EU leaders back steps to compete with US, China

European Union leaders agreed on Thursday to back a revamp of the single market, simplified regulations and other steps to ensure the bloc can compete with the United States and China as an industrial leader in green and digital technologies.

High energy prices and US President Joe Biden’s Inflation Reduction Act, which offers $369 billion of green subsidies that often only apply to products made in North America, have raised EU fears of an exodus of European industry.

Europe’s competitiveness in relation to the world’s two biggest economies has become a major concern 30 years after it created an internal market, which is largely seamless for goods, but falls short for services.

Dutch Prime Minister Mark Rutte said it was vital to cut red tape and make the most of the single market.

“The internal market is of vital importance for our welfare,” he said, adding it had helped make the Netherlands among the world’s richest countries.

EU leaders, meeting in Brussels from Thursday for a two-day summit, said the single market was essential to future economic growth, while highlighting areas for improvement.

“The European Council calls for ambitious action to complete the single market, in particular for digital and services,” the summit conclusions said.

The conclusions also called for progress in areas to improve the long-term competitiveness of the European Union.

These include simplifying regulation and reducing bureaucratic burdens, such as by accelerating procedures for granting permits for green or digital projects.

The leaders also pressed for the completion of a capital markets union to ease access to private investment, more spending on research and innovation and moves to increase the take-up of digital tools across the economy.

One issue of potential division is the extent to which state aid rules should be relaxed to allow public funds to be pumped into clean tech, although leaders did not discuss this in detail at the summit. [Reuters]