The heads of cabinets of the EU’s 27 commissioners recently discussed priorities for the autumn, and the standout theme was the need to improve the competitiveness of the EU’s economy. Ursula von der Leyen, the commission president, dedicated a significant portion of her State of the Union speech to reshaping the EU’s economy and announced that former Italian prime minister Mario Draghi would write a report on competitiveness. The EU economy is currently 65% the size of the US economy, down from 91% in 2013. Europe lags behind in areas such as technology companies, universities, and semiconductor manufacturing capacity. Structural issues, crisis experiences, a skilled labor shortage, and excessive bureaucracy have all contributed to the EU’s economic struggles. Efforts to address the short-term impacts of the Covid-19 and Ukraine crises have created medium-term risks by altering the “level playing field” and increasing state aid expenditure. A desire to transition to a low-carbon economy and compete with the US and China also presents challenges. The EU must find a way to improve the single market and make it exciting again while preserving its strengths and freedoms.
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