Consolidating sustainable and long-term growth in Europe

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Four main areas of actions by the EU institutions and the member states have been underlined at the recent EU summit: a) efficient use of available financial resources, b) effective and affordable energy facilities for households and businesses, c) addressing the lack of skills that affects European socio-economic development, and d) competitive external trade policy. A short description of the perspective actions is revealed below.  

Recent special EU summit in mid-April 2024 has shown the importance of strengthening the EU-wide competitiveness in the world and vital aspects of the single market. Among vivid examples are: the EU’s ability to develop policies for “green transition”, deploying modern technologies needed for digitalisation process (to acquire the global priority in the digital field and produce best digital products/services) and develop crucial sectors of competitive and robust European defense industry.

Main areas of actions
The Commission President underlined four perspective actions by the EU institutions and the member states:
= First, the access to capital: in the economic sense, the effective use of available financial resources is critically important; however, every year about €300 billion of European savings is diverted abroad, mainly to the United States. This is, actually, money missing for corporate development in the EU. The main reason for that is that the EU capital market and the financial system are extremely “fragmented”: e.g. companies in the EU could raise additionally about €470 billion a year in funding from the capital markets if the Capital Markets Union is being completed.
The EU has to take a series of decisive steps: first, to lower the costs for companies and investors in using the capital markets; second, to strengthen and align supervision of the most important players in the financial market, and third, provide predictability to investors at the occasions of crises and insolvencies. The EU, generally, needs a simple European framework that adds value, lowers cost and improves the access to capital for businesses in all member states and regions.

= Second, energy-efficient policy: i.e. energy costs continue to affect European competitiveness; numerous energy-intensive industries such as steel, glass, cement, chemicals, fertilizers, etc. have been particularly affected. Although the EU has reached the pre-war level of the energy costs, the Commission has acknowledged that “they are still structurally too high”.
For example, data shows now that a large wave of new LNG export projects is coming to the EU market from the next year on; it is going to increase the global supply of LNG by half; it means that the EU is moving from a condition of “shortfalls of gas to the opposite, i.e. to a position where the EU could see soon an abundance of gas on the market”.
Providing for “new importance of LNG in the energy mix”, the EU would bring down significantly the gas prices; at the same time, this will give the member states time to build up “the new clean energy economy”, which “would be largely home-grown”.
Positive thing in this process is that all sorts of renewable energies are coming at a much lower price, which is making great structural changes necessary in a reformed growth pattern.

= Third, addressing the lack of skills that affects European socio-economic development. The issue has severe consequences for the member states: hence, the Commission has created 2023 the Year of Skills. The specific in the EU labour market is that the “untapped potentials” are limited: i.e. the member states’ economies have had historically high levels of employment.
Thus, the Commission has been forced to “really look at every single person that can potentially join the labour market” and train as many young unemployed as possible. For example, the states need to improve women’s access to the labour market and older workers as well.
Besides, the EU needs legal migration: in 2023, the EU has had 3.5 million migrants coming legally and joining labour forces in the member states: it is three times higher than illegal migration. The better the EU states are dealing with legal migration, noted the Commission President, the more active they can combat irregular migration, as well as smugglers and traffickers behind it.
The EU has taken many initiatives in the area of skills: the member states need not only training but the upskilling and the reskilling of the workforce: thus the EU has provided €65 billion in funding for the states to invest in training, notably through NextGenerationEU and the ESF+. Two programs were particularly effective in the single market’s domain: i.e. SURE-job program and the NextGenerationEU, the investment program. Due to the exploration of these programs, the EU-wide unemployment is presently at an all-time low with less than six percent and employment is at an all-time high level with about 75 percent; besides, inflation is almost at the desired level of two percent.

= Fourth, competitive external trade policy: presently, almost all economic growth in the world is generated outside Europe. For example, the European GDP is about $20 trillion and the US about $30 trillion; as soon as the globally generated “wealth” is around $ 454 trillion (data from 2022), the EU has a very small share of global turnover. Besides, the concentration of wealth us enormous: about 10 percent of global population, mostly in the western parts of the world (i.e. in North America and Europe) has acquired about 85 percent of the total, it is not so difficult to see where are the main green transition influences and interests are.
The EU institutions are good at negotiating trade deals; it is the EU exclusive competence: e.g. export of agri-food to Canada has made in 2023 about €4.5 billion, and the EU has had an agri-food surplus of €1.6 billion with Canada. So, the EU is gaining huge advantages of its open and fair trade that provides the member states companies good opportunities. However, the EU needs a global level playing to avoid risks associated with such openness, which the EU already encounters in trade defence measures. Recently, the Commission has taken over 170 trade defence measures which have protected over 500,000 jobs EU-wide.

General reference and citations from the Commission press release at:

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