Europe needs growth policies to address its environmental and geopolitical challenges

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A more “activist” industrial policy

The unanimous need to deepen the single market, as recommended by the Letta and Draghi reports, has been seen as a way to simplify the lives of businesses. This can be done without necessarily “over-regulating”, as it is important to avoid harming consumer and worker safety or financial stability.

The importance of promoting the emergence and/or strengthening of a cutting-edge industry in Europe highlights the role of a more “activist” industrial policy. In a world where Europe lags behind the United States or China not so much in terms of the number of new startups created, but in terms of new high-growth companies (scale-ups, unicorns), it is crucial for this industrial policy to be accompanied by a vigorous competition policy. The goal is not to prioritize current “national or European champions”, but rather to enable the emergence of “future European champions.”

This is particularly true for the defense industry (as well as for major infrastructures, energy, and others), where large “national champions” often dominate public markets, while in Ukraine, innovative new companies often offer key military solutions.

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A truly European defense

The current geopolitical context emphasizes the need for a truly European defense, with increased budgets and, more importantly, greater synergies through a genuine single market in this sector, leading to pan-European tenders.

As Mario Draghi recently stated: Europe is taken seriously when it is federal, as with monetary, trade, or competition policies, but not when it remains a group of member states prone to division, such as in defense matters.

This will require, as recommended by the Draghi report, a transfer of some national budgets to the European level. Europe is taken seriously when it is federal, as with monetary, trade, or competition policies, but not when it remains a group of member states prone to division, such as in defense matters.

The green transition

Regarding the green transition, it is not only necessary to protect the climate but also geopolitically imperative for Europe: a greater share of decarbonized energy would be a significant advantage at a time when oil and gas supplies are uncertain and much more costly.

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Three responses

How to achieve “more Europe” as a path towards greater growth potential? How to reduce the number of national regulations and transfer national budgets to the European level? And how to avoid progress followed by setbacks (as in the case of the green transition), with confidence in regulatory stability being essential to boost private investment?

Three responses have emerged in the discussion:

1. The need for a “mobilizing project” for European citizens to embrace. An “Europe that protects our prosperity and security” based on the principles above could constitute such a project, if accompanied by financial compensations to protect the inevitable “losers” of industrial changes, especially in the cases of digital and environmental transitions.

2. A “realistic European project,” sufficiently targeted to avoid challenging national regulations seen as essential (the example of a 28th regime for companies was mentioned, more focused than currently on high-growth young companies and limited to certain categories of workers).

3. Finally, a “flexible integration” based on a “coalition of volunteers” open to future entrants (as was the case with Schengen or the Euro), a coalition that could even go beyond current member states: the case of defense, where participation from the UK and even Ukraine would be highly beneficial, is a clear example.

The ambitious agenda should not be underestimated. However, its importance and urgency should not be minimized in a rapidly evolving world.