On Wednesday, 29 January, the European Commission unveiled its Competitiveness Compass, an initiative aimed at strengthening the EU’s competitiveness, resilience, and innovation. The Compass comes at a critical moment for Europe as it strives to maintain its position in the face of growing global competition.
The Competitiveness Compass will closely follow the recommendations laid out by both the Draghi and the Letta reports. The Compass comprises three pillars:
- Pillar 1: Closing the innovation gap
- Pillar 2: A joint roadmap on decarbonisation and competitiveness
- Pillar 3: Reducing excessive dependencies and increasing economic security.
President von der Leyen promised an Omnibus proposal next month that will simplify sustainability reporting, due diligence, and taxonomy. Other Omnibuses for different sectors will follow. The Compass sets a target of cutting the administrative burden for firms by at least 25% and for SMEs by at least 35%.
The Compass will also work towards lowering barriers to the Single Market, financing competitiveness through a European Savings and Investments Union, and Promoting skills and quality jobs. There will be better coordination of policies at the EU and national level, with the introduction of a Competitiveness Coordination Tool to ensure this.
Based on President von der Leyen’s address, there can be expected R&D investment opportunities across all sectors, particularly as pillar one focuses on bridging the innovation gap. Additionally, the simplification of sustainability reporting highlights the EU’s long-term commitment to advancing renewable energy solutions, improving energy efficiency, and promoting carbon reduction technologies.
The European Competitiveness Compass signals a clear emphasis on diversifying supply chains within the EU, with reshoring production being a key priority. While President von der Leyen expressed willingness to source critical raw materials externally, it is expected that these materials will primarily come from regions that align with the EU’s values and objectives.
The Competitiveness Compass is the first major initiative of this mandate and sets a path for Europe to become a place where future technologies and clean products are being invented and manufactured to allow for Europe to become the first climate-neutral continent.
By focusing on innovation, sustainability, and economic security, it aims to reduce dependencies and strengthen Europe’s resilience. This comprehensive initiative will place Europe in a leading position, supporting its long-term climate goals and competitiveness.
