Europe urgently needs a coherent economic policy agenda

The EU is in danger of falling behind in the global economy. International economic organisations expect the EU to grow by just over four percent this year, while the USA is projected to grow by over six percent and China by more than eight percent. Amidst the severe economic crisis, the EU’s failure to develop a coherent economic policy agenda now comes back to bite her. This failure must be corrected quickly.

So far, the focus of the EU institutions is mainly on the Green Deal. The political discussion centred on climate and environmental policy visions and increasingly ambitious targets. Meanwhile, the EU Commission's economic policy agenda "An economy that works for people" resulted mainly in socio-political initiatives. Moreover, the EU Commission's industrial strategy of March 2020 narrows down Europe’s industrial policy challenges to climate protection and digitalisation and fails to go beyond general announcements. No concrete answers are given as to how the EU intends to support industry in transitioning to climate neutrality and digitalisation, overcoming the Corona crisis, handling unfair competition with state-dominated economies or dealing with increasing security risks.

Despite the Corona-Crisis - Business as usual in Brussels

The most severe economic crisis since the beginning of European integration has not yet led to a coherent economic policy agenda in Brussels. On a positive note, the EU deserves credit for its multi-billion-euro reconstruction programme NextGenerationEU. However, regarding the important regulatory agenda, it is business as usual. Besides the measures to implement the tightened EU climate targets for 2030 the Commission's 2021 agenda is shaped, among other things, by its plans for sustainable corporate governance. The announcements of Justice Commissioner Didier Reynders and the demands of the European Parliament on this matter cause us to expect considerable additional burdens on industry, especially on SMEs. At the same time, the Commission has postponed the update of the Industrial Strategy from March to the end of April and has been delaying the publication of its Communication for Better Regulation for almost a year now.

Towards a modern and bold industrial strategy

European industry demands that the EU Commission finally presents an ambitious industrial strategy. Acute crisis management alone is not enough to ensure Europe’s global standing in the future. It is necessary to look over the rim of the Corona teacup. Reforms are needed for the future. A bold industrial strategy is essential to translate the ambitious climate and digital policy goals into growth, sustainable business models and innovation dynamics. At the heart of this should be a concrete industrial policy action plan.

The EU should prioritise the following initiatives

  • Enable private investment into climate-protection technologies
  • Support emission reductions in the mobility sector
  • Develop an import strategy for renewable energy sources
  • Clarify carbon leakage protection in the least burdensome way
  • Revise the legal and financial framework for key projects of European interest (IPCEIs)
  • Launch a second IPCEI on microelectronics quickly in 2021
  • Promote hydrogen
  • Revise competition law
  • Make 5G applicable to industry while already considering 6G
  • Create legal certainty for the General Data Protection Regulation
  • Promote a European platform ecosystem and push ahead swiftly with common European data spaces.

Strategy for better regulation and bureaucracy reduction still missing

There also remains uncertainty about the Commission's approach towards better regulation and the reduction of bureaucracy. The Commission’s Communication on this matter is overdue since May 2020. Industry expects clear answers on how the Commission intends to further develop and strengthen the existing system for better regulation. For BDI, the focus must be on the active involvement of relevant stakeholders, sound impact assessments including independent regulatory scrutiny, as well as evidence-based ex-post evaluations.

Furthermore, it must be clarified how the Commission will implement "One In One Out" (OIOO) in practical terms. OIOO sets out that all Commission services reduce existing burdens on businesses and citizens to the same extent in policy areas where they create new burden through legislative proposals. However, it is unclear how and what kind of burden will be calculated and how they will be reduced. Industry demands that OIOO will be designed in such a way that not only administrative burden (e.g. reporting obligations) are considered, but that all substantive compliance costs of businesses are taken into account. Only this will make OIOO an effective instrument for reducing bureaucracy.

A strong Europe depends on a strong industry

German industry hopes that the EU Commission uses the revision of the EU Industrial Strategy and the Communication on Better Regulation as chance to score a major goal. For the future of Europe is inextricably linked to the future of industry. A strong and innovative industry is a prerequisite for Europe to co-shape global issues of the future, such as the green transition or digitalisation, with its own technologies and concepts, and on an equal footing with the United States and China. A strong Europe will only exist with a strong industry.