EU Competitiveness Summit Preview: Key Points You Need to Know

Investing.com - EU leaders will hold a competitiveness summit in Belgium on February 12, which may reorient the EU’s economic policies as pressure to address low productivity and strategic dependencies increases.

According to Deutsche Bank economist Marion Muehlberger, the meeting is expected to focus on revitalizing the single market and reaching a political consensus on “broad developmental directions,” rather than on specific legislation.

Muehlberger stated that a formal decision is expected to be made at the EU Council meeting on March 19-20, “though the political implementation risk remains quite high.”

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This debate follows warnings from former European Central Bank President Mario Draghi, who said the EU must implement reforms quickly or face a “slow decline.”

Muehlberger noted that progress so far has been mostly incremental, with last year focusing mainly on strategies and action plans. This year will bring more substantive legislative proposals, including the Industrial Accelerator Act, Innovation Act, and the 28th framework.

Muehlberger believes a key issue will be strategic autonomy and a potential shift toward a “Buy European Products” policy. A leaked draft of the Industrial Accelerator Act shows local content requirements in public procurement and subsidies for sectors like steel, cement, aluminum, and clean energy technologies.

The proposal also includes a 49% cap on foreign direct investment (FDI) in certain emerging strategic sectors, and mandates that EU companies hold at least 51% of shares in joint ventures.

Member states have differing positions, with France more supportive, while Germany and Nordic countries tend to favor short-term “Buy European Products” measures only within narrow strategic sectors.

Removing barriers in the single market is another core theme. The European Commission has begun addressing the 10 most harmful obstacles identified last year and plans to propose further legislation on unified product rules, public procurement, and antitrust procedures.

Muehlberger pointed out that efforts to reduce red tape are gaining momentum, with 10 comprehensive proposals expected to cut approximately 13 billion euros in compliance costs annually.

In terms of innovation, proposals to be presented on March 18 include the European Innovation Act and the 28th framework, aimed at promoting scale-up and enabling “one-time” digital company registration within 48 hours. A European scaling fund is also planned to support large-scale financing rounds in strategic sectors.

Other items on the agenda include delaying the phased removal of free carbon dioxide allowances, advancing the Savings and Investment Union, and further steps in defense preparedness, including launching a 150 billion euro SAFE loan program starting in March.

Muehlberger noted that political implementation risks remain high, as major reforms require cooperation among the European Commission, the Council, and the Parliament, with many core leverage points still held by member states.

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