New EU leadership outlines steps to tackle economic hardships

BRUSSELS

The EU Commission’s new leadership will tackle the economic hardships plaguing the region by revitalizing the weakening economy, improving the competitiveness of European products, and managing the trade tensions with US President-elect Donald Trump for the next five years.

The EU is planning to eliminate the lingering supply chain issues since the COVID-19 pandemic and its vulnerabilities due to the high external dependence on energy products, especially natural gas.

EU Commission President Ursula von der Leyen, having taken office on Dec. 1, stated that Europe’s security depends on growing its economy, its competitiveness, bringing innovation, and increasing the region’s production capabilities.

Introducing a major initiative, the Competitiveness Compass will act as a framework for the EU’s efforts on closing the innovation gap between the EU, the US, and China in the next five years.

The EU will aim to prevent new firms from leaving the union during the development phase, especially those operating in digital technology, while identifying new sources for investments in startups to incentivize them to stay in the region.

The framework will also act as a common plan to decarbonize by preparing the Clean Industry Deal, which will be similar to the net zero roadmap of the European Green Deal. The new deal will focus investments in Europe towards clean infrastructure and industry, especially for high-energy-intensive sectors, thereby reducing the high energy costs of the region.

The Competitiveness Compass will also include an element to plan the increase of economic security and the reduction of the region’s foreign dependencies by establishing stable and secure supply chains, particularly for key raw materials, while working on new trade agreements to diversify supply sources.

The EU also plans to increase its defense spending by establishing a single market for defense products and supporting joint projects.

The new leadership will focus on investment and it will amend the EU’s long-term budget to allocate more public resources to key areas.

Meanwhile, crippling bureaucratic procedures in Europe will be changed to facilitate the day-to-day operations of companies and various rules will be more streamlined in an effort to reduce the costs of complex reports and paperwork requirements.

The new EU Commission will face Trump’s tough protectionist trade policies. Trump showed his discontent with the EU trade surplus with the US, saying that he would impose tariffs of 10% to 20% on European products.

The EU had various trade disputes with Trump during his first term, so the commission will certainly face problems in his second term, dealing with his harsher rhetoric and promised actions.

Former European Central Bank (ECB) president Mario Draghi released a report on how the EU economy can maintain its competitiveness in the face of global developments.

Draghi stated that the EU needs to introduce a more coordinated industrial policy and increase investments and joint borrowing to be able to compete with the US and China, noting that the region’s competitiveness declined against them due to the pandemic, supply chain disruptions, the war in Ukraine, and the rapid developments in technology.

*Writing by Emir Yildirim in Istanbul