Produce, invest and protect: Von der Leyen’s recipe for Europe’s competitiveness

Brussels – Mario Draghi has “paved the way”. It is now up to the European Union to follow it by placing industry at the heart of its economic strategy. This was the message delivered by the President of the European Commission, Ursula von der Leyen, during her first public appearance after the summer break at the annual conference La Rencontre des Entrepreneurs de France in Paris, where she set out her vision for a new form of European competitiveness: “ to make Europe a continent that produces, invests and protects.” The event was chaired by the president of the French business movement (MEDEF) Patrick Martin and hosted by the Roland-Garros stadium in Paris. 

Work is thus resuming, following a rather quiet August for the Commission. And the focus is once again on European competitiveness, through a programme that brings together and translates many of the recommendations in Mario Draghi’s 2024 report on European competitiveness into concrete policies. “Mario Draghi paved the way,” von der Leyen acknowledged, identifying industry, investment and economic autonomy as the pillars upon which to build Europe’s response to a profoundly changed global landscape. France, she emphasised, has played an important role in defining this direction, from strategic independence to industrial policy, from nuclear energy to electrification, right through to artificial intelligence.

Less red tape, more investment. The first challenge is to free businesses from the burden of regulation. The Commission aims to reduce administrative burdens by 25 per cent for all businesses and by 35 per cent for SMEs by 2029. But simplification does not mean looking the other way: in its relations with other economic powers, particularly China, Brussels aims to reduce risks without severing trade links by addressing asymmetries and state subsidies that distort competition.

To finance growth, von der Leyen is also looking to the vast amount of private capital that remains untapped. Ten thousand billion euros of European households’ savings are currently held in bank accounts, a mass of capital that, through the Savings and Investment Union, could be channelled towards businesses, generating up to 470 billion euros of additional investment. This will be complemented by the forthcoming EU budget, which the President regards as the “financial arm for our independence,” with over 450 billion euros mobilised through the new European Competitiveness Fund and Horizon Europe. The aim is to support the entire value chain, from laboratories to industrial production.

 A single market – finally truly single. However, the fragmentation of the 27 national markets remains one of the main obstacles to growth. The response is also symbolic: a future EU Inc., a European company that could be set up online in 48 hours for less than 100 euros. An initiative that provides a level playing field for all, to move beyond the 27 different national regulations currently in force and the more than 60 types of company structure, providing businesses with a single framework in which to grow. The idea was presented as part of the 28th scheme, the set of EU rules designed to overcome fragmentation and barriers between Member States, thereby enabling businesses to be set up and grow more quickly. 

At the same time, Brussels wants to regulate mergers and, through the Industrial Accelerator Act, create stable markets for strategic sectors such as steel, cement, batteries, and clean technologies. As von der Leyen explains, industry invests when it sees a market: it is up to Europe to provide that certainty. On the labour front, a package on fair mobility due in the autumn aims to tackle the skills shortage affecting almost two-thirds of SMEs. 

The most pressing issue, however, remains that of energy. Prices in Europe are still two or three times higher than in the United States and China, a problem already highlighted by Draghi in his report. “We cannot ask our businesses to switch to electricity when it is nearly three times more expensive than gas, on average,” von der Leyen said. Decarbonisation, the Commission President continued, “must not be a cost for industry, but the driver of its transformation,” supported by the over 100 billion euros for the Bank for Industrial Decarbonisation by 2030. 

Finally, the artificial intelligence race. Europe must “produce and deploy” developing technology, control the supply chain from computing power to semiconductors and models, and, at the same time, bring it into factories, laboratories, hospitals, and energy networks. 20 billion has been earmarked for AI gigafactories to prevent Europe from becoming dependent on other powers for the technologies necessary for its economy to function. The call for tenders was launched on 30 July and aims to create up to seven major artificial intelligence hubs across the European Union, in the name of innovation and competitiveness.

The common thread is independence without isolation. According to von der Leyen, open trade “remains a source of power,” but it must be based on reciprocity, fairness, and the protection of European interests. “An independent Europe is not an isolated Europe. It is a Europe that can choose,” said the President. Economic security, in her view, means above all not being dependent on a single partner. 

And this is where Draghi’s message takes centre stage once again: European competitiveness is not just about the ability to produce more, but about the freedom to choose where to invest, what to produce and on whom to rely. “None of these battles can be won by a single country,” von der Leyen warned. The path set out by the Commission is therefore to use, collectively at the European level, all the levers that determine competitiveness today: from the single market to energy, from investment to artificial intelligence, right through to trade policy.