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EU commission published its new “Annual Single Market and Competitiveness Report”

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Despite global economic challenges and geopolitical tensions, the EU Single Market, as one of the world’s largest integrated market areas, provides a solid foundation for close cooperation between EU member states and economic recovery.

The European Commission released its Annual Single Market and Competitiveness Report on February 14, which provides an in-depth look at the competitive strengths and challenges of the Europe’s Single Market and tracks yearly developments according to the nine competitiveness drivers identified in the EU’s 2023 Long-term competitiveness Communication.

Those are the functioning of the Single Market, access to private capital, public investment and infrastructure, research and innovation, energy, circularity, digitalisation, education and skills, and trade and open strategic autonomy. The 2023 Communication established a set of Key Performance Indicators to serve as a dashboard of progress regarding these drivers. The report notes that 9 KPIs have improved, against 5 that have disimproved; 3 are stable, and 2 do not yet have new data.

The report recalls that the functioning Single Market boosts the EU’s economy with a large demand pool, diversified supply sources, opportunities for innovating and scaling up production, strong social rights, and fair working conditions, while serving as a geopolitical lever.

Regarding investment, the report concludes that public investment has recovered from the low levels after the financial crisis, partially thanks to the Recovery and Resilience Facility, while private investment remains high. To increase the availability of risk and venture capital funding and scale up innovative companies, the report recommends to further strengthen the Capital Markets Union, building on the initiatives already approved since 2020.

Regarding research and innovation, the EU’s R&I investments have increased from 1.8% of GDP to 2.2% in twenty years but slipped year on year and remain below the target of 3%, and unevenly distributed across regions and Member States. Meanwhile, the scientific publications do not always translate into commercial leadership, often because of the difficulties to scale up business activities in the EU. More efforts are required to support Europe’s efforts from lab to fab, such as is being done for semiconductors through the European Chips Act, facilitating research collaboration and providing support through Horizon Europe or the Digital Europe Programme.

Although high energy prices remain a challenge, the report points to important steps taken over the past years in order to update the EU energy policy toolbox and support EU clean tech manufacturing.

Europe is slowly progressing towards a more circular economy. Since 2000, the EU industry’s resource productivity has increased by 37%, indicating a more efficient use of materials in EU production, but the EU materials footprint remained stable in the last decade.

In terms of digitalization, several funding instruments and legislative initiatives are now in place to enhance the digitalisation of businesses and the competitiveness of the EU information and communication technology sector.

In terms of education and skills, at 74.6% in 2022, the EU is on track to reach its 2030 employment rate target of 78%. And yet, three quarters of SMEs currently face labour and skills shortages, which the Pact for Skills and measures facilitating labour mobility have started to tackle.

The report also notes that the EU is a major trading power accounting for 16% of global exports, and that trade continues to be a source of competitiveness. It also points to the need to defend the level playing field and to protect our economic security.

In fact, the Annual Single Market and Competitiveness report responds to the request of the March 2023 European Council to monitor the state of Europe’s Single Market and competitiveness. It builds on previous Annual Single Market reports as first envisaged by the 2020 EU Industrial Strategy.

As to the next steps, the June 2023 European Council announced its plan to hold the first annual progress review on enhancing the Union’s competitiveness and increasing productivity and growth at its March 2024 meeting.

The Single Market Scoreboard was first published in 1997 and was initially set up to assess the performance of the Member States on the implementation of Single Market acquis. It was extended over time to cover the use of related governance tools. This year, it includes new competitiveness indicators, in line with the Long-term competitiveness Communication.

EU Briefs publie des articles provenant de diverses sources extérieures qui expriment un large éventail de points de vue. Les positions prises dans ces articles ne sont pas nécessairement celles d'EU Briefs.

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