The new European Commission must deliver for Europe’s future – but excessively emphasising ‘competitiveness’ could hinder this
By Karel Lannoo
Tackling Europe’s economic decline, preparing and adapting for a new wave of enlargement and defending Europe’s geopolitical position… the new European Commission will definitely need to deliver. The past five years have shown that it can prepare and react when it needs to, responding on the spot to multiple crises. But the path ahead will be steep.
The economic challenges are undoubtedly enormous. Mario Draghi’s recent report outlined them clearly. There’s doubt over Europe’s ability to create wealth. It doesn’t invest or innovate enough, it doesn’t spend enough on R&D and it lacks high-skilled labour. Europe also needs to prepare for a rapidly ageing population and invest much more in defence.
Europe’s productivity gap with the US is somewhere between 12 %-30 %, depending on the measure used. And as the Letta Report also laid out well, the EU is just not enough of a single market – it’s too fragmented in finance and digital services, and energy is far too expensive.
There have undoubtedly been many challenging moments for the EU. Jean-Claude Juncker spoke about the ‘last chance’ Commission more than a decade ago. Competitiveness was already a major concern at the turn of the millennium – think back to the 2000 Lisbon Declaration and Germany’s then-sorry state in 2000-03 as the ‘sick man’ of Europe.
Yet the EU has demonstrated that it can react to unexpected events. Apart from the green and digital transition, the Commission spearheaded the EU response to Covid-19, to the energy crisis and to Russia’s invasion of Ukraine. The EU adopted the Sure programme and the Recovery and Resilience Facility (RRF) to prevent an economic meltdown. It unanimously adopted 14 packages of sanctions against Russia and agreed in June 2022 to grant candidate status to Ukraine and Moldova, with accession negotiations starting exactly two years later.
What’s problematic now is the extreme right’s increased size in the European Parliament (EP) and many Member States. Compared to 15 years ago, the ‘centrist’ parties’ (EPP, S&D, Renew and the Greens) share of EP seats have declined from about 85 to 65 %. The extreme right parties have all adopted populist policies to win voters’ favour, be it with anti-immigration (or just purely racist) posturing, protectionist policies and/or irresponsible fiscal measures.
