BRUXELLES – In a global system where geopolitical tensions, competition for technological supremacy, and the struggle for control of resources are increasing, the freedom, security, and autonomy of Europe depend more than ever on its ability to innovate, compete, and grow. This is stated in the introduction of the draft of the Competitiveness Compass, which is expected to be presented next Wednesday. “Without an urgent change in direction and approach, the future of the EU as an economic power, investment destination, and production center is at risk,” the document’s message reads.
“The new Commission has an ambitious political mandate, based on the president’s political guidelines, to be a Commission for growth and investments, with competitiveness at the center of this mandate. This communication defines a compass that will guide work over the next five years and lists priority actions to reignite economic dynamism in Europe,” the introduction of the document, reviewed by ANSA, reads. “Draghi’s report shows that productivity dynamics play a central role in explaining the divergence of Europe’s economic trajectory from other major economies,” the draft further states.
“There are three relevant factors for the dynamics of European productivity: the innovation gap, particularly compared to the technological and digital sector of the United States, which reflects a more static industrial structure in Europe, with fewer startups and lower private sector spending on research and innovation; the transition to a climate-neutral economy and the impact of higher and more volatile energy prices compared to major competitors; the uncertainty of a continuously evolving geoeconomic and security context, where global supply chains become fragile and excessive dependencies can turn into risky vulnerabilities,” the draft continues.
The EU Competitiveness Compass, as outlined in the draft, sets out “guidelines for work in the coming years” based on some principles: “sustainable competitiveness, closing the innovation gap” with other countries, “increasing economic security and ending energy dependencies, a roadmap for decarbonization.” “We will start with a first Omnibus simplification proposal next month, which will include areas such as sustainable finance reporting, sustainability due diligence, and taxonomy,” the draft read, as seen by ANSA.
Around its five-year priorities, the document foresees interventions in the single market, simplification, skills, financial competition, and coordination. “We will start with a first Omnibus simplification proposal next month, which will encompass wide-ranging simplifications in areas such as sustainable finance reporting, sustainability due diligence, and taxonomy,” the text states, subject to last-minute changes before the next college of commissioners.
The Competitiveness Compass also includes the adoption of the 28th legal regime, in addition to the 27 EU Member States, as outlined in the Letta Report. It will be a set of harmonized rules expected in 2026 for innovative companies, with simplifications on bankruptcies, labor law, and taxation. This emerges from the draft communication seen by ANSA. In the second quarter of this year, a proposal on the Union of Savings and Investments is expected, a challenge indicated in both the Letta Report and the Draghi Report. This year, a Steel Plan and a review of the Carbon Adjustment Mechanism (Cbam) are expected.
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