Key issues for competitiveness in Europe

The European Union must become more competitive and it is therefore essential that European industry is given a boost. The Commission is once again stating the importance of this political priority for the European Union. In this regard, it proposes taking stock of the performance and future of European industry, in order to facilitate and guide the work of the Competitiveness Council.

ACT

Communication from the Commission to the Council and the European Parliament of 21 November 2003 "Some Key Issues in Europe's Competitiveness - Towards an Integrated Approach" [COM(2003) 704 final - Not published in the Official Journal].

SUMMARY

Competitiveness is determined by productivity growth. Therefore, a competitive economy is one that experiences high and sustained productivity growth.

Many factors have an immediate impact on competitiveness. For instance, the ability to promote research, innovation and entrepreneurship, as well as the ability to encourage investment and the level of competition, or even the ability to reap the benefits of the enlarged internal market, have a direct influence on the development of European competitiveness.

Issues for a more competitive Europe

European industry needs to be competitive if the Community is to achieve its social and environmental goals, which, in turn, ensure that the quality of life of Europe's citizens improves.

The current state of competitiveness

At present, European productivity growth is slowing down. This slowdown is reflected by a loss of competitiveness, which is a cause for serious concern. It represents a threat to European industrial performance and to the European industry's ability to carry out structural adjustments.

While there is currently no serious evidence to suggest that Europe is heading for deindustrialisation in the true sense of the word, the process of structural adjustment under way is certainly proving to be difficult.

Signs of weakness are emerging in several key areas in the European Union, particularly research and development, innovation, information and communication technologies (ICT), entrepreneurship and the development of new skills.

To be competitive in a global market that is more and more open to competition, it is vital that the European Union becomes more efficient. In particular, it must therefore encourage investment in research, innovation, ICT, the reorganisation of work and education, all of which are key aspects of the transition process. It is essential that European industry anticipates and better prepares itself for the challenges of adjustment.

How to meet the challenges of competitiveness

The measures taken by the European Union need to be based on an analysis of competitiveness. This analysis consists of two parts: a general economic analysis and a detailed analysis of the competitiveness of the different sectors. This will identify not only the key issues linked to competitiveness, but also the specific problems experienced in certain industrial sectors. This analysis will thus enable the European Union to determine what measures should be taken.

All Community policies must contribute to competitiveness. It is crucial, therefore, that the synergies between certain Community policies (industrial policy, research and development policy, competition policy, internal market strategy, fiscal policy, employment policy, education and training policy, environment policy, transport and energy policy, regional policy) are exploited to obtain the best results in terms of competitiveness, both at European and national level.

The European institutions and the Member States must act as the "guardians of competitiveness": adopting and implementing the legislation needed for economic growth is their responsibility. In addition, they must carry out impact assessments systematically. In other words, they must take care to take full account of the impact of their political decisions on competitiveness.

Background

This Communication responds to the request made by the 2003 spring European Council concerning the development of a strategy for competitiveness. It also forms part of the wider debate, launched by the Commission's Communication of 11 December 2002 on the role of industrial policy in improving the competitiveness of industry.

Last updated: 30.06.2005