What Happened to the EU’s Appetite for Growth?

The year 2024 was quite a rollercoaster ride on the regulatory front: the Data Act, the AI Act, the Ecodesign for Sustainable Products Regulation, the Platform Work Directive, the Cyber Resilience Act, the Product Liability Directive, NIS2, DSA, the General Product Safety Regulation were either adopted or kicked in during the course of the year. This is just to mention a few and it is important to remember that the proper implementation of all these pieces of legislation will take years.
This takes me back to the summer and autumn when the grand designs for the new European Commission were revealed by Ursula von der Leyen. Back then, it was all about investment and competitiveness. The findings of Mario Draghi resonated well in Brussels, with the key focus being economic growth – or the lack thereof. Especially in the digital sector, Europe is falling behind and the Union’s own Digital Decade targets on data and AI will not be met. This does not straightforwardly tell us that the companies aren’t investing; it tells us that companies are not investing in Europe.
Somehow, the competitiveness objective receded into the background during the first months. Energy and security are now the talk of the town instead. Focusing on competitiveness and investments first was the main idea of Draghi. I find it easy to agree with this, as newly found growth would be needed to finance the investments to security, energy, and infrastructure.
What would be the formula for European growth, then? Technology Industries of Finland drafted three points for this. Firstly, we need to clarify the application of the set of (digital) regulations to release investment potential and accelerate demand. The design of the data regulatory framework is such that we would need hundreds of digital product companies to help manufacturing industries, especially SMEs, with their data.
Secondly, we need innovation. The target for additional investment is good, but it does not help the European challenge, which is the gap in scaling and commercialising innovations. To address this, we would need to award a much greater role to companies in the European innovation system. By developing our capability to scale up innovation, we can simultaneously accelerate demand for innovative solutions in other sectors. Think of the advances in marine motors which are pushing the demand for e-fuels. By accelerating these kinds of virtuous ecosystems, we can create the right conditions for leaps in technologies and market-led green development.
The third pillar is deepening the Single Market. These principles have been sidelined, both in content and schedule. The major initiatives on green and security policy, the Clean Industrial Deal and the White Paper on Defence, respectively, should have the Single Market principles deeply ingrained in them. The level playing field where excellence prevails through competition is the best guarantee for building European capabilities. The project for European competitiveness cannot be left to Omnibus directives alone, we need to seize all means to accelerate both investments and innovations.
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