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The Commission President underlined several priorities that have been valid at the end of the Commission’s College five years’ term: public investments in strategic sectors (with the stress on commodities), reducing the cost of energy, addressing the labor and skills shortage, and facilitating external trade.
Background
Since t the inauguration of the present Commission in 2019, the EU has managed two crises of “historic proportions”, i.e. the COVID-19 health crisis and the war in Ukraine, followed by a widespread energy crisis. Due to extensive Commission’s politico-economic efforts, dramatic economic and social crises have been avoided.
The EU-wide recovery and resilience programs have been at the right time and with due facilities: e.g. SURE program which saved 40 million jobs in the member states, the NextGenerationEU plan and/or REPowerEU program, which fast-tracked the recovery and the deployment of home-grown renewables.
In 2020, just in the pandemic and post-pandemic period, many predicted mass unemployment in Europe and a long recession. Instead, the member states presently have more people at work than at any other time in European history: e.g. unemployment is at an all-time low at less than 6 percent, and employment is at an all-time high, at more than 75 percent; besides, inflation is now close to the EU target of two percent. r of our 2% target.
Bottom line, in her speech at the European Parliament Plenary on the conclusions of the special European Council, President von der Leyen underlined that “we have come out stronger than five years ago”.
Reference and citation: https://ec.europa.eu/commission/presscorner/detail/da/speech_24_2233
Competitive Europe: strategic plan
Among some basic factors that determine costs, prices and productivity in the European Union, the President mentioned four focal issues:
= Public finances: during five years “in power”, the EU institutions have unleashed an unprecedented wave of public investments in the member states’ strategic sectors. For example, in energy and clean technology, the EU invested €400 billion from NextGenerationEU program as well as over €550 billion in public support for the states’ investment in clean technology and energy transition. Now the time has come, noted the President, for “a systemic solution” to mobilize the European “immense private capital: an essential part of this solution is the completion of the EU Capital Markets Union, CMU which was launched almost ten years ago. During last five years, the Commission has made progress in many directions: e.g. it was made easier for companies in EU, specifically SMEs, to get listed on capital markets. However, the EU is moving forward on three vital issues: a) in harmonizing national rules on topics like insolvency, which would give investors the needed predictability; b) designing and creating cross-border savings products for retail investors; and c) strengthening the EU-wide supervision of the most important market players. The President added in this regard: “If we are to fund the new industrial revolution of our times, we must mobilise Europe’s private capital; now is the time to turn the political will into action”.
To finance EU policies as efficiently and effectively as possible, the Commission uses several means (e.g. the chapters in the multi-annual EU budget), including proceeds of its bond issuances in international capital markets to finance select EU-wide policy programs. A landmark policy program currently funded by EU borrowing is the NextGenerationEU recovery plan. The latest fourth in line syndicated transaction is expected to raise about €48 billion of its €75 billion funding target for the first half of 2024; with this transaction, the EU has issued over €333 billion in EU-Bonds under the unified funding approach. Of the proceeds raised, almost €228 billion has been disbursed to the member states under the Recovery and Resilience Facility, and further €54 billion has been allocated to other EU programs within NextGenerationEU funding.
Source: https://ec.europa.eu/commission/presscorner/detail/da/ip_24_2226
= Reducing the cost of energy: as the energy costs continue to affect the EU and the member states’ competitiveness, specifically in the energy-intensive industries; the Commission has mentioned some efforts and actions. Thus, according to the International Energy Agency’s predictions, there are “some reliefs in sight”: e.g. in 2023, during the energy crisis numerous investments have been done by the EU. Thus, a large wave of new LNG export projects is coming to the EU market and the continent might soon be moving from a global shortfall to an abundance of LNG. As a result, gas prices are expected to fall giving the room to further developing the renewables energies: e.g. in 2023, for the very first time ever, the EU was able to produce more electricity from wind than it did from gas.
During the coming decade, the EU-wide cross-border electricity transmission capacity must doubled, which needs investments in smart grids and charging infrastructure with more cables, pipes, turbines, electrolysers, etc. However, the member states have to build efficient national energy networks as the physical backbone of the “economy of the future” in order to be competitive.
= Labour issues and skills shortage: having a low unemployment rate on average, the EU is still having on average higher youth unemployment rate. It is obvious that every young person has great potential, even if they might be struggling with numerous obstacles; the states have to make sure that they get the chance they deserve.
The EU is going to increase women’s access to the labour market, and the so-called “parents infrastructure” has become a priority; the social problem is simple: affordable and accessible childcare, good schools and flexible working hours are “an absolute must” in national wellbeing. The member states have to offer more flexible solutions for the so-called “silver workers” to continue their careers, and they need to attract the right talents from abroad.
Therefore, there numerous activities that have to be performed to address the skills shortage; the EU is investing €65 billion in skills from the NextGenerationEU program and the European Social Fund. Thus, skills must continue to be at the heart of the EU-wide actions.
More on the issue in: https://www.integrin.dk/2024/04/20/tackling-labor-market-and-skills-shortage-in-eu/
= External trade: the EU derives a significant share of its prosperity from trade. However, during the next decade almost 90 percent of the most significant growth is happening in regions outside the European Union; but the EU, through its exclusive competence, should tap into it as the Union is second to none in negotiating trade deals.
The EU-27 is having the largest network of trade agreements in the world, with a total of 74 countries; the value of EU trade through these agreements surpassed €2 trillion for the first time already in 2022.
And beyond exports, the member states need to secure imports, for example, a number of the critical raw materials that the industrial development needs. However, the global trade has to be fair and the EU states need a global level playing field in trade.
With this in mind, the EU needs to address the risks that come with the “open trade”: the EU needs for example tools to address issues of the so-called structural overcapacity produced outside the EU, which is to be achieved to a large extent with massive subsidies. Massive volumes of “overproduction” are circulating around the world: numerous states are closing their markets and the European market is becoming an attractive destination for that. But the member states have to be very vigilant that the local producers are not at risk to be forced out of the market.
At the same time, the EU also needs to involve developing economies around the world on this topic, because their industrialization is also threatened directly/indirectly by overcapacity, which needs a more structural response with the EU partners, specifically within the G7.
Citation: “The last five years have taught us something. Time and again, we have surprised the skeptics and defied the doomsayers. But for a strong Europe, if there is a will, there is a way. And our continent will continue to be the global beating heart of industry and innovation”.
Source: Commission President’s speech at the European Parliament Plenary (23.04.2024) on the conclusions of the special European Council meeting of 17-18 April 2024.