Europe’s future competitiveness is at stake

On 1 January, Sweden will take over the six-month Presidency of the Council of the European Union. At this time, Europe remains in the grip of several simultaneous crises - the Russian war of aggression against Ukraine, the ongoing energy crisis, rising rates of inflation and the pressure on Europe’s economies are all issues that will dominate the Presidency and the surrounding discussions.
Perhaps the most concerning issue for Europe’s companies is the ability to manage these crises. A healthy and competitive European business community is a fundamental prerequisite to allow us to sustainably support Ukraine and to tackle these other crises. In the Swedish EU declaration on 16 November, Prime Minister Ulf Kristersson highlighted Europe’s competitiveness as the third vital area for cooperation along with security and the climate. This statement is to be welcomed, as is the commendable ambition to build an alliance for a competitive Europe. However, it is important that these insights and ambitions are translated into concrete action. In the first place, this must be to deal with ongoing crises, but it should also reflect a longer-term strategy to build a more competitive Europe. Today (25 November) the Confederation of Swedish Enterprise is hosting a meeting with the chairmen and CEOs of forty business organisations from over thirty different countries along with Business Europe. The focus of the event will be on the Swedish Presidency and on building a long-term strategy for competitiveness. Together, we have clear expectations:

Secure Europe’s fossil-free energy supply and enable companies to cope with the energy crisis.
Today, fuel prices in Europe are five to seven times higher than they are than in the US. This immediately undermines competitiveness and margins and as a result production and employment. The acute crisis risks wiping out established, well-run businesses. We need a European policy that provides the foundation for long-term investments in fossil-free electricity production. In addition, we need short-term measures that can reduce the harmful impact of the high fuel prices resulting from the war in Ukraine.

Reinforce the single market and strengthen Europe’s competitiveness.
In 2023, it will be thirty years since the EU’s single market was launched, with the goal of free movement of people, goods, services and capital. By any measure, Europe has become both richer and stronger through opening up its economies and creating this single market. This expansion in our economic cooperation has also brought our countries closer together. Work on further reinforcing the internal market – not least that for services – must run in tandem with broader deregulation work. Common rules that apply in 27 Member States are welcomed by business, but the volume and complexity of new and old rules are worrying. This too is part of the issue of competitiveness.

Let business drive the green transition.
It is trade that allows us to get the return we need on our competitiveness and innovative capacity. To date, the EU has concluded over 40 trade agreements with more than 70 countries worldwide; it now needs to conclude further trade agreements. This is not simply to provide better opportunities for diversification in a geopolitically complex world, above all it is to act as a driving force for free, rules-based trade. Over recent years, the EU has built up a toolbox, replete with instruments to protect the EU. Now, the focus must be on those instruments and agreements needed to expand and increase trade.

Accelerate digitalisation.
Sweden and the EU need to ensure the feasibility of cross-border data flows, e-commerce agreements, data sharing and the use of AI. At the same time, however, we also need to remove other barriers to establishing a well-functioning European digital single market. Investment in digital infrastructure and research, both public and private, needs to be significantly increased.

Strengthen the research and development conditions for business.
The EU currently invests less in R&D than the US and China, something that is undermining European innovative capacity. Europe is also worse at the large-scale commercialisation of its advances in research. This is also linked to a weak innovation climate. We need to take aggressive measures to correct this, with open calls and priorities identified in partnership with industry. The public sector should establish well-designed rules for these, with companies then competing - on a level playing field - to develop the best possible solutions. Taking such a step forward in encouraging research and development will be essential if the EU is to remain competitive. The Confederation of Swedish Enterprise, along with our European sister organisations in Business Europe, have immense expectations for the Swedish Presidency. Europe needs a fresh start, an aggressive agenda for reform and increased competitiveness.