Business confidence in Europe’s competitive position falls

Europe’s business federation believe that there has been no improvement in the position of European companies against global competition, with over half stating that the regulatory burden worsened in 2023.

BusinessEurope, the federation that represents more than 40 EU business groups, reported this message in its 2024 Reform Barometer, which looks at Europe’s global competitiveness performance and evaluates policy decisions.

Federation president Fredrik Persson said: “Our key finding is that 88% of our national member federations believe that, having declined significantly between 2020 and 2023, there was no improvement in the attractiveness of the EU’s investment environment vis-à-vis our major competitors over the last 12 months. Moreover, over half of our member federations (54%) believe that the regulatory burden for companies operating in the EU increased in 2023.”

The report highlights that economic growth in the US last year exceeded the EU for the seventh time in the last ten decade The report also says that the EU has failed to close its long-term productivity gap with the US. Overall EU productivity in 2022 was only 75% of that enjoyed in the US, it says.

Similarly, the gap in productive investment continues to widen. Productive investment in 2022 amounted to 15% of GDP in the US versus 11% in the EU, said the federation.

“During the next political cycle, the EU needs to put competitiveness at the forefront. The EU needs to rejuvenate and further develop the single market in areas ranging from digital to financial services, make good on the Commission’s promise to reduce reporting requirements for companies by 25%, and ensure that the Green Deal becomes a growth strategy by flanking it with a real Industrial Deal,” said Persson.

The Reform Barometer also shows that initial expectations for an improvement from the EU’s Next Generation Recovery and Resilience facility (RRF) implementation has faded. The proportion of BusinessEurope member federations dissatisfied with implementation of their national plans has increased from 29% following the launch of the plans up to 42%.

The report was presented to European leaders and social partners at the EU’s Tripartite Social Summit in Brussels, at which EU leaders and social partners focused on the topic ‘An economically and socially strong Europe to play its role in the world’.

The participants discussed an industrial strategy complementing the green deal with quality jobs at its heart, a single market that delivers for enterprises and workers, and tackling skills and labour shortages.

“We are in a moment of transition. The EU project is based on two pillars: security and competitiveness. We are now building a new paradigm to tackle our double transformation – climate and digital. We need to deepen the internal market on energy, services and capital. We must also address labour and skills shortages that hinder our businesses and the competitiveness of our single market, while taking into account the fundamental role of SMEs. Our social partners play a key role helping us achieve these goals,” said Charles Michel, president of the European Council.