EU leaders meeting in Brussels will call for the bloc’s competitiveness to be boosted primarily by easing regulatory requirements and leveraging the power of private capital, according to the latest draft conclusions of the 17-18 April summit and a senior EU official familiar with the discussions.
The draft text for the Special European Council summit, seen by Euractiv, notes that a “combination” of public and private funds is necessary to enhance the continent’s economic resilience but places heavy emphasis on market forces as the key driver of future innovation and growth.
The document also stresses that private capital’s power could be better harnessed through “regulatory and prudential changes” of the bloc’s securitisation market, “eliminating unnecessary reporting”, and “reducing the administrative burden that weighs on companies”.
In addition, the text explicitly urges the European Commission to “prevent overregulation” — a proposal echoed by the EU official, who spoke on condition of anonymity.
“I think that’s maybe a natural reflex of the EU Commission: when you face a problem, you regulate,” the official told Euractiv on Tuesday. “We have reached a point where it’s not sustainable.”
The official also corroborated analysts’ suspicions that European policymakers are increasingly focussing on the private rather than public sector as the principal means to finance the bloc’s digital and green transitions.
“Many member states have insisted also on the need to have public investment, but we are not at a stage where we need to make decisions at the EU level on public investment,” the official said. “So, indeed, when you’re looking for money, they are looking at private money.”
This is partly in contrast with the critical role former Italian prime minister Enrico Letta assigns to EU-level public funds in a high-level report he is due to present to EU leaders on Thursday, as he is expected to detail a batch of ready options to cover the bloc’s funding needs through the public and the private-market routes.
Europe’s competitiveness has been a topic of increasing concern among EU leaders in recent months, as slowing Chinese demand, high interest rates, and massive US and Chinese industrial subsidies pose a growing threat to the bloc’s economy.
Exacerbating leaders’ concerns, the International Monetary Fund downgraded on Tuesday the eurozone’s projected 2024 GDP growth from 0.9% to 0.8%.
The IMF report noted that the “trailing effects of tight monetary policy and past energy costs, as well as planned fiscal consolidation” were continuing to “weigh on activity”.
The EU official’s comments came on the same day another former Italian prime minister, Mario Draghi, who has been asked by the European Commission to write a report on the bloc’s competitiveness, said that “most” of the funds required to restore the bloc’s competitive edge will be provided by the private sector.
Draghi, whose study is set to be published at the end of June, has previously told EU officials that two-thirds of the estimated €500 billion per year required to close Europe’s “investment gap” with the US should come from private companies.
The EU summit on Wednesday and Thursday (April 17-18) will focus largely on the bloc’s competitiveness, but also on the growing tensions in the Middle East.
On Thursday, Letta will present his report on the single market to European leaders.
A leaked version of the report, seen by Euractiv, similarly highlights the dangers that “overregulation” poses to the European economy.
In particular, it stresses that the single market’s “dynamism and efficiency” is being hampered by an “excessive regulatory burden and bureaucratic red tape”.
“Overregulation places significant additional costs on businesses, proving unsustainable for SMEs and inadvertently favouring non-European companies that are not bound by the same stringent rules,” the report notes.
“Addressing these regulatory challenges is not merely a task of reform but a crucial necessity to unlock the full potential of the single market.”
