After a slight delay, the European Commission’s Competitiveness Compass was finally published today. The much anticipated document is the first major communication from the second von der Leyen Commission, following on from the insights of the Draghi and Letta reports, showing the thinking that will drive the Commission’s work during the next 5 years.
The role of the Competitiveness Compass, as the name suggests, is to provide a guide for creating a Europe “where tomorrow’s technologies and clean products are invented, manufactured and marketed” and to establish “competitiveness as one of the EU’s overarching principles for action”.
As announced by von der Leyen early on, to structure the work to be done, the Commission has taken the three transformational imperatives from the Draghi report as its pillars. The three pillars are in turn supported by horizontal enablers focusing on simplifying the regulatory environment, removing barriers in the Single Market, improving financing through the Savings and Investments Union (publication set for March 19, 2025), promoting skills, and better coordination of policies.
1. Closing the innovation gap: Investment in innovation in emerging technologies such as AI, biotech, and clean energy while simplifying regulations to support start-ups and scale-ups. Flagship proposals will include:
- EU Start-up and Scale-up Strategy (Q2 2025)
- 28th regime (Q4 2025-Q1 2026)
- European Innovation Act (Q4 2025-Q1 2026)
2. A joint roadmap for decarbonisation and competitiveness: Balancing climate neutrality by 2050 with securing the EU as an attractive location for manufacturing. Flagship proposals will include:
- Clean Industrial Deal (February 26, 2025)
- New State Aid Framework (Q2 2025)
- Circular Economy Act (Q4 2026)
3. Reducing dependencies and enhancing security: Making sure that that the EU remains open to trade whilst reducing on external sources for critical inputs. Flagship proposals will include:
- Critical Medicines Act (March 11, 2025)
- Revision of Public Procurement Directives (2026)
- Clean Trade and Investment Partnerships (ongoing)
Underlining the Commission’s thinking are simplification and increased policy coordination at EU and national level – member states will have their part to play in the Commission’s plans. However, “the change will start with the Commission”, who will “deliver an unprecedented simplification effort”. With Valdis Dombrovskis as the first-ever Commissioner for Implementation and Simplification, the Commission will screen the EU acquis to see where simplification of EU legislation is possible and introduce a Competitiveness Check to impact assessments. The other Commissioners are also to hold regular implementation dialogues with stakeholders to make sure that burdens are reduced for businesses.
First item on the simplification agenda? An Omnibus proposal targeting sustainability reporting requirements (aka the Corporate Sustainability Reporting Directive – CSRD), sustainability due diligence (aka the Corporate Sustainability Due Diligence Directive – CSDDD), and the EU Taxonomy is to be published on February 26. Certain stakeholders will be able to discuss the plans with Commissioner Dombrovskis on February 6, but how much of that will be taken into consideration is another matter.
Whilst clarity and predictability are appreciated all round whether it be about simplifying reporting requirements or increasing coordination of EU policies, concerns over possible deregulation, crawling back of environmental protections, and implementation delays are ever present – and most definitely not silenced by the publication of the Competitiveness Compass.
At Dods EU Political Intelligence, we will be following the reactions, the debates and new proposals that will follow the publication of the Competitiveness Compass. If you want to know more, do not hesitate to get in touch.
Image Source – EP Parliament