The European Commission must prioritise EU Single Market integration
Intra-EU trade in goods and services
% of GDP
The European Commission must prioritise EU Single Market integration
Observations
- Europe’s main competitors, the US and China, both have enormous internal markets, that are also less fragmented or difficult to navigate than the EU
- The integration of Europe’s Single Market for goods and services has been stagnating for years, due to persistent barriers to internal trade and market fragmentation
Recommendations
- A fully integrated Single Market must be a top priority for the next EU Commission and Parliament. Its huge potential for economic growth and Europe’s future prosperity is too important to be wasted.
- The next European Commission’s opening commitment should be to identify and remove the most important remaining Single Market barriers, including those resulting from EU legislation.
EU producers need better framework conditions to remain competitive
Exports of manufacturers
Global market share, %
EU producers need better framework conditions to remain competitive
Observations
- The EU’s market share as an exporter of manufactured goods has declined over the years, while China has become world leader
- The EU market share in exports has declined proportionately less than Japan’s or the US’: still in 2022 Europe’s manufacturing sector maintained its competitive potential
Recommendations
- Europe’s policymakers at all levels have to create conditions for Europe’s businesses to play to their strengths as producers and exporters. Factors to be addressed:
- Europe’s high energy costs compared to other regions
- accelerating technological change;
- increased global competition for raw materials;
- a weakening of WTO and trade principles.
- The EU has to expand its global commercial relationships and increase market access for its exporters in a pragmatic way.
To keep benefiting from global trade, the EU must make ‘promoting and partnering’ a success
EU export share to different markets
% of global container trade
EUR: North Europe, Mediterranean (including North Africa)
AFR: West Africa, South Africa, Mozambique, East Africa, Indian Ocean Islands
NAM: US, Canada
LAM: Central American & Caribbean (including Mexico), West Coast South America, East Coast South America
WCA: Middle East (excluding North Africa), Indian Subcontinent
OCE: Oceania
FEA: China, Mongolia, Hong Kong, North East Asia (including Taiwan), South East Asia
To keep benefiting from global trade, the EU must make ‘promoting and partnering’ a success
Observations
- With international trade in goods and services as a share of GDP at constantly high levels, the EU remains one of the world’s most open economies.
- A global level playing field is even more vital for the EU than for its global peers and competitors.
- Container trade data show that Europe’s export share has been decreasing across all geographies.
Recommendations
- The EU should emphasise those aspects of its Economic Security Strategy that promote competitiveness and build/reinforce partnerships to open markets abroad:
- forging strong alliances with like-minded partners, e.g. the US and countries in Asia Pacific as well as Latin America. There is no time to lose in accelerating FTAs and strategic partnerships
- driving transatlantic market integration, especially joint global standard-setting and regulatory cooperation: The EU-US Trade & Technology Council must continue to serve as a stable, long-term framework of cooperation. The ultimate goal remains a holistic transatlantic free trade agreement
- continuing EU efforts to safeguard the multilateral rules-based trading system and revitalise the WTO.
The next European Commission has to deliver a ‘great simplification’ of EU regulation
Private sector friendliness index, 2022
Regulatory quality index from -2.5 to 2.5, with 2.5 being optimum
The next European Commission has to deliver a ‘great simplification’ of EU regulation
Observations
- Unlike in Japan, the US or South Korea, the EU’s private sector friendliness and regulatory quality have declined.
- New EU rules with heavy reporting burden (taxonomy, corporate sustainability, etc.) will weigh on private sector friendliness in the future.
- The ERT CEO Conference Survey highlights strong concerns that Europe’s regulatory environment undermines competitiveness looking forward.
Recommendations
- The EU needs a ‘great simplification’ of its regulatory environment.
- EU institutions and national governments need a mind shift to make business friendly regulation a part of the EU’s regulatory DNA. ‘Business friendly’ means:
- coherent political goals, followed through with coherent rules centred around the business case for innovation and investment;
- reporting requirements that focus on the essential;
- fast permitting and digitalised administrative processes;
- a Single Market environment with greater harmonisation that enables economies of scale.
Public and private sector have to join efforts to up-and re-skill Europe’s workforce
Participation of employed (25-64 year-olds) in non-formal job-related education and training by size of enterprise
In 2022, %
Public and private sector have to join efforts to up-and re-skill Europe’s workforce
Observations
- Skills shortages – together with ageing societies – will become a major challenge in western economies.
- Across the EU, 85% of companies see a lack of skilled workers as an obstacle to long-term investment decisions. This also is the case in the five Member States with the highest GDP.
- Job-related training programmes are costly: large companies appear better positioned than SMEs to upskill or reskill their employees than SMEs.
Recommendations
- Re-skilling and up-skilling have to become the ‘new normal’, if Europe’s workforce is to keep pace with the evolution of technology. The EU and Member States should do more to incentivise and enable the re-skilling and up-skilling of companies’ own workforces.
- The EU Industry 5.0 ‘human-centricity’ approach (driven forward by DG RTD) should be tailored to help solve skills and demographic challenges.
- More public-private cooperation to reskill unemployed workers is urgently needed. Key factors: scalability and better access to public funding (e.g. via the European Social Fund or Erasmus+). ERT’s Reskilling4Employment (R4E.EU) offers insights.