EU Commission sets path for new mandate: EU Competitiveness Compass
Three core pillars
On 29 January 2025, the European Commission unveiled its Competitiveness Compass. This first major initiative of this new Commission mandate aims to improve the EU’s competitiveness to make the European Union the place where future technologies, services, and clean products are invented, manufactured, and put on the market, while being the first continent to become climate neutral.
The Compass transforms last year’s reports by Mario Draghi and Enrico Letta into a roadmap focusing on three pillars:
- Innovation
- Decarbonisation
- Security
Closing the innovation gap
The EU will launch a comprehensive AI strategy to boost adoption, including 'AI Gigafactories' with supercomputers and 'Apply AI' initiatives. Similar plans are set for advanced materials, quantum, biotech, robotics, and space technologies.
The EU will also support start-ups and scale-ups by addressing growth obstacles and improving access to financing. The European Commission will propose a simplified "28th regime" by late 2025 or early 2026, unifying corporate law, insolvency, labor, and tax law.
To enhance venture capital access, the Commission will introduce a European Investment and Savings Union to direct more EU savings into investments, complemented by public capital through a refocused European Budget.
Joint Plan for Decarbonization and Competitiveness
The Competitiveness Compass highlights high energy prices as a major challenge. The EU will address this through its upcoming Clean Industrial Act, promoting a competitiveness-driven approach to decarbonization. This act aims to make the EU attractive for manufacturing, including energy-intensive industries, and will support clean tech and circular business models. It will be accompanied by an Affordable Energy Action Plan and an Industrial Decarbonisation Accelerator Act.
Sector-specific plans will drive progress in strategic areas like chemicals and automotive, with tailored plans expected in 2025. Cleantech, biotech, and AI sectors will also have dedicated plans by 2025, addressing their unique needs without introducing new norms that could hinder innovation.
Reducing Dependencies and Increasing Resilience and Economic Security
The EU has launched "Clean Trade and Investment Partnerships" to secure key raw materials, clean energy, sustainable transport fuels, and clean tech globally, reducing dependencies and bolstering the continent's resilience and economic security.
Additionally, the Compass plans to review Public Procurement rules to introduce a European preference for critical sectors and technologies.
Horizontal enablers
The EU commission added that its Competitiveness Compass with its three core pillars would be further supported by five key horizontal enablers:
Simplification
The EU will move forward with its plans for the Omnibus simplification package aimed at drastically reducing regulatory and administrative burden with the first part of the package expected to be released next month. It will focus of on simplifying sustainability reporting, due diligence, and taxonomy. Further Omnibus simplification plans for other sectors will then follow.
Lowering barriers to the single market
The EU will release a Horizontal Single Market strategy meant to modernise the governance framework
Financing
The EU will seek to enhance public and private financing through the building of the European Savings and Investment Union and the refocusing of EU budget.
Promoting skills
The EU plans on proposing an initiative to build what they call “a Union of Skills” focused around building and maintaining talent with the Union but also attracting qualified talent from abroad
Coordination
The Commission will present a “Competitiveness Coordination Tool” to ensure EU Member States coordinate EU policy objectives.
Why it matters
The Competitiveness compass is meant to establish the EU’s political doctrine for the next five years. With this announcement the EU Commission confirms its commitment to focusing on competitiveness through its core pillars. We will have an idea of how impactful this new direction will be for companies over the coming weeks as the EU Commission unveils its 2025 work programme and most importantly, reveals the contents of the much anticipated “Omnibus Simplification Package” meant to eliminate administrative burdens deemed excessive.
If members have any views or questions, please reach out to theo.maiziere@techuk.org.
