have a significant problem with legal and illegal, uncontrolled migration, and many societies are paying attention to this. These are the aspects that Europeans expect from the European Commission or from the governments of national countries,” tells the Newseria agency Ewa Zajączkowska-Hernik, MEP from the Confederation.
The European Commission, led by Ursula von der Leyen, is just starting its term, and one of its priorities is to improve competitiveness and revive the EU economy, which is losing the global race against the USA and China. This is indicated, among others, by the October report of the Europe Unlocked coalition, of which the Confederation of Leviathan is a member. From 1993 to 2022, GDP per capita in the USA increased by almost 60 percent, while in Europe it increased by less than 30 percent. This difference is even more pronounced in high-growth sectors such as innovation and technology, where Europe is clearly lagging behind.
Similar conclusions come from the September report on EU competitiveness, prepared for the European Commission by Mario Draghi, former President of the European Central Bank. The publication lists key problems that the EU is currently facing, such as low innovation compared to the USA and China – especially in the field of advanced technologies such as artificial intelligence or quantum computers; challenges related to combining decarbonisation and maintaining the competitiveness of industry; and high energy costs significantly burdening European companies, especially compared to competitors across the Atlantic. That is why the Draghi report indicates an urgent need for radical changes in EU economic policy and swift actions in areas such as innovation and green technologies. Among the postulates is the need to increase expenditure on investments by an additional 750-800 billion euros annually, which corresponds to approx. 4.4-4.7 percent of EU GDP. Without this, Europe may lose the global race for economic position and remain far behind its competitors.
“The problem will be that at some point, we will reach a point where the only asset of the European Union will be consumers. We will stop counting economically, we will lose competitiveness with the United States, we will lose competitiveness with China, and Chinese or American products will flood us. And the only thing we will be able to offer the world will be consumers. If we also oppress them with green policy, energy transformation, zero emissions and various obligations arising from the European Green Deal, there may come a situation where even European consumers will not be able to afford to buy products that will flood us from different directions,” warns Ewa Zajączkowska-Hernik.
According to the Draghi report, Europe is currently one of the leaders in the development of clean, green technologies. On the other hand, it also bears huge costs associated with energy transformation. Compared to the USA, European companies pay higher energy bills, and competition from China in the area of green technologies is constantly growing. The Draghi report emphasizes that decarbonization should become the engine of EU economy growth, but only with simultaneous problem of energy price disparities and challenges related to industrial decarbonization.
Importantly, these findings are to serve the European Commission as a basis in the work on a new plan to strengthen Europe’s competitiveness – especially in developing a new Clean Industrial Deal, which will be presented during the first 100 days of the new KE term.
“In order for the European industry to develop and be competitive in the global market, a very large deregulation is needed. The prospect of tightening or tightening the screw and introducing the European Green Deal will mean that many European companies will face increasing energy prices, increasing employment costs. Unfortunately, this will cause European competitiveness to fall, not rise,” says the MEP.
She believes that to strengthen the competitiveness of the EU economy, the European Commission would have to withdraw from the mandatory implementation of the European Green Deal.
“If someone wants to build their enterprise or some country wants to build its economy on zero emissions, it of course has every right to do so. However, forcing all countries to do this by the European Commission – under the threat of penalties if any of them does not fulfill certain obligations, because for example the EPBD directive speaks directly about the penalties to be imposed on those who do not bring their properties to zero emissions – will not cause companies or economies to be competitive. This is not the point, this is not the direction in which the European Commission should go if we want to restore competitiveness. We must free the European economy from obligations arising from the European Green Deal,” believes Ewa Zajączkowska-Hernik.
During last week’s plenary session, the European Parliament approved in a vote the composition of the new European Commission, which is again led by Ursula von der Leyen. The head of the KE also presented MEPs with an action plan for the next five years. As she pointed out, Europe will stick to the goals of the Green Deal and will not give up actions to protect the climate, but the energy transformation should be carried out more skillfully than before. The head of the Commission also presented actions for maintaining the competitiveness of the European economy and announced that one of the first initiatives of the new KE will be the Competitiveness Compass, which will set the directions of its actions and will be based on the conclusions from the Mario Draghi report. The compass will focus on three pillars, i.e., closing the innovation gap with the USA and China, decarbonization, and increasing security and reducing Europe’s dependence on other entities.
According to the Draghi report, Europe – alongside an increase in spending on investments by almost 5 percent of EU GDP per year – urgently needs a new industrial strategy, focused on sectors of strategic importance, full implementation of the single market, and a thorough reform of EU governance, increasing coordination, and reducing bureaucracy. This direction is also indicated by the October report of Europe Unlocked, according to which the way to ensure Europe’s global competitiveness in the coming decades is structural reforms, focusing on innovation and digitization (a fully functioning single digital market could increase EU GDP by 2 percent, and investments in next-generation networks, such as 5G, could add over 106 billion euros per year), and smarter regulations, which are currently pointed out as one of the main barriers to development – as many as 60 percent of companies perceive EU regulations as the main obstacle to investment and innovation. Therefore, the priority of the new KE should be to restore the for economic attractiveness of the EU and to curb regulatory inflation.
