The European Council's special two-day summit wrapped up in Brussels on Thursday with a firm commitment to enhance the European Union's competitiveness amid drastic global shifts. Leaders vowed to close the economic gap with the U.S. and strengthen the EU's strategic sovereignty.
European Council President Charles Michel highlighted the bloc's over-reliance on external economic and security bases, arguing that it undermines the EU's competitiveness and global influence. In 2024, the European economy remains sluggish, particularly in manufacturing and energy-intensive industries, due to intensified geopolitical tensions, monetary tightening, and weak global demand.
Preliminary data from Eurostat revealed that both the Eurozone and the EU experienced zero growth in the fourth quarter of last year compared to the previous quarter. Additionally, the European Trade Union Confederation reported nearly one million manufacturing jobs lost in the EU over the past four years.
The summit identified nine key areas to drive competitiveness, including deepening the single market, developing effective industrial policies, and increasing investments through the Capital Markets Union (CMU) and the European Investment Bank. A significant proposal was presented for an EU-wide effort to subsidize industrial companies in response to the U.S. Inflation Reduction Act, which has raised concerns about investment flowing away from Europe.
Former Italian Prime Minister Enrico Letta emphasized that there is 'no time to waste' in addressing the widening economic gap with the U.S. His report warned that rising protectionism threatens the EU's economic security and technological development, highlighting the need for funding to support green and digital transitions, EU enlargement, and defense enhancements. Letta pointed out that the EU's 33 trillion euros in private savings are underutilized, with approximately 300 billion euros redirected abroad each year, mainly into the American economy.
European Commission President Ursula von der Leyen stressed the potential to raise an additional 470 billion euros annually from capital markets if the EU completes the CMU. Charles Michel supported leveraging the CMU to channel funds into European companies, likening the initiative to the U.S. Inflation Reduction Act, which allocated nearly $400 billion to subsidize domestic production.
Divisions Among Leaders
Despite broad support for the CMU in the European Council conclusions, divisions among EU leaders persisted. While France and Germany supported the initiative, many of the EU's 27 member states expressed concerns about losing national control and expanding EU regulatory powers. Estonian Prime Minister Kaja Kallas and Irish Prime Minister Simon Harris voiced their reservations, emphasizing the need for careful implementation without excessive centralization.
The summit communique reaffirmed the EU's support for Ukraine, although analysts believe limitations in the bloc's defense industrial base and production capacity pose challenges to fulfilling its commitments. On the Middle East, EU leaders urged all parties to exercise restraint and agreed to implement more restrictive measures against Iran, specifically targeting unmanned aerial vehicles and missiles.
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EU summit urges boosting competitiveness, saying 'no time to waste'
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