Brussels – A revamped competitiveness strategy that pays greater attention to the Union’s “industrial and security dimensions”. With a budget of 264 billion over seven years. Late yesterday afternoon (10 November), MEPs on the European Parliament’s Committee on Industry, Research and Energy (ITRE) proposed to “reshape the European Competitiveness Fund’s (ECF) scope, governance and budget,” adopting a position on the European Competitiveness Fund. The vote, approved by 61 votes in favour, 13 against, and 12 abstentions, calls for the Fund to “strengthen European competitiveness in strategic sectors for the period 2028–2034”. The ECF is one of the central pillars of the new Multiannual Financial Framework (MFF) – the European Union’s seven-year budget – designed to help bridge the innovation gap between the EU and its main global competitors, reduce dependencies and boost the overall competitiveness of the European economy.
A new structure
The ECF brings together 14 existing EU funding instruments in four key policy areas: clean transition and industrial decarbonisation; health, biotech, agriculture and the bioeconomy; digital leadership; resilience and security, the defence industry and space. MEPs propose renaming three of these, stressing the competitiveness aspect linked to industrial and economic security. They also advocate for a “dedicated budget envelope and governance structure for critical raw materials, and for a section dedicated to energy infrastructure.” Regarding funding, they propose to increase the Fund’s overall budget to 264.35 billion euros at current prices – compared with the 234.3 billion euros envisaged in the Commission’s proposal – while establishing binding minimum allocations for each area of intervention and sub-section. MEPs also suggest introducing a flexibility reserve of 10.11 billion euros to enable the Fund to respond to unforeseen challenges.
Research and advocacy
MEPs recommended establishing a specific programme for research, development and innovation in the defence sector, suggesting that it be structured around three distinct instruments: “an agile, upstream defence research programme, a blended-finance instrument for defence start-ups and scale-ups developing disruptive technologies, and an instrument to fund collaborative applied research tied to capability priorities.” According to MEPs, it is also necessary to draw up “a clear definition of the notion of ‘competitiveness’, centred around the ability of European companies to compete successfully in global markets.” ITRE put forward the idea of replacing the single ‘Strategic Stakeholders Board’ – a body provided for in the regulation with the role of linking the European institutions to the industrial, scientific and financial sectors to channel the Union’s investments towards the most relevant technological and industrial sectors – as envisaged by the European Commission with several new independent governance bodies. Finally, the text supports the creation of “Horizon Europe pathway actions”, a mechanism designed to transform the programme’s research results into market-ready applications.
Construction, energy communities and social investment
The amendments the MEPs proposed included a new article “dealing with the ECF InvestEU Instrument” – a European Union programme designed to stimulate strategic, sustainable and innovative investment by mobilising public and private capital – aimed at supporting sustainable construction and the production of clean technologies for the housing sector, the energy-efficient refurbishment of buildings, energy communities (based on renewable sources and citizen participation) and social investments. The maximum guarantee for this instrument is expected to be 150 billion euros, while the Commission had proposed 70 billion euros.
The MEP from the European People’s Party and co-rapporteur on the dossier, Christian Ehler, stated that this position introduces “a definition of competitiveness grounded in economic realities” and proposes “a governance structure grounded in expertise and enhanced coordination with Member States.” Similarly, the MEP (S&D) and other co-rapporteur, Dan Nica, stressed that it all “starts with energy” because “without affordable and reliable energy, there is no European industry”. MEPs on the ITRE Committee backed the launch of negotiations with EU governments by 56 votes in favour, 26 against and 4 abstentions. The ITRE Committee’s position and the negotiating mandate will be submitted to the plenary for approval during the European Parliament’s November plenary session.
Confindustria’s warning
The vote in the ITRE Committee did not satisfy the association representing Italian businesses, Confindustria, which expressed concern over an amendment that would prioritise loans and guarantees, relegating direct grants to a last-resort measure to be used strictly in conjunction with private capital. Confindustria has described the amendment as a “killer” amendment, as it “would transform the ECF from an industrial policy instrument into a mere channel for bank financing. But loans and guarantees only work for projects that are already ‘bankable’, with predictable revenues and limited risks.” According to the association, the position expressed by the European Parliament “would penalise precisely those investments that European industry needs most to compete with the United States and China: from the development of new technologies to the decarbonisation of production processes, right through to strategic capabilities in defence and space. These are areas characterised by high risks and uncertain returns, in which public support is essential”, they stress. In particular, innovative SMEs, mid-cap companies, universities, research centres and public bodies – crucial players in reviving European competitiveness – would be at risk of exclusion. “The approval of the amendment would also deprive the European Parliament of its main means of steering the Fund. Less focus on innovation and competitiveness, coupled with a loss of political direction: a paradoxical and dangerous outcome,” concluded Confindustria.
English version by the Translation Service of Withub
