COMMISSION STAFF WORKING DOCUMENT Annual Single Market Report 2021 Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe's recovery
Date: 2021-05-05
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: EU growth strategy, EU industrial policy, competitiveness, coronavirus disease, digital single market, economic recovery, epidemic, green economy, industrial cooperation, industrial reorganisation

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 5.5.2021  SWD(2021) 351 final  COMMISSION STAFF WORKING DOCUMENT Annual Single Market Report 2021 Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe's recovery {COM(2021) 350 final} - {SWD(2021) 352 final} - {SWD(2021) 353 final}  
 
 
COMMISSION STAFF WORKING DOCUMENT 

Annual Single Market Report 2021 

Accompanying the 

Communication from the Commission to the European Parliament, the Council, the 
European Economic and Social Committee and the Committee of the Regions 

Updating the 2020 New Industrial Strategy: Building a stronger Single Market for 
Europe's recovery 

Executive Summary 

The  COVID-19  crisis  has  highlighted  the  importance of  looking  at  the  EU’s  industrial  policy  and  the 
Single Market together, to better take into account the economic and social impact that disruptions 
to the free flow of goods, services and people - regardless of whether they are longstanding or crisis-
related  -  have  on  our  companies  and  to  better  understand  the  complex  interlinkages  among  them 
across regions and sectors. 

This report provides the analytical elements underpinning the Communication in its response to calls 
from the Competitiveness Council for the Commission to assess the resilience of the Single Market by 
drawing lessons from the COVID-19 crisis; define and report regularly on key performance indicators 
on  industrial  strategy  and  competitiveness;  and  take  stock  of  implementation  of  the  March  2020 
Single Market Enforcement Action Plan (SMEAP). It is the first of a planned series of yearly reports. 

The  events  of  the  past  year  have  exposed  the  EU’s  economy  to  an  unprecedented  and  sustained 
shock,  with the EU  economy  contracting by 6.3%. Small and medium-sized enterprises (SMEs) were 
especially  affected.  This  was  also  caused  –  and  aggravated  -  by  the  unilateral  introduction  of  a 
number of restrictions to the free movement of goods and people, which led to severe supply chain 
disruptions.  These  came  on  top  of  existing  barriers  identified  in  the  March  2020  Single  Market 
Barriers report and the SMEAP. The crisis also confirmed the interdependence of global value chains 
and demonstrated the importance of a globally integrated and well-functioning Single Market. 

The impact of the crisis has been felt differently across the fourteen industrial ecosystems identified 
by  Commission  services.  During  the  first  three  quarters  of  2020,  the  “Tourism”  ecosystem  lost  one 
fourth of its turnover while that of the “Digital” ecosystem was 5% higher. 

Recovering fully and sustainably means  implementing a large number of initiatives at  EU, national, 
regional and local level. Many of these were already identified in the March 2020 Industrial Strategy 
package  but  their  importance  and  the  need  to  deliver  on  them  fast  has  increased,  as  has  the 
importance of an open, integrated, competitive and fully functioning Single Market. 

There  has  been  quick  and  substantial  progress  in  addressing  the  impact  of  the  crisis  and  in 
implementing the measures announced in the March 2020 Industry Package by deepening the Single 
Market;  upholding  a  global  level  playing  field;  supporting  companies  and  the  economy  in  the 
transition  towards  climate-neutrality  and  a  circular  economy;  helping  the  digital  transition; 
supporting innovation; placing skills at  the heart of the EU policy agenda; assisting investment and 
financing;  reinforcing  industrial  and  open  strategic  autonomy;  and  taking  a  new  partnership 
approach to governance.  

1 

 
 
 
Contents 
1.  Why this report is needed ............................................................................................................... 5 

2. 

The impact of the crisis on the Single Market Economy ................................................................. 7 

3.  Delivering on the ground: the implementation of the 2020 Single Market Enforcement Action 
Plan, Industrial and SME Strategies ....................................................................................................... 29 

4.  Conclusion ..................................................................................................................................... 39 

Annex 1 State of play of the implementation of the Single Market Enforcement Action Plan ............ 41 

Stocktaking of the implementation of the 2020 Single Market Enforcement Action Plan ................... 53 

Annex 2 Overview of the implementation of the 2020 Industrial Policy Package ................................ 59 

Stocktaking of the implementation of the 2020 Industrial Strategy ..................................................... 60 

Stocktaking of the implementation of the 2020 SME Strategy ............................................................. 66 

Annex 3: 14 industrial ecosystem fiches ............................................................................................... 71 

1. Aerospace and Defence Ecosystem .............................................................................................. 75 

2. Agri-Food Ecosystem .................................................................................................................... 82 

3.  Construction Ecosystem ........................................................................................................... 90 

4.  Cultural and Creative Industries Ecosystem ............................................................................ 97 

5.  Digital Ecosystem .................................................................................................................... 104 

6. 

7. 

8. 

Electronics Ecosystem ............................................................................................................. 112 

Energy-Intensive Industries Ecosystem.................................................................................. 119 

Energy – Renewables Ecosystem ........................................................................................... 127 

9.  Health Ecosystem .................................................................................................................... 136 

10. Mobility – Transport – Automotive Ecosystem ....................................................................... 143 

11. 

12. 

13. 

14. 

Proximity, Social Economy and Civil Security Ecosystem .................................................. 152 

Retail Ecosystem ................................................................................................................. 161 

Textile Ecosystem ............................................................................................................... 168 

Tourism Ecosystem ............................................................................................................. 175 

Annex 4: Monitoring the implementation of Industrial Policy ........................................................... 181 

Structure of the document .............................................................................................................. 181 

Headline indicators .......................................................................................................................... 184 

Value added in industry and services .......................................................................................... 184 

GDP per person employed .......................................................................................................... 185 

Employment ................................................................................................................................ 185 

EU global market share ............................................................................................................... 186 

Short-term indicators ...................................................................................................................... 186 

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Turnover ...................................................................................................................................... 186 

Industrial production ................................................................................................................... 186 

Declarations of bankruptcies and Registration of businesses ..................................................... 187 

Permanent, temporary and self-employment ............................................................................ 187 

Gross fixed capital formation ...................................................................................................... 188 

Economic confidence indicator ................................................................................................... 188 

Economic Resilience ........................................................................................................................ 189 

Net public investments ................................................................................................................ 189 

Net private investments .............................................................................................................. 189 

R&D expenditures ....................................................................................................................... 190 

STEM graduates ........................................................................................................................... 190 

Digital Transition ............................................................................................................................. 191 

Digital Economic and Society Index and its sub components ..................................................... 191 

Digital skills .................................................................................................................................. 191 

Climate neutrality and Circular Economy ........................................................................................ 192 

GHG emission intensity ............................................................................................................... 192 

Electricity prices .......................................................................................................................... 192 

Circular material use rate ............................................................................................................ 193 

Recycling rate of municipal waste ............................................................................................... 193 

Single Market Integration ................................................................................................................ 194 

Intra-EU trade .............................................................................................................................. 194 

Price convergence ....................................................................................................................... 195 

SMEs ................................................................................................................................................ 195 

Employment in SMEs ................................................................................................................... 195 

Value added in SMEs ................................................................................................................... 196 

International dimension .................................................................................................................. 197 

Extra-EU trade ............................................................................................................................. 197 

Key Performance Indicators for EU Industrial Ecosystems ............................................................. 198 

Headline indicators: the size and performance of ecosystems................................................... 198 

Green transition: GHG emissions ................................................................................................ 201 

Short-term indicators: Economic confidence .............................................................................. 202 

International dimension: Trade ................................................................................................... 203 

Resilience: the dynamism of ecosystems .................................................................................... 204 

Resilience: Investments in tangibles ........................................................................................... 205 

3 

 
 
Methodology for constructing the data used for the analysis of industrial ecosystems ................ 207 

4 

 
 
 
 
 
1.  Why this report is needed  
The  events  of  the  past  year  have  exposed  the  EU’s  economy  to  an  unprecedented  and  sustained 
shock, with the EU economy contracting by 6.3%.   

This shock was not only caused by national public health measures to limit social contact: it was also 
caused  –  and  aggravated  –  by  the  unilateral  introduction  of  a  number  of  restrictions  to  the  free 
movement of goods and workers by Member States, with intra-EU trade falling by 24% alone in May-
June 2020. 

This  not  only  limited  the  ability  of  businesses  to  supply  their  goods  and  services,  but  also  led  to 
severe  supply  chain  disruptions.  Compounding  the  issue,  the  restrictions  were  adjusted  frequently 
and  unpredictably,  triggering  national  stockpiling.  And  these  restrictions  came  on  top  of  existing 
barriers  to  businesses  within  the  Single  Market  as  detailed  in  the  Commission’s  Staff  Working 
Document of 10th March 2020 on addressing barriers to the Single Market1. 

All businesses suffered, but smaller ones most of all. Preliminary estimates show that the number of 
small  and  medium-sized  enterprises  (SMEs)  fell  by  1.3%  with  over  60%  of  SMEs  reporting  a  fall  in 
turnover. 

The impact of the crisis varied across regions and Member States, and most of all across ecosystems, 
with tourism suffering the most. 

Swift action was taken and is being taken by the EU – both the Commission and Member States – to 
address these negative socio-economic impacts and to put Europe’s businesses and wider economy 
on  a  more  stable  and  sustainable  footing.  Investments  and  reforms  under  the  Recovery  and 
Resilience  Facility  (RRF)  and  Next  Generation  EU  will  most  notably  provide  key  support  for  the 
recovery. The State Aid Temporary Framework has also helped. 

Many  of  the  reforms  needed  had  already  been  identified  in  the  March  2020  Single  Market 
Enforcement Action Plan, Industrial Strategy and SME Strategy adopted before the full impact of the 
crisis  was  felt.  Rather  than  being  made  redundant,  their  importance  and  the  need  for  a  twin 
transition to environmental sustainability including climate neutrality and digital leadership has been 
increased. 

But more fundamentally, the crisis has underlined that the Single Market does not stand in isolation. 
It is the basis of all the EU’s efforts to support the recovery of its industry, make it more resilient, and 
facilitate the green and digital transitions.  It has underlined the importance of an open, competitive 
and  fully  functioning  Single  Market  to  enable  businesses  to  grow  to  the  scale  needed  to  compete 
globally.  This  can  only  be  achieved  through  effective  implementation  and  enforcement.  In  this 

1 Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions Identifying and addressing barriers to the Single Market 
{SWD(2020) 54 final}: https://ec.europa.eu/info/sites/info/files/communication-eu-single-market-barriers-
march-2020_en.pdf  

5 

 
 
 
 
                                                           
context, competition rules have an essential role to play. Competitive markets improve conditions for 
companies of all sizes to have a level playing field and unlock their full potential. This also contributes 
to a quicker, stronger and more sustainable recovery and increased resilience of Europe’s industry. 

This report therefore looks at these two dimensions – Single Market and industry – together.  

Both the Council and the European Parliament have recognised that it is not enough to commit to a 
seamless Single Market and twin transition: it must be followed up with specific actions and actively 
monitored. This will allow the EU to identify and tackle remaining barriers and shortcomings. 

Specifically, in September 2020, the Competitiveness Council called on the Commission to: 

 

“take stock of the state of implementation of the 2020 Enforcement Action Plan and progress 
in addressing barriers in the Single Market, including through measures of the recovery plan, 
taking into account the work of [the Single Market Enforcement Taskforce] (SMET); 

  assess the resilience of the Single Market, by first drawing lessons from the COVID-19 crisis 

and evaluating the robustness of existing procedures; and 

  analyse on this basis the need for further regulatory and non-regulatory actions. 

Moreover, the Competitiveness Council conclusions from 16 November 2020 that: 

 

call  on  the  Commission  to  define  key  performance  indicators  for  monitoring  the  industrial 
strategy  and  competitiveness  by  the  end  of  March  2021  […]  including  taking  into  account 
investment trends, and comparing those to other world regions;  

  Ask for a regular reporting on the key performance indicators in the form of a brief written 

report and a statement for discussion in the Competitiveness Council;  

  Call also for the objectives of the EU's industrial policy to be reflected in sound indicators, in 
particular  concerning  industrial  competitiveness,  industry's  contribution  to  the  green  and 
digital transition and the Union's resilience and strategic autonomy while preserving an open 
economy;”2. 

This  report  provides  the  analytical  elements  underpinning  the  Commission  response  to  these 
requests  presented  in  the  Communication  “Updating  the  2020  New  Industrial  Strategy:  Building  a 
stronger Single Market for Europe’s recovery” (“the Industrial Strategy Update Communication”3. 

Section  2  of  this  report  assesses  the  impact  of  the  crisis  on  the  Single  Market  and  on  European 
companies,  including  as  part  of  industrial  ecosystems  and  SMEs.  Together  with  the  analysis  of key 
persistent obstacles in the Single Market, it will allow lessons to be drawn from the crisis and assess 
the resilience of the Single Market  

2 https://data.consilium.europa.eu/doc/document/ST-13004-2020-INIT/en/pdf  
3 COM(2021)350, “Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe’s 
recovery.” 

6 

 
 
                                                           
Section 3  presents  progress  in  the  implementation of  the  2020  Industrial Policy  Package,  including 
the Single Market Enforcement Action Plan, the Industrial Strategy, and the SME Strategy. 

2. The impact of the crisis on the Single Market Economy  

Key messages 

The impact on businesses and the economy of national public health measures to limit social contact 
was  aggravated  by  new  unilateral  restrictions  on  the  Single  Market,  often  subject  to  frequent 
adjustments  exacerbating  legal  uncertainty  and  triggering  national  stockpiling.  These  also  affected 
the mobility of workers and service providers. 

These restrictions caused major disruptions to the free flow of goods, services and people, profoundly 
affecting  value  chains,  economic  activity  and  employment.  Despite  the  actions  of  the  European 
Commission, the ability of industry to quickly introduce and scale up production in critical areas was 
seriously constrained. 

As a result, the EU economy contracted by 6.3% in 2020, with major turnover losses and decline in 
employment, and investment. The economy is expected to start recovering in 2021 and grow by 3.7%.  

The Commission services have further developed the ‘industrial ecosystems approach’ set out in the 
2020 Industrial Strategy as a lens to look at Europe’s economy. This analysis shows that the impact of 
the crisis  was  uneven among ecosystems with tourism,  cultural and creative industries, textiles and 
mobility-automotive  all  among  the  worst  hit.  Other  ecosystems  were  less  heavily  hit,  or  even 
experienced a turnover increase during the crisis, such as the digital ecosystem.  

SMEs  were  especially  affected  with  over  60%  of  SMEs  reporting  a  fall  in  turnover  and  two  thirds 
reporting  that  they  have  delayed  investment  decisions  or  downsized  investments4.  They  were 
particularly affected by supply chain disruptions, employee absences and temporary shutdowns.  

These new barriers came on top of a number of existing barriers to companies operating within the 
Single Market.  

The crisis has underlined not only the fundamental importance of the Single Market but also the need 
to make it more resilient and create appropriate tools to face future crises. 

2.1.  Impact of the COVID-19 crisis and restrictions to the Single Market 

The containment measures applied by national authorities to limit social contact and the spread of 
the COVID-19 virus inevitably caused an economic contraction and hit a large number of businesses.  

The measures led to physical constraints on economic activity and a sudden stop of production. First, 
the  partial  or  full  shut  down  of  entire  sectors  severely  disrupted  domestic  production  in  most 

4 European Commission/European Central Bank (November 2020), “Survey on the access to finance 
of enterprises (SAFE)”. 

7 

 
 
 
                                                           
countries.  Second,  the  propagation  of  such  disruptions  along  global  value  chains  weakened  the 
functioning of the Single Market and of extra-EU supply chains. 

As a result, during the second and third quarter of 2020, intra-EU trade fell by 24%, while GDP by 7% 
(see Figure 1). 

Figure 1: GDP and intra-EU exports of goods and services  
Q2 and Q3 2020 compared with 2019, unadjusted data at current prices. Data 
missing for ES. 
Source: European Commission analysis based on Eurostat.  

This contraction was aggravated by new restrictions on the Single Market.5 Soon after the start of 
the outbreak in the EU, a number of Member States unilaterally introduced a number of restrictions 
that they justified by a need to protect public health. Whilst some of these have subsequently been 
relaxed or ended, a number of new restrictions have been introduced in some Member States.   

Businesses,  notably  SMEs,  have  complained  about  a  number  of  practical  problems,  notably  the 
perceived lack of clarity regarding applicable national measures. Information was often hard to find, 
complex  and  only  available  in  the  national  language  of  the  Member  State  concerned.  In  addition, 
companies  highlighted  the  large  degree  of  divergence  and  fragmentation  between  national 
approaches even in cases of similar epidemiological situations. This is particularly difficult for those 
businesses being active or having to transit across several Member States.  

Furthermore,  the  intra-EU  export  restrictions  on  products  were  subject  to  frequent  adjustments 
exacerbating  legal  uncertainty  and  triggering  national  stockpiling  responses  with  further  negative 
effects.  In  the  area  of  medicinal  products,  for  example,  economic  operators  had  stocks  close  to 
expiry date, which were not in shortage nor in demand at national level but were still blocked on the 
national territory. In addition, many measures were not notified or only notified after they had been 
adopted,  preventing  the  Commission  and  other  authorities  from  raising  potential  concerns  and 
weakening the ability of the EU to coordinate its response.  

In  addition,  overly  cumbersome  border  controls  restricting  the  free  movement  of  persons  caused 
serious  delays  in  freight  traffic  and  even  blocked  the  delivery  of  goods  to  other  Member  States, 

5 Several Member States closed their borders or introduced coronavirus-related restrictions, for instance in the 
context of medical and medicinal devices. 

8 

 
 
 
 
                                                           
leading  to  major  disruptions  to  supply  chains  in  many  industrial  ecosystems,  including  retail6  and 
automotive7.  

The free movement of services was affected strongly, including by forced temporary closures of non-
essential businesses, travel restrictions, and a lack of clarity on applicable rules on movement across 
borders. 

Furthermore,  border  restrictions  reduced  the  mobility  of  workers  and  service  providers.  The 
number  of  postings  dropped  dramatically  in  the  second  half  of  March  and  in  April  and  May. 
Stakeholders repeatedly complained of8 problems in construction (e.g. posting workers), retail (e.g. 
difficulties  of  frontier  workers  to  reach  the  workplace),  agri-food  (e.g.  lack  of  seasonal  workers  or 
difficulties  in  manning  of  fishing  vessels),  health  (e.g.  hospitals  in  border  regions  having  staff  from 
across  the  border)  and  energy-intensive  (e.g.  engineers  unable  to  carry  out  urgent  cross-border 
maintenance  services  on  industrial  equipment).  Irrespective  of  the  employment  situation,  this 
remains  very  difficult  for  some  service  providers  and  workers,  mostly  on  short-term  contracts, 
without decent accommodation at the place of work.  

The  accumulation  of  these  restrictions  caused  major  disruptions  in  many  of  the  EU’s  industrial 
ecosystems, especially given the close links between activities within them. Some restrictions were 
particularly  harmful  to  the  functioning  of  the  Single  Market  and  even  counter-productive.  Bans  or 
other  restrictions  on  intra-EU  exports  of  products  raise  serious  doubts  about  their  suitability  and 
proportionality. They also undermine the principle of European solidarity and create a domino effect 
across the Single Market.  

Businesses (mainly in the health ecosystem) underlined the negative impact on their supply chains of 
such new export restrictions, in particular during the first wave of the pandemic.   

Commission services worked to lift around 30 export restrictions within the Single Market during the 
first  wave9,  recommending  instead  a  system of  prior notification of exports  allowing  authorities  to 
refuse  these  on  a  case-by-case  basis  and  for  a  limited  time,  based  on  clearly  identified  risks  of 
shortages.  

Since  then,  Commission  services  have  monitored  national  measures  to  prevent  that  new  bans  or 
other trade restrictive measures and has challenged unjustified or disproportionate measures using 
all  available  tools,  including  infringement  procedures.  The  Single  Market  Task  Force  (SMET)  set  up 
following the adoption of the Long-term action plan for better implementation and enforcement, is 
proving an effective tool. 

Guidelines  on  border  management10  allowed  for  improvements  to  the  free  flow  of  goods  and 
essential  services.  The  “Green  lanes”  system  based  on  the  principles  set  out  in  the  “Green  Lanes” 

6 e.g. products not available in shops or for online purchase 
7 e.g. disrupted supply of components from other Member States 
8 Based on feedback obtained through SOLVIT, YourEurope Advice and information from business associations 
9 Introduced between March and May 2020 mainly on medicines, personal protective equipment (PPE), 
ventilators and disinfectants but also for food products 
10 Guidelines for border management measures to protect health and ensure the availability of goods and 
essential services (C(2020)1753) 

9 

 
 
                                                           
Communication11  has  significantly  alleviated  the  serious  delays  faced  by  freight  traffic  but  remains 
voluntary.  The  recent  reintroduction  by  some  Member  States  of  checks  on  transport  workers,  in 
particular at or behind the border is causing significant social and economic disruption and resulting 
in substantial challenges for freight and logistics, as well as for the movement of goods and people. 
This  highlighted  that  the  “Green  Lanes”  principles  for  freight  transport  must  also  continue  to  be 
applied in full in any circumstances when internal border controls are temporarily reintroduced as a 
measure of last resort12. 

Furthermore,  in  the  last  year,  discriminatory  practices  have  emerged  in  the  agri-food  sector, 
favouring national products over products originating from other Member States, and so fragmenting 
the  Single  Market.  Measures  such  as  calls  on  “naming  and  shaming”  of  firms  importing  goods, 
obligations on retailers  to advertise  or source  a certain percentage of food products from national 
producers;  giving  preference  to  national  food  in  public  procurements;  or  promoting  national  food 
products  with  state  or  EU  funds,  may  breach  the  Single  Market.13  The  Commission  has  used 
infringement  proceedings against  such  measures14.  These  issues  are  being  discussed  with  Member 
States  in  the  SMET  together  with  alternative  means to  support  farmers  and  short-supply  chains  in 
line with EU rules. 

Public buyers had to deal with an immense increase of demand for similar goods and services. They 
had  to  ensure  the  availability of  personal  protective equipment  such  as  face  masks  and  protective 
gloves,  medical  devices,  notably  ventilators,  other  medical  supplies,  but  also  hospital  and  IT 
infrastructure, to name only a few. They were able benefit from the use of electronic procurement 
tools for their emergency purchases, facilitating the implementation and monitoring of the contracts.  

In addition, the risk of shortages of essential products protected by intellectual property rights has 
also triggered debates in relation to compulsory licensing15 of patents both at Member State and EU 
levels16. This mechanism based on the WTO TRIPS Agreement and implemented in the EU mainly at 
Member  State  level  provides  for  a  safety  net,  if  voluntary  solutions  to  make  intellectual  property 
available  fail  or  are  not  available.  Steps  have  been  taken  to  facilitate  the  availability  of  results  of 
publicly  funded  Research  &  Innovation  programmes  in  the  EU  and  its  Member  States  to  address 
shortages and ramp up production of critical materials. 

Due  to  the  commitment  and  close  co-operation  between  public  and  private  players  to  boost 
availability of essential products across the EU, the need to resort to compulsory licensing has been 

11 C(2020) 1897 final on the implementation of the Green Lanes under the Guidelines for border management 
measures to protect health and ensure the availability of goods and essential services 
12 (COM(2020) 685 final Communication “upgrading the transport Green Lanes to keep the economy going 
during the COVID-19 pandemic resurgence” 
13 More than 10 such measures and/or export restrictions were identified in the area of food 
14 https://ec.europa.eu/commission/presscorner/detail/en/inf_20_859  
15 A compulsory license may be issued by a public authority under certain conditions, permitting the use of a 
patented invention without the consent of the patent owner. 
16 EP Resolution ‘Shortage of medicines - how to address an emerging problem’ (2020/2071(INI)) of 17 
September 2020 included a calls on the Commission ‘to consider, in the context of its upcoming pharmaceutical 
strategy, the possibility for harmonised rules on granting compulsory licensing of medicinal products, such as 
vaccines, which would allow Member States to respond faster and more effectively to future European public 
health crises. 

10 

 
 
                                                           
largely mitigated. Unexpected and uncoordinated use of compulsory licensing by one Member State 
in  an  EU-wide  emergency  situation  can  distort  trade,  innovation,  exacerbate  product  shortages  in 
other Member States, and more generally weaken the collective bargaining power of the EU, e.g. in 
the  context  of  joint  procurement,17  and  also  negatively  affect  ongoing  negotiations  with  patent 
holders.  

The result of all these restrictions and disruptions was that the ability of industry to quickly introduce 
and  scale  up  production  in  critical  areas  was  seriously  constrained  as  certain  products  (e.g.  cloth-
face masks) lacked harmonised standards under the existing EU product acquis. In addition, testing 
facilities for essential products were closed in some Member States, putting further pressure on the 
ability  of  industry  to  quickly  respond  to  emerging  needs.  Furthermore,  market  surveillance 
authorities faced a high number of non-compliant products shipped from third countries. As a result, 
shipments were blocked by customs in their transit to final destination in one Member State leading 
to further delays in the free movement of goods across the Single Market. 

2.2.  The impact of the crisis on the economy and the industrial ecosystems perspective  

The pandemic has hit the European economy harder than any other economic shock in the history of 
the  EU.  The  drop  in  economic  activity  has  translated  into  significant  reductions  in  the  number  of 
hours  worked,  while  employment  losses  have  so  far  been  more  contained  in  part  because  of  the 
widespread  use  of  short-time  work  schemes,  supported  at  EU-level  by  the  SURE  instrument. 
Employment strongly declined in the second quarter 2020 before rebounding in the third quarter of 
2020.  The  impact  on  young  people  has  been  particularly  harsh,  with  the  number  of  young  people 
neither  in  employment  nor  in  education  and  training  (NEETs)  on  the  rise,  in  particular  in 
Mediterranean and Central European Member States18.Despite important downside risks, economic 
recovery is within sight: according to the latest Commission Forecast, the EU economy is expected to 
grow by 3.7% in 2021 and 3.9% in 2022 (See Figure 2). Moreover, it is expected to reach the pre-crisis 
GDP level earlier than expected in the Autumn 2020 Economic Forecast. 

18 Employment and Social Developments in Europe, Quarterly Review, December 2020 

11 

 
 
                                                           
 
Figure 2: Evolution of GDP and employment, 2019=100 
Source: European Commission analysis based on data by Eurostat. 

Economic activity can also be analysed through the lens of industrial ecosystems. This approach aims 
at capturing the interlinkages and interdependencies occurring between different economic actors.  

The  contraction  of  economic  activity  is  uneven  across  economic  activities,  and  the  protracted 
nature  of  the  pandemic  tends  to  deepen  these  sectoral  differences  in  impact.  Contact-intensive 
services, which tend to be relatively insensitive to the economic cycle, have been affected the most. 
The sectoral variation in the containment measures largely explains differences in impact. Moreover, 
where contact is easier to avoid or teleworking is possible, economic activity has been more resilient. 
Similarly, in industries producing essential goods such as food, the reduction in turnover was rather 
modest.  On  the  other  hand,  businesses  relying  on  close  physical  interactions  have  experienced 
significant  adverse  shocks  to  turnover  as  they  were  forced  to  shut  down  or  change  the  nature  of 
their  operations  (e.g.  tourism,  food  services,  cultural  and  creative  activities).  Moreover,  demand-
sensitive sectors like the automotive industry experienced strong reductions in sales. 

Nonetheless, the lockdown has hit all ecosystems. Divergences started to emerge during summer, 
due to the dynamics discussed above. In the second quarter of 2020, the lockdown triggered sizeable 
losses  for  all  ecosystems,  with  the  exception  of  “Digital”.  The  figure  below  shows  that  “Tourism”, 
“Textile”  and  “Automotive”  have  suffer  the  most  in  terms  of  turnover  (See  figure  3).  The  average 
losses  reported  in  the  figure  hide  significant  heterogeneity  within  some  ecosystems.  For  instance, 
travel agencies and tour operators faced turnover losses of roughly 80% in the last three quarters of 
2020. In the same period, air transport also lost between 60% and 70% of their revenues.  Moreover, 
the  data  significantly  underestimate  the  impact  for  ecosystems  as  Cultural  and  Creative  and 
Proximity,  Social  Economy  and  Civil  Security,  which  are  underrepresented  in  data.19  In  the  third 

19  Eurostat  Short-term  Business  Statistics  do  not  cover  the  whole  economy.  In  particular,  several  activities 
related to culture, art, recreation, as well as public sector activities are not included. Hence the data used for 
the  graph  only  represent  a  fraction  of  ecosystems  depicted  using  dotted  bars.  Nonetheless,  the  sectors 

12 

 
 
 
 
                                                           
 
quarter, most  ecosystems returned close to 2019 levels, but  divergences  started to emerge. In the 
fourth  quarter  of  2020,  such  divergences  became  more  apparent:  Turnover  in  the  “Tourism” 
ecosystem has further contracted significantly, pointing to a worrying situation, as this ecosystem did 
not  recover  even  in  the  most  favourable  period  of  the  year.  The  “Digital”  and  “Energy  Intensive 
Industries” ecosystem, instead, increased their turnover, with respect to the previous year.  

Figure 3: Change in Turnover by Ecosystem – by Quarters. 
Source: European Commission analysis based on data by Eurostat Short-term business statistics.  
Note:  data  show  annualised  y-o-y  change  in  turnover  for  each  quarter  of  2020.  For  “Agrifood”, 
“Health”, “Social”, and “Creative & Cultural” data available cover only partially that ecosystem. For this 
reason, they are depicted using dotted bars and the related values have to be interpreted with caution. 
Data  for  Cultural  and  Creative  Industries  and  Proximity,  Social  Economy  and  Civil  Security  may 
underestimate the impact of the crisis, as data for some relevant sectors are not available. 

To provide a better picture of the impact of the crisis for the ecosystems not fully covered by data on 
turnover, Commission services use quarterly data on Value Added.20 The data show that in 2020, the 
arts, entertainment and recreation activities experienced the largest percentage drop compared to 
2019  (see  Figure  4).  The  impact  was  particularly  strong  in  the  second  and  fourth  quarters, 
corresponding to the most relevant waves of the pandemic. A large share of these activities are part 
of the Cultural and Creative industries as well as of the Proximity, Social Economy and Civil Security 
ecosystem.  

included  to  calculate  the  turnover  drop  of  CCI,  represent  approximatively  70%  of  the  value  added  of  the 
ecosystem.  
20 Quarterly data on value added is only available for aggregate sectors, hence it is not possible to produce 
figures by ecosystem.  

13 

 
 
 
                                                                                                                                                                                     
Figure  4:  Gross  value  added,  2020.  Percentage  change  with  respect  to  the  same 
period in the previous year. 
Source: Eurostat [namq_10_a10] 

Studies  on  different  components  of  the  CCI  ecosystem  also  show  severe  disruptions,  potentially 
comparable  to  the  Tourism  sector.  This  is  particularly  the  case  for  activities  based  on  venues  and 
visits:  performing  arts  and  ‘heritage’  sectors  (e.g.  live  music,  theatres,  circus,  festivals,  cinema, 
museums and heritage sites). For example,  cinema operators in the EU report a 70%21  drop in box 
office sales in 2020, music venues report a 76% drop in attendance (64% in revenues)22 and museums 
lost  revenues  up  to  75-80%  (in  popular  touristic  regions).  Outside  of  venue-based  activities,  news 
publishing saw  its  advertising revenues  drop between 30%  and 80%23. Revenues in the audiovisual 
sector  (including  remotely  accessible  services  like  broadcasting  or  streaming  besides  cinema),  are 
estimated  to  have  decreased  by  15%  in  202024.  TV  advertising  revenues  are  estimated  to  have 
dropped  by  15-20%  in  2020.  The  increase  in  the  uptake  of  streaming  and  gaming  services  cannot 
alone compensate for the severe losses suffered elsewhere in the ecosystem.  

The drop in turnover across ecosystems is mirrored by a drop in volume of hours worked. In some 
ecosystems, such as “Aerospace & Defence”, “Retail”, and “Digital”, the drop in total hours worked is 
considerably  larger  than  the  drop  in  turnover:  this  signals  important  productivity  gains  in  these 
ecosystems. In the “Energy-Renewables” ecosystem, instead, despite a relevant loss in turnover, the 
volume of hours worked and the level of employment have remained constant, leading to some fall 
in productivity (see Figure 5). As above, data for Cultural and Creative Industries and Proximity, Social 
Economy  and  Civil  Security  significantly  underestimate  the  impact  of  the  crisis,  as  data  for  some 

21 www.unic-cinemas.org 
22 Source: Live DMA Network 
23  http://www.newsmediaeurope.eu/news/covid-19-and-the-news-media-journalism-always-comes-at-a-cost/ 
24 Source: European Audiovisual Observatory https://rm.coe.int/modelling-audiovisual-sector-revenue-flows-
in-the-eu-and-test-case-on-/16809fd5e7 

14 

 
 
 
                                                           
relevant  sectors  is  not  available.  In  particular,  given  the  high  share  of  self-employed  and  non-
standard employment in these ecosystems, the impact has certainly been very severe. 

Figure 5: Change in Turnover, Employment and Hours Worked in 2020 
Source: European Commission analysis based on data by Eurostat. Note: For “Health” 
and “Proximity, Social Economy and Civil Security”, data do not cover enough sectors 
to build a proxy, so they are not included. Data for “Cultural and Creative  Industries” 
significantly underestimate the impact of the crisis, as data for some relevant sectors 
are not available. 

Surveys data can be used to build an economic sentiment indicator for each ecosystem, which is a 
good  proxy  of  the  actual  economic  impact.25  This  complements  the  analysis  for  the  most  recent 
months,  for  which  official  data  is  not  yet  available,  and  points  to  an  improving,  though 
heterogeneous,  situation  across  the  board  (see  Figure  6).26  Services  sectors  are  clearly  the  most 
affected, as well as retail, while manufacturing and construction seem to have better absorbed the 
second  round  of  containment  measures.  Consequently,  in  April  2021,  the  economic  sentiment 
turned  positive  for  most  ecosystems,  but  remains  negative  in  Textiles  and  Tourism,  despite  a 
significant  improvement..  As  above,  Data  for  Cultural  and  Creative  Industries  and  Proximity,  Social 
Economy  and  Civil  Security  may  underestimate  the  impact  of  the  crisis,  as  data  for  some  relevant 
sectors is not available. 

25 A profile of the economic sentiment for each ecosystem is created by aggregating data for different sectors, 
as explained in the methodological annex to this document. We calculate a weighted average of the values of 
the sectors included in the definition of each ecosystem;  the weights are based on the share of value added 
that each sector has in the total value added of the ecosystem. This surveys-based indicator is highly correlated 
(80%) with the data on actual changes in turnover, for each ecosystems in each month. We can therefore use it 
to forecast the economic impact on each ecosystem in the most recent months. 
26 From the Joint Harmonised EU Programme of Business and Consumer Surveys. 

15 

 
 
 
                                                           
Figure 6: Evolution of the Confidence Indicator by Ecosystem  
Source: European Commission analysis based on data by the Joint Harmonised EU Programme of Business and Consumer 
Surveys.  Note:  For  “Retail”,  “Agri-food”,  “Proximity,  Social  Economy  and  Civil  Security”,  “Energy-Renewables”,  and 
“Health”, data coverage is partial, so they are depicted using dotted lines and the related values have to be interpreted with 
caution.  Data  for  Cultural  and  Creative  Industries  may  underestimate  the  impact  of  the  crisis,  as  data  for  some  relevant 
sectors are not available. 

Overall,  this  evidence  suggests  that  the  prospects  for  a  quick  and  strong  recovery  differ  across 
ecosystems. As seen in the third quarter of 2020, demand can quickly rebound if the health impact of 
the pandemic is contained. Nonetheless, the sheer size and the persistence of the shock are likely to 
spur  business  failures  and  a  fall  in  employment  in  the  future,  leading  to  reallocation  of  resources 
both within and across ecosystems.  

Swift  and  large-scale  policy  support  programmes  rolled  out  by  governments  in  response  to  the 
unfolding  of  the  pandemic  cushioned  the  adverse  effect  on  employment,  bankruptcies  and 
household  income,  and  avoided  the  destruction  of  viable  businesses.  Beyond  their  macro-
stabilisation effect, the measures will foster a faster recovery. In particular, a pandemic-driven surge 
in bankruptcies could have severe macroeconomic effects, as the exit of businesses would translate 
into 
losses  of  employment,  higher  unemployment  benefit  expenses  and  reduced  private 
consumption,  possibly  resulting  in  a  downward  spiralling  of  aggregate  demand.  Moreover,  the 
potential  concentration  of 
lead  to  more  persistent 
unemployment if labour reallocation is made more difficult by the specificity of human capital and 
skills of the workers affected.   

in  specific  sectors  could 

insolvencies 

Government policies have effectively staved off the surge in bankruptcies so far. As the emergency 
support  measures  are  gradually  phased  out,  firms’  ability  to  repay  debt  will  be  a  function  of  firm 
characteristics  pre-crisis,  the  magnitude  and  duration  of the  sectoral shock,  as  well  as  the  sectoral 
recovery prospects. The share of Euro Area corporate non-performing loans (NPLs) stood at 5.2% of 
total loans in Q2-2020, marginally lower than in the previous quarter (5.3%) and down from 6.3% in 

16 

 
 
 
Q2-2019. While it  is clear that the  debt-servicing capacity of the  private sector has been adversely 
affected  by  the  pandemic,  government  credit  guarantees  and  loan  repayment  moratoria  have 
prevented so far a rise in loan defaults. The most recent evidence shows that the characteristics of 
firms  filing  for  bankruptcy  in  the  course  of  2020  is  similar  to  pre-crisis  patterns.  These  findings 
support  the  hypothesis  that  policies  have  been  effective  in  avoiding  a  COVID-driven  wave  of 
bankruptcies.  As  illustrated  in  Figure  7  below,  the  number  of  bankruptcies  in  2020  decreased 
compared to 2019, owing to administrative delays and, in some countries, loan repayment moratoria 
and the temporary relaxation of bankruptcy regulations. Thus, the headline NPL ratios – based on a 
rather  stable  NPL  stock  and  the  increasing  loan  denominator  –  do  not  yet  reflect  the  underlying 
deterioration in the credit profile of borrowers. The stronger capital position of banks compared to 
the financial crisis should help them better absorb the shock. 

Figure 7: Registration of business and declaration of bankruptcies, seasonally 
adjusted data (2015=100) 
Source: Eurostat, experimental statistics.  

While  the  policy  response  has  prevented  a  wave  of  bankruptcies,  it  has  not  eliminated  financial 
distress. Rather, the protracted nature of the pandemic has deepened the sectoral heterogeneity of 
its impact. Whether one uses the sectoral or the ecosystem grouping of economic activity, the stark 
finding  is  that  firms  which  were  perfectly  healthy  before  the  crisis  have  also  been  significantly 
affected  by  the  crisis.  Simulations  based  on  the  income  statements  and  balance  sheets  of  initially 
solvent  firms  show  that  the  trajectories  of  firms  operating  in  different  sectors  have  gradually 
diverged.    These  simulations  take  into  account  a  subset  of  government  support  measures  such  as 
short-term  work  schemes,  loan  moratoriums,  and  tax  deferrals.  As  shown  in  Figure  8  below, 
corporate financial distress differs strongly across all sectors of the economy, with the largest share 
of distressed firms in the automotive and hospitality industries.27  

27 For an overview of the methodology used for these simulations, please see the Commission Staff Working 
Document “Identifying Europe's recovery needs”, SWD(2020) 98 final. The same methodology is illustrated in 
Connel Garcia, Ho (2021), “What Types of Firms Become Illiquid as a Result of COVID-19? A Firm-Level 
Perspective Using French Data”, Discussion Paper 136, Economic and Financial Affairs, European Commission.  

17 

 
 
 
                                                           
Figure  8:  Share  of  EU  firms  likely  to  face  financial  distress  at  different 
points in time. 
European  Commission  analysis  based  on  ORBIS,  Eurostat  and  Member  State 
specific information collected by DG ECFIN 

The same  heterogeneity is visible when replicating the  analysis by ecosystem. This complementary 
approach  allows  to  better  take  into  account  the  interlinkages  across  sectors. By  the  end  of  March 
2021, the fraction of illiquid firms is estimated to range between 18% in the digital and 74% in the 
tourism ecosystem (see Figure  9). Data  representing SMEs has been reweighted for this analysis in 
order  to  correct  for  the  underrepresentation  of  SMEs  and  microenterprises  in  firm-level  data. 
Nonetheless,  results  should  be  interpreted  with  caution  for  ecosystems  as  Cultural  and  Creative 
Industries and Proximity, Social Economy and Civil Security, characterised by the presence of many 
self-employed,  associations  and  microenterprises,  which  may  have  suffered  disproportionally  from 
the lockdown measures. 

Figure 9: Share of firms likely to face financial distress by March 2021 
Source:  Commission  analysis  based  on  ORBIS  and  Eurostat  (SBS  and  STS).  Due  to  the 
specific  characteristics  of  the  ecosystems,  data  for  Cultural  and  Creative  Industries  and 

18 

 
 
 
 
Proximity, Social Economy and Civil Security should be interpreted with caution.  

Less performant firms in terms of economic characteristics as productivity are more likely to become 
illiquid  within  each  sector  or  ecosystem.  Yet,  a  significant  fraction  of  the  total  liquidity  shortfall  is 
attributable to large and highly productive firms (see Figure 10). This finding indicates that financial 
distress may not be tightly connected with pre-COVID productivity.   

Figure 10: Share of firms (among top/bottom productive firms) likely to face financial 
distress by March 2021 
Source: Commission analysis based on ORBIS and Eurostat (SBS and STS). Note: The graph shows 
the  share of firms facing financial distress among the higher and lower half of firms  in  terms of 
labour productivity, measured prior to the COVID-19 pandemic. Due to the specific characteristics 
of  the  ecosystems,  data  for  Cultural  and  Creative  Industries  and  Proximity,  Social  Economy  and 
Civil Security should be interpreted with caution. 

In  terms of  financial  characteristics,  firms  that  were  already  financially  vulnerable  before the  crisis 
are  more  likely  to  face  financial  distress.  Some  pre-crisis  characteristics  of  firms  can  affect  their 
ability  to  absorb  repeated  adverse  shocks  to  revenue.  In  particular,  less  profitable  and  more 
leveraged  firms  tend  to  have  smaller  liquid  asset  buffers  and  face  more  difficulty  in  absorbing  the 
adverse shock.   Data  shows that firms with relatively high ratio of equity to assets (solvency ratio) 
tend to become illiquid only as the crisis protracts.  Specifically, among firms that became illiquid by 
the  end  of  March  2020,  80%  had  a  solvency  ratio  below  the  median  level  in  pre-crisis  times. 
However,  just  half  of  firms  that  become  illiquid  by  the  end  of  March  2021  (but  were  not  illiquid 
previously) have a pre-crisis solvency ratio below the median (See Figure 11).  

19 

 
 
 
Figure  11:  Financial  profile  (pre-COVID19)  of  new  firms  estimated  to  face  financial 
distress in each month since March 2020 
Source: Commission analysis based on ORBIS and Eurostat (SBS and STS).  
Note:  The  Solvency  Ratio  is  calculated  as  equity/assets  and  it  is  defined  using  the  pre-COVID 
period.  The  firm  level  simulations  use  the  most  recent  cross-section  of  financial  statements 
covering millions of firms in the EU allows evaluating the capacity of these firms to overcome the 
COVID-19  shock  on  sales,  including  through  previously  accumulated  cash  reserves,  operational 
flexibility as well as policy intervention. Due to the specific characteristics of the ecosystems, data 
for  Cultural  and  Creative  Industries  and  Proximity,  Social  Economy  and  Civil  Security  should  be 
interpreted with caution. 

Financial distress is more likely to translate into solvency concerns for firms that were already at a 
high  risk  of  default  at  the  onset  of  the  crisis.  The  likelihood  of  default  pre-crisis  is  assessed  using 
firms’ liquidity, leverage,  and profitability characteristics.  It is expected that firms at a high risk of 
default pre-crisis and illiquid in its aftermath may face greater difficulties in accessing credit. For the 
EU economy as a whole, about one third of all firms were estimated to be illiquid at the end of 2020. 
About  one  third  of  these  illiquid  firms  were  also  at  a  high  risk  of  default  pre-crisis,  implying  that 
about 11.4% of all firms in the EU economy are likely to exit as support dries up, as they may fail to 
get access to fresh sources of credit. This share is estimated to increase to 12.3% by the end of 2021 
in the scenario that incorporates the ongoing third wave of the pandemic. There is strong variation in 
expected exit depending on the economic activity. The percentage of firms expected to exit by the 
end  of  2021  on  the  basis  of  this  estimation  varies  between  7%  in  construction  and  27%  of  in  the 
accommodation and food services sector. This quantification is most likely a lower bound as it does 
not  include  viable  firms  pre-crisis  that  might  become  insolvent  following  the  pandemic  shock. This 
could have negative effects on employment in the coming months and bear negatively on the job-
creation potential of the forecasted recovery. 

2.3.  The impact of the crisis on SMEs  

SMEs are particularly vulnerable in the context of the pandemic. Preliminary estimates from the SME 
Performance  Review  suggest  that  across  the  EU,  the  number  of  SMEs  fell  by  -1.3%  in  2020, 
employment in SMEs by -1.7% in 2020 (representing 1.4 million jobs) and SME value added by -7.6%. 

20 

 
 
 
SME  value  added  is  unlikely  to  reach  2019  levels  even  by  the  end  of  2021.28    According  to  SME 
associations, more than 60% of SMEs have reported a fall in turnover and about two-thirds of SMEs 
report that they have delayed investment decisions or downsized investments. 29  

Seventy-two percent of respondents to a recent SME survey30 indicated that the crisis affected them 
strongly  or  moderately  because  of  supply  chain  disruptions,  employee  absences  and  temporary 
shutdowns. SMEs were not well prepared: almost two thirds of respondents had no plan in place to 
handle  supply  chain  disruptions.  One  third  created  such  a  plan  during  the  pandemic.  The  main 
reactions  of  companies  to  supply  chain  disruptions  were  looking  for  alternative  suppliers  and 
drawing up a plan to increase resilience to such disruptions (see Figure 12). 

Figure 12: Response to the SME Survey  
Source: EU Survey of SMEs carried out July-December 2020: multiple answers allowed 

While bankruptcies among SMEs have so far not increased compared to 2019, within this group, this 
is also likely due to various government support measures and moratoria on insolvencies.  

However, financial pressure is likely to increase in 2021 with insolvencies expected to rise as various 
forms  of  relief  are  phased  out.  As  most  Member  States  focus  their  support  schemes  on  debt 
solutions,  the  risk  of  over-leverage  and  the  need  for  recapitalisation  will  be  severe  for  SMEs, 
especially  smaller  ones.  According  to  an  AFME  report31,  there  is  a  shortfall  of  between  EUR  450 
billion to EUR 600 billion in public and private sector equity at an EU-level over an assumed two-year 
period. Closing this gap will be a challenge that will have to be addressed at both EU and MS level.  

28 Estimates for 2020 produced by DIW Econ, based on 2008-2018 figures from the Structural Business Statistics 
Database as well as provisional data for 2019-2020 from the National Accounts database and the Short-Term 
Business Statistics Database (EUROSTAT). 
29 European Commission/European Central Bank  (November 2020), “Survey on the access to finance of 
enterprises (SAFE)” 
30 EU Survey carried out by European Commission July-December 2020. 
31AFME/PwC, Recapitalising EU  businesses post COVID-19, 2021  

21 

 
 
 
 
                                                           
As  SMEs  are  deeply  integrated  into  supply  chains  and  comprise  about  99%  of  companies  in  every 
industrial  ecosystem,  a  rise  in  bankruptcies  could  significantly  impact  supply  chains  and  jobs.  In 
addition, late payments, which have long been an issue for SMEs, could exacerbate as since March 
2020, payment delays have gone up rapidly knock-on effects throughout supply chains.   

2.4.  Progress on addressing key Single Market obstacles  

The new Single Market restrictions detailed above came on top of a number of existing barriers to 
companies  operating  within  the  Single  Market.  These  were  detailed  in  the  2020  Staff  Working 
Document of 10 March 2020 on addressing barriers to the Single Market referred to above. 

These  barriers  are  a  mixture  of  horizontal  barriers  across  all  industrial  ecosystems  and  specific 
barriers within individual ecosystems. 

Horizontal  barriers  remain  for  example,  for  the  free  movement  of  products.  To  address  these, 
Commission  services  are  working  in  close  cooperation  with  Member  States  to  ensure  the  full 
implementation  of  the  new  EU  Regulation  2019/515  on  mutual  recognition32.  In  addition,  work  is 
ongoing  with  interested  Member  States’  representatives  in  the  context  of  an  “Accelerated  Mutual 
Recognition” project. The aim is to come to an arrangement for specific sectors (e.g. precious metals, 
construction). The objective  of this project  for interested Member States is to facilitate a common 
understanding of their respective national rules to ensure that if a good is considered compliant in 
one participating Member State, it will automatically and without detailed assessment be recognized 
as compliant in another participating Member State. Such an arrangement would facilitate the work 
of  national  competent  authorities  and  provide  more  certainty  to  economic  operators  when  they 
decide to enter other Member States’ markets. 

In addition, inadequate market surveillance may also endanger a well-functioning Single Market for 
products  that  are  safe  and  compliant  with  EU  high  standards  and  technical  regulations,  distorting 
competition  and  a  level  playing  field  for  EU  companies.  Stepping  up  coordination,  investment, 
resources  and  digitalisation  of  market  surveillance  authorities  is  therefore  a  high  priority  of  the 
Commission  and  the  EUPCN  (EU  Product  compliance  network),  which  has  been  recently  set  up  as 
foreseen in the new Market Surveillance Regulation33.  Moreover, resources are available under the 
Recovery  and  Resilience  Fund  for  Member  States  to  build  or  upgrade  their  market  surveillance 
systems.  For  instance,  the  RRF  could  support  the  consolidation  of  national  market  surveillance 
authorities, the establishment of new accredited public laboratories, or the digitalisation of product 
inspections and data collection.  

But such horizontal barriers are particularly prevalent for services, with a significant impact on the EU 
economy: the Services Directive alone covers service activities that account for 46.4% of EU GDP.34 
Full implementation of the Directive could potentially increase the level of EU GDP by 1.7%.35  Indeed, 

32 Regulation (EU) 2019/515 of the European Parliament and of the Council of 19 March 2019 on the mutual 
recognition of goods lawfully marketed in another Member State and repealing Regulation (EC) No 764/2008 
33 Regulation (EU) 2019/1020 of the European Parliament and of the Council of 20 June 2019 on market 
surveillance and compliance of products and amending Directive 2004/42/EC and Regulations (EC) No 
765/2008 and (EU) No 305/2011 
34 Commission calculations based on Eurostat data. 
35 See COM study from 2012, and its update in 2015.  

22 

 
 
                                                           
the  entry  into  force  and  implementation  of  the  Services  Directive  brought  clear  economic  benefits 
(see Figure 13 below). 

Figure 13: Overall barriers evolution in the EU 
Source: Study on “Mapping and assessment of removal of legal and administrative barriers in the services sector”, DG 
GROW. Note: The level of barriers measures the intensity of restrictions in services regulation in a specific sector, quantified 
on a scale from 0 to 1. 

However  reform  progress  has  been  slow  and  in  some  cases  has  been  reversed.  To  address  this, 
Commission  services  prepared  a  comprehensive  review  of  its  most  pertinent  rules  in  all  Member 
States36.  Inter  alia,  this  shows  that  regulation  of  services  markets  remains  complex  and  the  Single 
Market in services remains fragmented. While, for example, most authorisation schemes applicable 
to  service  providers  have  remained  in  place,  some  of  the  key  restrictions  accompanying  and 
underlying the authorisation schemes have been removed. In many cases, only a few Member States 
retain a certain type of restriction.  

Making  progress  here  is  all  the  more  important  because  of  the  increasingly  strong  interaction 
between  goods  and  services,  often  referred  to  as  ‘servitisation’.37  In  2011,  the  value-added  by 
services  in  EU  manufacturing  output  and  exports  (at  an  aggregated  level)  already  amounted  to 
40%;38 an estimated 25-60% of employment in manufacturing firms relates to service.39  

36 Study on “Mapping and assessment of removal of legal and administrative barriers in the services sector”, DG 
GROW https://data.europa.eu/doi/10.2873/690757  
37  For  example,  in  several  Member  States  more  than  50%  of  manufacturing  SMEs  provide  product-service 
combinations    
38 Copenhagen Economics, 2018, Making EU trade in services work for all. 
39 Ibid. 

23 

 
 
 
 
 
                                                           
Service activities in turn have much to gain from further digitalisation, which could contribute to lift 
the  comparatively  low  productivity  of  the  European services  sector.    Digitalisation  is  important  for 
European  companies’  capacity  to  grow,  innovate  and  go  international,  but  requires  significant 
investment.  Nevertheless,  this  is  held  back  by  the  existing  regulatory  set-up.  For  example,  the 
business  services  sector  is  of  crucial  economic  importance  for  the  EU  (representing  13%  of  total 
value added) and provides key inputs into many ecosystems, yet is held back by restrictive national 
rules  such  as  strict  requirements  as  regards  who  can  hold  equity  of  business  service  providers  or 
manage them, which legal form they can take and how they can team up with other service providers 
to offer joint services. 

Finally,  preventing  new  regulatory  barriers  from  being  put  into  place  is much more  effective  than 
seeking  to  address  barriers  once  in  place,  particularly  for  services.  Whilst  regulation must  keep  up 
with  developments  in  services  markets,  the  Proportionality  Test  Directive  and  existing  notification 
procedures provide a comprehensive framework for ensuring that measures made by Member States 
are justified and proportionate. 

The ability of companies to send their workers temporarily to another Member State (i.e. posting of 
workers)  is  key  for  manufacturing  and  service  activities.  Complex  and  costly  administrative 
formalities linked to the posting of workers are a leading obstacle across ecosystems,40 in particular 
for SMEs. Recently revised EU rules regulating the posting of workers ensure the mobility of posted 
workers and must be implemented correctly by Member States. The European Labour Authority has 
been set up inter alia to assist Member States and the Commission in their effective application and 
enforcement of the relevant EU rules related to labour mobility across the EU. 

Specific obstacles to the functioning of the Single Market persist across all industrial ecosystems. An 
analysis  in  Annex  A3  shows  that  some  ecosystems  are  characterised  by  particularly  high  levels  of 
regulatory and administrative complexity that hinder their transformation.  

Two examples are the construction ecosystem and retail ecosystem. 

The transition to a greener European economy in no small part depends on the performance of the 
construction  ecosystem  and  its  ability  to  renovate  Europe’s  existing  building  stock,  accounting  for 
approximately 40% of EU energy consumption and emissions. The efficiency of construction services 
is, however, held back by a number of Single Market barriers. They include compulsory certification 
schemes  based  on  national  standards  and  regulation  without  functioning  mutual  recognition 
schemes,  as well  as  difficulties  for  companies  to  obtain  the  insurance  coverage  they  need  to offer 
their construction services in other Member States. 

In  addition,  the  environmental  performance  of  the  retail  ecosystem  (e.g.  green  transport  and 
deliveries,  low-emission  stores,  green  product  design)  is  essential  for  Europe’s  green  transition. 
Nevertheless, national restrictions to establishment and operations deter innovation and affect the 
ability  of  retailers  to  invest  in  digital  and  green  infrastructure  and  services.41  Ongoing  actions  to 
eliminate  barriers  in  the  retail  ecosystem  include  the  identification  of  best  practices  that  are  tried 
and tested and could provide inspiration for reforms in other Member States.  

40 SWD(2020)54 Identifying and addressing barriers to the Single Market  
41 Establishment restrictions are extensive regulatory requirements retailers face to open a shop (e.g. planning 
permits and authorisations). Operational restrictions are regulatory obstacles linked to the daily operations of 
shops. 

24 

 
 
                                                           
Underpinning  all  this  work  on  removing  Single  Market  barriers  is  work  on  standardisation.  For 
several years now, standardisation work has been supporting EU legislation on eco-design for a wide 
range of products. It is also crucial in implementing recent initiatives aimed at “greening” of critical 
sectors  (such  as  the  Plastics  Strategy,  sustainable  fertilisers  and  “green”  construction  products).  In 
the  digital  transition,  standardisation  will  support  the  implementation  of  new  technologies  like 
Artificial Intelligence, whilst ensuring protection of citizens’ rights in terms of privacy, personal data 
accessibility42 and non-discrimination. 

Administrative  burden  is  often  flagged  as  one  of  the  key  obstacles  to  doing  business,43  especially 
cross-border.  Ensuring  a  smooth  functioning  and  further  implementation  of  the  Single  Digital 
Gateway  will  help  overcome  language  barriers,  introduce  the  once-only  principle,  increase 
transparency  of  rules  and  accelerate  the  digitalisation  of  procedures.  In  addition,  the  possibility  to 
set up companies on-line and the cross-border co-operation and exchange of information between 
business  registers  (BRIS)  will  make  the  creation  of  new  companies  quicker  and  help  overcome 
administrative barriers44. 

As  a  first  step,  in  accordance  with  the  Single  Digital  Gateway  regulation,  Member  States  are 
publishing online and making accessible through the gateway the national rules applying to citizens 
and businesses who want to make use of their Single Market rights. Thanks to the gateway, SMEs can 
be  better  informed  about  the  applicable  rules  and  they  can  more  easily  get  relevant  assistance.  It 
also  allows  EU  citizens  and  businesses  to  report  any  obstacle  they  still  encounter  in  the  Single 
Market. 

2.5.  Lessons learnt to increase the resilience of the Single Market  

The crisis has underlined the fundamental importance of the Single Market. Particularly in the early 
days,  businesses  and  citizens  suffered  from  border  closures,  supply  disruptions,  lack  of  clarity  and 
predictability, and fragmentation.  

The Commission adopted a number of recommendations to provide swift and practical solutions to 
concrete obstacles on the ground: 

-  Guidelines on border management45 allowed for improvements as regards the free flow of 
goods and essential services. The establishment of “green lanes”46 in particular led to a quick 
and marked reduction of delays faced by freight transport at border crossings. Data from the 
green  lanes  reporting  portal  indicates  that  already  in  April  2020  there  was  a  roughly  85% 
compliance  rate  with  the  green 
In  subsequent  months, 
compliance rates further increased to around 95%. The Commission also issued Guidelines on 

lanes  recommendations.47 

42 Directive 2019/882 European Accessibility Act 
43 SWD(2020)54final Identifying and addressing barriers to the Single Market 
44 Directive 1151/2019 as regards the use of digital tools and processes in company law. 
45 Guidelines for border management measures to protect health and ensure the availability of goods and 
essential services (C(2020)1753) 
46 Communication on the implementation of Green Lanes (C(2020)1897) 
47 Blockages of over one hour were experienced at roughly 5% of border crossings while wait times between 15 
minutes and one hour were experienced at roughly 10% of border crossings. 

25 

 
 
 
                                                           
air cargo48 and seafarer mobility49 to ensure uninterrupted cargo transport and taken several 
other measures50. 

- 

-  On the basis of a Commission proposal, Council Recommendation (EU) 2020/1475 fostered a 
coordinated  approach  to  the  restriction  of  free  movement  in  response  to  the  pandemic51 
basing restrictions such as quarantine and testing on the epidemiological situation in other 
Member States. The Council Recommendation was amended on 1 February 2021 to take into 
account  the challenging epidemiological situation52. The Council Recommendation provides 
relevant exemptions for essential travellers such as transport workers.  
The  Commission  ensured  the  mobility  of  workers  and  service  providers  including  through 
practical  advice  on  the  free  movement  of  essential  workers53,  urging  Member  States  to 
establish  specific  burden  free  and  fast  procedures  to  ensure  a  smooth  passage  for  critical 
cross-border  workers, 
including  proportionate  health  screening.  In  addition,  specific 
guidance  was  provided  in  the  area  of  professional  qualifications  to  support  the  free 
movement  of  health  professionals.54  Furthermore,  the  Commission  presented  on  16  July 
2020 Guidelines on Protecting Seasonal Workers in the context of the COVID-19 outbreak55, 
to strengthen the protection of this particularly vulnerable group of workers; 
The  Commission  also  adopted  guidelines56  presenting  general  principles  for  the  safe  and 
gradual restoration of  passenger transport  by air, rail, road and waterways. The  guidelines 
put forth a series of recommendations, such as the need to limit contact between passengers 
and transport workers, and passengers themselves, reducing, where feasible, the density of 
passengers. 

- 

-  Commission  guidelines  also  boosted  Europe’s  efforts  to  fight  the  pandemic.  For  example, 
recommendations to testing bodies and market surveillance authorities facilitated the supply 
of  personal  protective  equipment  and medical  devices57  and  guidance  to  public authorities 
enabled  purchasing  urgently  needed  supplies  and  services  under  the  EU’s  public 
procurement  framework.  In  addition,  guidance  on  national  measures  relating  to  medical 

48 C(2020) 2010 final, 
49 C(2020) 3100 final 
50 These measures are described more in detail in SWD (2020) 331. Section 4.3.1. 
51 Council Recommendation (EU) 2020/1475 of 13 October 2020 on a coordinated approach to the restriction 
of free movement in response to the COVID-19 pandemic. OJ L 337, 14.10.2020, p. 3–9. 
52  Council  Recommendation  (EU)  2021/119  of  1  February  2021  amending  Recommendation  (EU)  2020/1475 
on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic. 
OJ L 36I, 2.2.2021, p. 1–6. 
53 Guidance to ensure the free movement of critical workers (C(2020)2051) 
54  Communication  from  the  Commission  Guidance  on  free  movement  of  health  professionals  and  minimum 
harmonisation of training in relation to COVID-19 emergency measures – recommendations regarding Directive 
2005/36/EC (2020/C 156/01) 
55  C(2020)4813  Guidelines  on  Seasonal  Workers  in  the  EU  in  the  context  of  the  COVID-19  outbreak 
file:///C:/Users/caspasi/AppData/Local/Packages/Microsoft.MicrosoftEdge_8wekyb3d8bbwe/TempState/Dow
nloads/C_2020_4813_Communication_Seasonal-workers%20(1).PDF  
56 C/2020/3139 Communication from the Commission Guidelines on the progressive restoration of transport 
services and connectivity. 
The European Union Aviation Safety Agency (EASA) and European Centre for Disease Prevention and Control 
(ECDC) issued a joint document defining measures to assure the health safety of air travellers and aviation 
personnel once airlines resume regular flight schedules following the severe disruption caused by COVID-19. 
For the safe resumption of railway operations in Europe, the European Union Agency’s for Railways (ERA) and 
ECDC have developed operational guidelines with the COVID-19 railway protocol. 
57 Recommendation on conformity assessment  and market surveillance (C(2020)1712) 

26 

 
 
                                                           
products  and  devices  and  of  personal  protective  equipment58  aimed  to  address  the 
proliferation of export restrictions.   

In addition, different efforts made it possible to maximise the availability of medical supplies on the 
Single Market. The Commission coordinated a number of joint procurement actions, where Member 
States  joined  forces  in  negotiating  purchases.  In  addition,  the  strategic  rescEU  stockpile  and  the 
COVID-19  Clearing  House  for  medical  equipment  were  established,  the 
latter  accelerating 
matchmaking for needed medical equipment. Furthermore, European standardisation bodies made 
21  harmonised  European  standards  for  personal  protective  equipment  and  medical  devices  freely 
available, facilitating the conversion of production lines (and the creation of new ones) to respond to 
shortages.    A  specific  European  standardisation  document  for  generic  fabric  facemasks  was  also 
developed and made freely available.  

Secondly, existing Single Market tools and instruments have proven valuable: 

- 

The Single Market Transparency Directive ensured transparency of measures restricting the 
free movement of goods. Altogether, Member States used the urgency procedure under that 
Directive  85  times  during  the  first  wave  of  the  pandemic  to  notify  COVID-19  related 
legislation to the Commission. The notifications of the draft technical regulations allowed the 
Commission  to  identify  barriers  to  the  free  movement  of  goods,  in  particular  concerning 
medicines  and  medical  equipment  most  needed  during  the  crisis,  and  address  them  in  a 
timely and efficient manner. The measures most commonly notified during the first wave of 
the  pandemic  related  to  export  restrictions  for  medicines  as  well  as  export  bans  on 
protective  equipment,  medical  devices  and  in  vitro  medical  devices  needed  in  hospitals. 
Export bans for disinfectants and alcohols needed for their production were also frequently 
notified.   

-  Assistance tools such as SOLVIT and YourEurope Advice have received and dealt with a large 
number  of  enquiries  and  requests  from  businesses  and  workers  to  solve  COVID-19  related 
problems. Business cases dealt with by SOLVIT include problems on free movement of goods 
(e.g.  export  restrictions  on  disinfectant  and  its  ingredients,  complaints  about  rules  for  CE 
labelling  of  masks)  and  on  free  movement  of  services  (e.g.  problems  posting  workers  to 
another  Member  State,  issues  accessing  COVID-19  crisis  assistance  for  self-employed).  In 
addition,  SOLVIT  received  many  cases  involving  mobile  workers.  In  particular,  certain 
enforcement models, like the Consumer Protection Cooperation (CPC) Network, proved to be 
very efficient in addressing the surge of online consumer scams linked to the pandemic. The 
EU Rapid Alert System for dangerous non-food products was a very efficient tool to speedily 
exchange information on unsafe COVID-19 related products. 

- 

The  Commission  also  facilitated  and  encouraged  the  action  of  market  surveillance 
authorities  against  illicit  and  non-compliant  personal  protective  equipment  and  medical 
devices and fake certificates. 

-  Member States also took action, accelerating public purchases of goods and services needed 
to  fight  the  pandemic.  For  example,  during  the  first  wave,  11  Member  States  used  the 
options provided in the EU public procurement directives to adopt temporary derogations to 

58 Communication on a coordinated economic response COM(2020) 112 final 

27 

 
 
                                                           
national public procurement rules in order to streamline the purchase of health products and 
services. Some Member States also addressed possible shortages in healthcare professionals 
by relaxing access requirements and enabling accelerated and less burdensome recognition 
procedures for professionals from other Member States.  

Below  are  key  observations  based  on  the  assessment  presented  in  the  subsections  above59,  and 
informing the lessons learnt presented in the Communication60: 

  Existing  EU  crisis  governance  mechanisms  are  not  fully  effective  at  coordinating  national 

 

 

responses in times of emergency while protecting the Single Market; 
In  several  instances,  better  ex  ante  assessment  by  Member  States  on  planned  restrictions 
would  have  helped  them  to  understand  whether  these  measures  would  be  effective  and 
justifiable restrictions to Single Market freedoms61; 
Insufficient notification by Member States at EU level for national measures that introduced 
restrictions both for goods and services created uncertainty; 

  Member  States  could  have  made  available  more  clear,  comprehensive  and  stable 

information on applicable national restrictions for businesses;  

  The  administrative  capacity  to  fully  implement  and  apply  Single  Market  rules  including 
during crises times, including the notification of national measures, was often insufficient62; 
  Measures such as “green lanes” coupled with digital solutions were able to facilitate the free 

movement of goods, services providers and their workers during crises.  

  Faster  and  more  effective  purchases  of  urgently  needed  goods  and  services  through 
stronger  cooperation  among  public  buyers  across  the  EU  and  the  use  of  digital  solutions, 
together with new mechanisms to ensure and speed up the availability of essential products 
in the EU and a common approach on stockpiling measures for products that are vital during 
crises would have helped63.  

  Manufacturers  should  have  been  granted  better  access  to  the  necessary  product  testing 
facilities  and  market  surveillance  authorities  should  have  had  the  means  to  control  that 
products entering the Single Market met the necessary requirements.  

  Building skills that increase workers resilience and digital competences would have 

contributed to maintaining production and service lines. 

59 See Sections 2.1  Impact of the COVID-19 crisis and restrictions to the Single Market and 2.5 Progress on key 
Single Market obstacles 
60 Industrial Strategy Update Communication idem  
61 Bans or other restrictions on intra-EU exports of products raise serious doubts as regards their suitability and 
proportionality. The export restrictions were subject to frequent adjustments exacerbating legal uncertainty 
and they triggered national stockpiling responses with further negative effects. Many measures were not 
notified or only notified as adopted measures to the Commission and other Member States, preventing them 
from raising and addressing potential concerns beforehand. Commission services worked to lift around 30 such 
export restrictions during the first wave of the pandemic , instead recommending a more proportionate system 
of prior notification of exports allowing authorities to refuse these on a case-by-case basis and for a limited 
time, based on clearly identified risks of shortages. Some applies for border restrictions, which had a negative 
impact on the mobility of workers and service providers. 
62 See the SWD “Supporting public administrations in EU Member States to deliver reforms and prepare for the 
future”  for further details on the topic  
63 The Commission coordinated a number of joint procurement actions, where Member States joined forces in 
negotiating purchases. The strategic rescEU stockpile and the COVID-19 Clearing House for medical equipment 
were established, the latter accelerating matchmaking for needed medical equipment.  

28 

 
 
                                                           
Despite  the  usefulness  of  existing  Single  Market  tools,  the  crisis  showed  that  not  all  of  them  are 
suitable  for  emergency  situations.  The  Commission  was  forced  to  take  a  large  number  of  ad  hoc 
actions64 to safeguard the functioning of the Single Market.  

Gaps in existing legislation and practices hindered industry and SMEs, highlighting the need for tools 
to meet the specific needs that arise in the context of a severe crisis, ensure the free movement of 
goods and services and support efforts to enable and speed up the availability of essential products. 
The Single Market needs to be better prepared to face a future crisis, based on forward looking and 
structural solutions that allow for predictability and legal certainty. 

3. Delivering on the ground: the implementation of the 2020 

Single Market Enforcement Action Plan, Industrial and SME 
Strategies 

Key messages 

 Good  progress  was  made  in  implementing  the  measures  announced  in  the  March  2020  Single 
Market Enforcement Action Plan, Industrial Strategy and SME Strategies. 

The implementation of the Single Market Enforcement Action Plan (SMEAP), the creation of the joint 
Single Market Enforcement Task-Force (SMET) will contribute to the deepening of the Single Market. 
A  number  of  actions  to  help  SMEs  grow  within  the  Single  Market  have  been  put  in  place  and  the 
review of the EU competition framework is ongoing.  

A global level playing field has been upheld, by prioritizing WTO reform, following up on the White 
Paper on foreign subsidies, and thanks to actions aimed at improving SMEs’ access to global markets, 
as well as the new Customs Union Action Plan. 

Companies  and  the  economy  have  been  supported  in  the  transition  towards  environmental 
sustainability  including  climate-neutrality  and  a  circular  economy,  in  particular  through  the  New 
Circular  Economy  Action  Plan.  Good  progress  was  made  on  energy  with  the  Clean  Energy  and 
Hydrogen strategies, on mobility and construction with the Sustainable and Smart Mobility Strategy 
and Renovation Wave. The Commission is also paying special focus to products and their components, 
for  example  by  publishing  a  Chemicals  strategy  and  working  for  a  Clean  Steel  partnership  under 
Horizon Europe. It is moving to empower consumers under the Circular Economy Action Plan and New 
Consumer Agenda. 

Action has  helped the digital transition, by proposing the Digital Services  Act  (DSA) and the Digital 
Markets Act  (DMA) as  well  as  the Data Governance  Act. The development  and deployment  of next 
generation cloud technologies as well as a high common level of cybersecurity have been promoted. 
Innovation is being supported through the Intellectual Property Action Plan and a communication on 
“A  new  ERA  for  Research  and  Innovation”  as  well  as  through  a  more  strategic  approach  to 
partnerships. 

64 Cf. section 2.1 and the first part of this section 

29 

 
 
 
                                                           
Skills  are at  the heart of the EU  policy agenda and their development  is being promoted thanks to 
initiatives like the European Skills Agenda and the Pact for Skills. The first European skills partnerships 
in  key  industrial  ecosystems  have  been  announced  as  well  as  a  vision  for  achieving  the  European 
Education  Area  and  a  new  Digital  Education  Action  Plan  (2021-2027).  This  will  contribute  to 
addressing the gender gap in STEM65 as announced in the Gender Equality Strategy 2020-2025. 

The  agreement  on  the  Multiannual  Financial  Framework  and  Next  Generation  EU  will  support 
investment  and  financing  and  private  finance  will  be  leveraged  through  the  new  Capital  Market 
Union action plan as well as a number of actions to help Europe’s SMEs.  Member States can design 
Important  Projects  of  Common  European  Interest  (IPCEI)  in  line  with  State  aid  rules  and  new  ones 
have been put in place.  

The new Pharmaceutical Strategy, R&I partnership on pandemic preparedness, Action Plan on Critical 
Raw  Materials,  and  Cybersecurity  Strategy  are  reinforcing  Europe’s  industrial  open  strategic 
autonomy. 

Finally, a new partnership approach to governance has been promoted. In particular, the Commission 
has continued to promote the development of industrial alliances to bring stakeholders together to 
contribute to the delivery of EU policy objectives. Commission services have  also moved to promote 
wider partnership in industry, most notably through the Industrial Forum.  

In March 2020, just before the crisis fully hit all parts of the EU, the Commission adopted a package 
of  measures  including  a  new  Industrial  Strategy66  and  SME  Strategy.67    Over  the  past  year,  the 
Commission services have started to implement these measures, updating them as necessary in the 
light of the crisis. Adopting these measures, will help businesses and economy to recover from the 
crisis but also to move to a more stable and sustainable long-term footing. 

In particular and as promised in the Industrial Strategy, good progress has been made towards: 

  Moving to a deeper Single Market; 
  Upholding a global level playing field; 
  Supporting companies and the economy in the transition towards environmental 

sustainability; 

  Boosting the digital transition and innovation; 
  Promoting skilling and reskilling; 
  Assisting investment and financing for the transition; 
  Reinforcing Europe’s strategic autonomy; 
  Taking a new partnership approach to governance. 

3.1.  A deeper Single Market 

To allow the Single Market to work for all, common rules must be implemented and enforced across 
the  EU.  Based  on  a  renewed  partnership  between  Member  States  and  the  Commission,  the “Long 

65 Science, Technology, Engineering and Mathematics. 
66 COM(2020) 102, A New Industrial Strategy for Europe 
67 COM(2020) 103, An SME Strategy for a sustainable and digital Europe 

30 

 
 
 
                                                           
term action plan for better implementation and enforcement of the Single Market rules”68 (SMEAP) 
sets out horizontal measures and 22 specific actions to maximise the effectiveness and efficiency of 
compliance and enforcement across the EU.69 

The  joint  Single  Market  Enforcement  Task  Force  (SMET),  set  up  in  April  2020,  plays  an  essential 
facilitating role as a high-level forum where Commission services and Member States work together 
to assess the state of compliance of national law with single market rules, discuss the most pressing 
single market barriers needing to be addressed, as well as horizontal enforcement issues.70 Barriers 
will also be addressed through the National Recovery Plans, currently under preparation by Member 
States as part of the Recovery and Resilience Facility.71 

SMEs have the highest potential to benefit from the Single Market so the SME Strategy announced a 
number  of  measures  including  an  EU  Startup  Nations  Standard  launched  earlier  this  year72. 
Commission services are also setting up an EU Observatory on payment performance in commercial 
transactions  to ensure  a more  regular monitoring  for  the  payment  behaviour  by  public  authorities 
and  businesses.  The  Fit  for  Future  (F4F)  platform73  -  a  high-level  expert  group  to  help  simplify 
existing EU laws will advise the Commission on how to step up the application of the Late Payment 
Directive to ensure results for small businesses. 

The Commission also acted to review the EU competition framework. Between September 2020 and 
March  2021, three  Staff Working Documents  were  published:  one  that  summarises  the  findings of 
the  evaluation of  procedural  and  jurisdictional  aspects  of  EU  merger  control,  one  summarising the 
results of the Fitness Check of the State Aid control system and one on the evaluation of the Vertical 
Block Exemption Regulation. In December 2020, the Commission proposed a Digital Markets Act that 
builds on the antitrust enforcement practice in the digital sector.  

3.2.  A global level playing field 

The 2020 Industrial Strategy noted that while the openness of Europe’s economy is at the source of 
its prosperity and competitiveness, the EU should not be naive about threats to fair competition and 
trade. The EU supported global efforts in the G20, the WTO and bilaterally to monitor critical supply 
chains and address disruptions throughout the crisis, and set the direction for an open, sustainable 
and assertive trade policy in the Trade Policy Review Communication adopted in February 2021.74 

68 COM(2020) 94, Long term action plan for better implementation and enforcement of single market rules 
69 More details on the implementation of the SMEAP and work of the SMET are provided in Annex A1. 
70 Terms of Reference of the SMET Special Group, point 1 (1).   
71 The Annual Sustainable Growth Strategy (COM(2020) 575 final) identifies reforms as a key element of 
National Recovery Plans, notably when these reforms support the functioning of the Single Market 
72 This commits the Commission, Member States and stakeholders to high standards 
73 This builds on the REFIT platform and brings together Commission services, national authorities and 
stakeholders.  
https://ec.europa.eu/info/law/law-making-process/evaluating-and-improving-existing-laws/refit-making-eu-
law-simpler-less-costly-and-future-proof/fit-future-platform-
f4f_en#:~:text=The%20Fit%20for%20Future%20Platform%20is%20a%20high-
level,of%20the%20Regulatory%20fitness%20and%20performance%20%28REFIT%29%20programme 
74 COM(2021) 66  

31 

 
 
                                                           
In June, the Commission therefore published a  White Paper on foreign subsidies75 and is currently 
working on a legislative proposal. Given its essential role for a stable trading environment, the EU is 
prioritising  reform  within  the  WTO  later  across  its  functions.  Discussions  in  Council  on  the 
International Procurement Instrument are also progressing.   

Attention is also being paid to improving SMEs’ access to global markets, launching the information 
portal  ‘Access2Markets’76  in  October  and  including  SME  chapters  or  provisions  in  all  new  trade  or 
partnership agreements. For entrepreneurs, the extended Erasmus for Young Entrepreneurs Global 
programme started in March 2021.  

Beyond this, the new Customs Union Action Plan77 sets out a series of measures to make EU customs 
smarter, more innovative and more efficient over the next four years. The proposal for the ‘EU Single 
Window  Environment  for  Customs’78  was  also  adopted  to  enhance  cooperation  and  coordination 
between different authorities.  

3.3.  Climate neutrality and a circular economy 

The  Commission  has  adopted  a  number  of  measures  to  promote  the  transition  towards  increased 
environmental sustainability including social aspects in global supply chains. At the heart of these are 
the Green Deal and New Circular Economy Action Plan adopted in March 2020.. 

Within  this,  the  Commission  is  paying  special  focus to  sustainable  production and  consumption,  in 
particular  on  designing  greener  products  and  their  components,  and  harmonising  rules  for  them, 
and  has  published  a  Chemicals  strategy  for  sustainability  to  better  protect  citizens  and  the 
environment  and  boost  innovation  for  safe  and  sustainable  chemicals.  Work  on  a  Sustainable 
Product  Initiative 
initiatives  on  electronics,  batteries, 
construction, textile, plastic and packaging. The Commission adopted a proposal for a new regulation 
on  batteries  and  waste  batteries79  to  modernise  EU  legislation  on  batteries  to  make  them  more 
sustainable throughout their lifecycle. In addition, to promote the circular economy transition across 
Europe, the Circular Economy Stakeholders Platform continues to gather industry, businesses, think 
thanks, non-governmental organisations, innovation communities and public authorities80.  

is  underway  together  with  sectoral 

The  Clean  Steel  partnership  is  advancing  successfully  to  be  approved  as  one  of  the  proposed 
partnerships  under  Horizon  Europe.  The  steel  industry  is  responsible  for  about  20%  to  25%  of 

75 COM(2020) 253, White Paper on levelling the playing field as regards foreign subsidies 
76 https://trade.ec.europa.eu/access-to-markets/en/content  
77 COM(2020) 581, Taking the Customs Union to the Next Level: a Plan for Action 
78 COM(2020) 673, Proposal for a Regulation Of The European Parliament And Of The Council establishing the 
European Union Single Window Environment for Customs and amending Regulation (EU) No 952/2013 
79 COM(2020) 798/3, Regulation Of The European Parliament And Of The Council concerning batteries and 
waste batteries, repealing Directive 2006/66/EC and amending Regulation (EU) No 2019/1020 
80 https://circulareconomy.europa.eu/platform/ 

32 

 
 
                                                           
industrial CO2 emissions81. The partnership aims to align the public and private sector on alternative 
pathways82 towards CO2 reductions to of up to 95% by 2050 compared to 1990 levels.  

Energy  is  a  particular  concern,  so  in  July  2020,  the  Commission  adopted  the  Energy  System 
Integration  Strategy83  to  achieve  a  cost-effective  decarbonisation  of  the  EU  economy,  involving 
technologies  such  as  ICT  and  digitalisation,  smart  grids  and  meters  and  flexibility  markets.  Such  a 
Strategy lays the foundation for the decarbonised European energy system of the future in synergy 
with the dedicated Hydrogen strategy84 to support the production and use of clean hydrogen. 

Energy  is  identified  as  one  of  the  strategic  areas  for  setting  up  a  data  space.  Common  European 
Energy data spaces are being put in place to exploit the potential of data to achieve the Green Deal 
Objectives,  to  support  data  exchange  which  helps  the  integration  of  renewables  in  the  energy 
system.  The  enabling  instruments  will  be  the  Delegated  Acts  on  data  sharing  and  Horizon  Europe. 
The EU Strategy on Offshore Renewable Energy proposes to increase Europe’s offshore wind capacity 
to  at  least  60  gigawatts  (GW_  by  2030  and  to  300  GW  by  2050.  Underpinning  all  this,  the  Just 
Transition Platform provides technical and advisory support towards the green transition for public 
and private stakeholders in coal and other carbon-intensive regions.  The Emissions Trading System 
and the Energy Taxation Directive are being revised to better align them with the increased climate 
and environmental ambitions.  

Mobility  and  construction  are  also  central.  In  December  2020,  the  Commission  adopted  the 
Sustainable  and  Smart  Mobility  Strategy85  to  ensure  that  the  EU  transport  sector  is  fit  for  a  clean, 
digital and modern economy. In October, it launched the Renovation Wave.86 

Consumers have a key role to play. Among the priorities of the Circular Economy Action Plan and the 
New Consumer Agenda87 is to ensure that sustainable products are available to consumers on the EU 
market, that consumers have better information to be able to make an informed choice, and better 
information on the durability and reparability of products.  

It also means empowering SMEs and consumers to drive the transition, so as part of an upgrade of 
the  Enterprise  Europe  Network,  Commission  services  are  finalising  the  setting  up  of  dedicated 
Sustainability Advisors to advise SMEs. In November, the Commission launched the New Consumer 
Agenda.  The Commission services are considering the introduction, for selected sectors, of a Carbon 
Border Adjustment Mechanism (CBAM) should differences in levels of ambition worldwide persist.  

3.4.  Digital transition and innovation 

81 For further details, please see: eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1. 
82 Non-traditional production processes based on breakthrough technologies and use of green electricity and 
optimised materials, gases and energy flows 
83 COM(2020) 299, EU Strategy for Energy System Integration 
84 COM(2020) 301,  A hydrogen strategy for a climate-neutral Europe 
85 COM(2020) 789, Sustainable and Smart Mobility Strategy – putting European transport on track for the 
future 
86 COM(2020) 662, A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives 
87 COM(2020) 696, New Consumer Agenda 

33 

 
 
                                                           
Digital  technologies  are  profoundly  changing  our  industry,  business  and  societies.  The  Commission 
has  already  taken  significant  steps  to  invest  in  them,  provide  workers  with  new  skills,  reduce 
administrative burden for businesses, and set clear rules for their uptake.  

In December, the Commission proposed the Digital Services Act (DSA)88 and the Digital Markets Act 
(DMA).89  The new rules will better protect all users of digital services and their fundamental rights 
online, and will lead to fairer and more open digital markets for everyone. A modern rulebook across 
the  Single  Market  will  foster  innovation,  growth,  and  competitiveness  and  will  provide  users  with 
new, better and reliable online services. 

The efficient and ethical use of data will be central to Europe’s future competitiveness. The European 
data strategy aims to create a single European data space  where  personal as well as non-personal 
data  are  secure  and  businesses  also  have  easy  access  to  high-quality  industrial  data.  The  recently 
adopted  Data  Governance  Act90  will  improve  access  to  data  and  increase  trust  in  sharing  personal 
and non-personal data and lower transaction costs linked to data sharing. And from this year on, the 
Commission  will  co-invest  in  a  High  Impact  Project  on  European  data  spaces  and  next  generation 
federated cloud infrastructures and services. 91 The development and deployment of next generation 
cloud technologies will be co-financed under the new  long-term EU budget and complemented by 
private and national co-investment.  

The Communication on the Digital Decade92 will act as a compass to steer the digital advances to be 
reached by 2030, including the digital transformation of industry. 

Underpinning  the  safety  and  security  of  all  this,  in  December  the  Commission  proposed  a  revised 
Directive on measures for a high common level of cybersecurity across the Union93. The proposal will 
increase information sharing and cooperation on cyber crisis management at national and EU level. 

The  IP  Action  Plan94  adopted  in  November  2020  sets  out  key  steps  to  improve  the  protection  of 
Intellectual Property, boost its uptake by SMEs and facilitate the sharing of IP, so as to increase the 
technological uptake in the industry.  

The Industrial Strategy noted that if the EU wanted to lead this transition and that to sustainability, 
its  strategy  needed  to  have  an  industrial  innovation  strategy  at  heart.  The  Commission  therefore 
created  the  Advanced  Technologies  for  Industry  (ATI)95  monitor,  providing  qualitative  and 

88 COM(2020) 825, Proposal for a Regulation Of The European Parliament And Of The Council on a Single 
Market For Digital Services (Digital Services Act) and amending Directive 2000/31/EC 
89 COM(2020) 842, Proposal for a Regulation Of The European Parliament And Of The Council on contestable 
and fair markets in the digital sector (Digital Markets Act) 
90 COM(2020) 767, Proposal for a Regulation Of The European Parliament And Of The Council on European data 
governance (Data Governance Act) 
91 COM(2020) 66 final A European Strategy for data, https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52020DC0066&from=EN  
92 COM(2021) 118, 2030 Digital Compass: the European way for the Digital Decade 
93 Revised NIS Directive or NIS 2 
94 COM(2020) 760, Making the most of the EU’s innovative potential: An intellectual property action plan to 
support the EU’s recovery and resilience 
95 https://ati.ec.europa.eu/ 

34 

 
 
                                                           
quantitative data on technological development and trends. The communication on A new ERA for 
Research  and  Innovation96  was  adopted  in  September,  proposing  a  revitalised  European  Research 
Area (ERA) with a forward-looking agenda.  

Horizon  Europe  introduces  a  more  strategic  approach  to  partnerships  and  ensures  that  these 
partnerships  are  aligned  with  EU  priorities  and  inter  alia  key  drivers  for  industrial  innovation  and 
competitiveness[1].  In  September,  the  Commission  proposed  a  new  regulation,  providing  a 
substantially larger budget for the EuroHPC JU (high performance computing Joint Undertaking). The 
recently formed Quantum Industry Consortium (QuIC) will be the voice of the quantum industry in 
Europe  ensuring  a  sustainable  and  competitive  business  environment.  In  February  2021,  the 
Commission proposed to set up another ten institutionalised partnerships under Horizon Europe97, 
aiming  to  improve  EU  preparedness  and  response  to  infectious  diseases,  develop  efficient  low-
carbon  aircraft  for  clean  aviation,  support  the  use  of  renewable  biological  raw  materials  in  energy 
production, or make rail transport more competitive. This list included the Key Digital Technologies 
JU will consolidate European companies present at different levels of the semiconductor value chain. 

Administrative burden for businesses has been reduced with the implementation of the Single Digital 
Gateway Regulation.  

3.5.  Skilling and reskilling 

The Commission is placing skills at the heart of the EU policy agenda, steering investment in people 
and  their  skills  for  a  sustainable  recovery.  The  European  Skills Agenda98  adopted  in  July  2020  sets 
ambitious objectives  for upskilling and reskilling for the next 5 years including for skills needed for 
the green and digital transitions.  This was followed by the Pact for Skills in November and building 
on  the  Blueprint  for  Sectoral  Cooperation  on  Skills,  the  Digital  Skills  and  Jobs  Coalition,  and  the 
European Alliance for Apprentice ships. The Pact supports the setting-up of large-scale partnerships 
in strategic industrial ecosystems and value chains and the priority areas identified in the European 
Green  Deal  to  achieve  ambitious  commitments.  The  first  European  skills  partnerships  in  key 
industrial ecosystems were announced. 

The  Commission  also  adopted  two  important  initiatives  in  September.  The  vision  for  a  European 
Education Area to be achieved by 2025,99 sets out actions for quality, inclusion and gender equality, 
green and digital transitions, teachers, higher education, and a stronger Europe in the world. It also 
promotes  quality  investment  in  education  and  training  as  well  as  stronger  cooperation  among 
Member States. The new Digital Education Action Plan presents a plan for a high-performing digital 
education  ecosystem  with  enhanced  digital  competences  for  the  digital  transformation.  The 
Commission  has  also  launched  a  pilot  digital  volunteers’  programme  promoting  the  transfer  of 
for 
knowledge  between  high-tech  experts  and  SMEs.  The  renewed  European  Alliance 

96 COM(2020) 628, A new ERA for Research and Innovation 
97 https://ec.europa.eu/commission/presscorner/detail/en/ip_21_702  
98 COM(2020)274, European Skills Agenda for sustainable competitiveness, social fairness and resilience 
99 COM(2020) 625, Achieving the European Education Area by 2025 

35 

 
 
                                                           
Apprenticeships100  was  launched  in  July,  helping  SMEs  by  providing  a  stable  supply  of  quality  and 
effective apprenticeships and mobilising local and regional authorities. 

Gender equality must be a common principle of all our actions. The Gender Equality Strategy 2020-
2025101 delivers on a number of crucial issues to advance gender equality in the EU. One of them is 
promoting gender balance in ICT studies and careers.  

3.6.  Investment and financing 

Investment and finance were already critical for Europe’s companies. But the crisis has made this all 
the more critical. The EU has responded, most notably with agreement on the Multiannual Financial 
Framework  (MFF)  for  2021-2027  in  December,  providing  a  long-term  EU  budget  of  EUR1  074.3 
billion. Together with the Next Generation EU recovery instrument102 of EUR750 billion, it will allow 
the  EU  to  provide  an  unprecedented  EUR1.8  trillion  of  funding  over  the  coming  years  to  support 
recovery  and  the  EU's  long-term  priorities  across  different  policy  areas.  At  the  heart  of  Next 
Generation EU, the Recovery and Resilience Facility will help Member States address their structural 
challenges,  as  well  as  accelerate  a  just  transition  towards  a  greener,  digital  and  more  resilient 
economy.  

To support the transitions to sustainability and digitalisation, the Commission is also putting forward 
a renewed Sustainable Finance action plan and is delivering on its Digital Finance strategy launched 
in  September  2020.  The  EU  Taxonomy  Regulation103  was  published  on  22  June  2020  and  entered 
into  force  on  12  July  2020.  The  Taxonomy  Regulation  establishes  six  environmental  objectives  on 
which delegated acts will set out the criteria of significant contribution, do no significant harm and 
other requirements.104 

At  the  same  time,  the  new  Capital  Market  Union  action  plan105  proposed  16  legislative  and  non-
legislative actions to make financing more accessible to European companies and create a true single 
market for capital. 

Finance  will  be  particularly  important  for  Europe’s  SMEs.  The  Commission  has  advanced  on  the 
implementation  of  ESCALAR,  a  first  of  a  kind  risk/reward  mechanism  to  boost  the  size  of  venture 
capital funds and crowd in private investments for scaling up. The Commission is also working on the 
products  of  the  InvestEU’s  SME  window  including  a  single  integrated  guarantee  facility  and  will 
support equity financing for SMEs and small midcaps. In this context, the Commission is working on 
establishing a public-private SME IPO fund to help SMEs grow and access further sources of financing 
through public listings, in order to complement the range of already-existing public support measures 
at earlier funding stages and strengthen SMEs’ growth pipeline. 

100 https://ec.europa.eu/social/main.jsp?catId=1147&intPageId=5234&langId=en  
101COM(2020)152 A Union of Equality: Gender Equality Strategy 2020-2025 https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A52020DC0152  
102 https://ec.europa.eu/info/strategy/recovery-plan-europe_en#nextgenerationeu  
103 Regulation (EU) 2020/852 (Taxonomy) on the establishment of a framework to facilitate sustainable 
investment  
104 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-
sustainable-activities_en  
105 COM(2020) 590 A Capital Markets Union for people and businesses-new action plan 

36 

 
 
                                                           
To  support  top-class  innovators, entrepreneurs,  small  companies  and  researchers,  the Commission 
has launched a European Innovation Council (EIC) to provide funding and opportunities for ideas that 
are radically different from existing products, services or business models, are highly risky and have 
the potential to scale up internationally. The budget is over EUR10 billion for 2021-27 of which over 
EUR  1.5  billion  is  available  for  breakthrough  technologies  and  innovative  start-ups  in  2021  with 
targeted  funding  for  Green  Deal  innovations  and  strategic  digital  and  health  technologies.  The 
Innovation Fund under the EU Emissions Trading System was also launched in 2020, providing more 
than EUR 14 billion106 by 2030 for low-carbon innovative clean-tech investments in energy intensive 
industries, renewable energy, energy storage and carbon capture, use and storage applications over 
this decade. The EU ETS Modernisation Fund with more than EUR 16 billion107 is already available to 
support its ten beneficiary Member States to modernise their energy and industrial systems. 

Pooling  resources  towards  identified  common  priorities  is  equally  essential.  Important  Projects  of 
Common  European  Interest  (IPCEI)  provided  for  by  Article  107(3)(b)  TFEU  help  to  catalyse 
investment  in  ground  breaking  innovation.  Three  IPCEIs  have  been  put  in  place  on  batteries  and 
microelectronics, the most recent one being the ‘European Battery Innovation’,108 the second IPCEI 
on innovations in the battery value chain which brings together 12 Member States that will provide 
up  to  EUR2.9  billion  in  funding  in  the  coming  years. This  is  expected  to  unlock  an  additional  EUR9 
billion in private investments. 

 22 Member States signed a manifesto to collaborate for the development of the European hydrogen 
value  chain,  including  with  one  or  more  possible  IPCEIs.  In  addition,  in  December,  19  Member 
States  signed  a  declaration  agreeing  to  work  together  towards  a  forward-looking  IPCEI  on 
microelectronics which also seeks to develop innovative and sustainable chips in Europe.  

3.7.  Reinforcing Europe’s industrial and strategic autonomy 

The  Industrial  Strategy  committed  the  Commission  to  a  reinforced  industrial  and  open  strategic 
autonomy.  The  Commission  adopted  a  Pharmaceutical  strategy  for  Europe109.  The  aim  is  to  better 
identify  the  challenges  and  assess  the  need  for  measures  and  actions  aimed  at  strengthening  the 
resilience of pharmaceutical supply chains and ensure the security of supply of medicines110. 

The  Commission  has  also  launched  an  R&I  partnership  on  Pandemic  preparedness  under  Horizon 
Europe. 

106 subject to the carbon prices 
107 subject to the carbon prices 
108 https://ec.europa.eu/commission/presscorner/detail/en/IP_21_226 
109 COM/2020/761 final 
110 See for more information https://ec.europa.eu/health/human-use/strategy/dialogue_medicines-supply_en 

37 

 
 
 
 
                                                           
The  Action  Plan  on  Critical  Raw  Materials111  and  the  2020  List  of  Critical  Raw  Materials  were 
adopted in September, setting out the challenges for a secure and sustainable supply of critical raw 
materials and actions to increase EU resilience and open strategic autonomy. In July, the Commission 
published  a  Report  on  Member  States’  Progress  in  Implementing  the  EU  Toolbox  on  5G 
Cybersecurity. The Commission also addressed the status of implementation and next steps as part 
of  the  Cybersecurity  Strategy  adopted  in  December.  An  Action  Plan  on  synergies  between  civil, 
defence and space industries was adopted in early 2021.  

3.8.  A new governance approach 

Since the adoption of the Industrial Strategy, the Commission has reinforced its partnership approach 
to industrial policy. In particular, it has continued to promote the development of industrial alliances 
to bring stakeholders together to contribute to the delivery of the twin transitions and open strategic 
autonomy in an open, transparent, diverse and inclusive way. Stakeholder collaboration in targeted 
industrial  alliances  may  be  helpful  to  address  strategic  dependencies  (e.g.  batteries),  build  a  value 
chain  in  future  growth  markets  (e.g.  clean  hydrogen),  jointly  develop  research  and  innovation  or 
change business models from supply and demand perspective (e.g. circular plastics). 

This experience builds notably on the success of the Batteries Alliance. The European Battery Alliance 
has  helped  to  support  manufacturing  projects  along  the  battery  value  chain  at  scale  -  some  €100 
billion in investment has been committed. It has also facilitated the design by several Member States 
of two Important Projects of Common European Interest (IPCEI) with in total EUR 6 billion approved 
State  aid  for  research  and  innovation  in  the  battery  value  chain,  unlocking  an  additional  EUR  14 
billion in private investments. It has also led to a Blueprint Skills Programme for Batteries to develop 
a  highly  skilled  workforce  along  the  value  chain  and  an  interregional  cooperation  on  advanced 
batteries materials involving 28 regions. Battery cell production in the EU is estimated to lead to 60 – 
90,000  direct  jobs  and  around  180,000  upstream  jobs  by  2030.  If  electric  vehicles  are  taken  into 
account  as  well,  the  most  optimistic  assessment  estimates  that  the  transition  to  electric  mobility 
could create about 800,000 new jobs by 2025. In July, the Commission launched the European Clean 
Hydrogen Alliance, aiming at scaling up clean hydrogen production to 40 GW by 2030 and boosting 
demand  for  clean  hydrogen  in  industry  and  mobility  to  achieve  climate-neutrality.  The  European 
Clean Hydrogen Alliance has brought together more than 1,000 stakeholders along the value chain 
and  is  developing  a  pipeline  of  investment  projects  to  deliver  on  the  objectives  of  the  hydrogen 
strategy for a climate-neutral economy. 

In September, it launched the European Raw Materials Alliance in September 2020 to secure access 
to critical and strategic raw materials.  

But the Commission has also moved to promote wider partnership in industry, most notably through 
the  Industrial  Forum  established  in  December  and  composed  by  representatives  from  all  Member 
States  and  a  wide  range  of  stakeholders  to  support  the  Commission  in  the  systematic  analysis  of 
industrial  ecosystems  and  areas  for  cross-ecosystem  and  cross-border 
problems  faced  by 

111 COM(2020) 474 final Critical Raw Materials Resilience: Charting a Path towards greater Security and 
Sustainability 

38 

 
 
                                                           
collaboration.  The  EU  Industry  Days  most  recently  held  on  23-26  February  2021  as  well  as  the 
reinforced SME envoy network112   

4. Conclusion  
The  COVID-19  crisis  has  been  an  acid  test  of  European  businesses,  European  and  national  public 
authorities and above all, the commitment to the Single Market.  

The  unilateral  restrictions  put  in  place  caused  major  disruptions,  causing  as  yet  unquantifiable 
damage to European businesses, and severely impaired the ability of the EU to respond. Individual 
‘industrial ecosystems’ such as tourism and mobility were particularly badly affected. And this came 
on top of a number of existing barriers to companies operating within the Single Market.  

The  EU  and  the  Member States  must  draw  the  lessons  from  the  crisis. Despite  extensive  action to 
address its consequences, the crisis highlighted the importance of keeping a fully functioning Single 
Market and of European solidarity. This reminder would be expected to continue to guide the EU’s 
actions in the coming years, be it to remove remaining obstacles to the Single Market or by working 
together at all levels  to deliver  on the  EU’s green and digital ambitions, ensure Europe’s  resilience 
and  increase  its  long  term  competitiveness,  as  highlighted  in  the  linked  Communication  “Updating 
the  2020  New  Industrial  Strategy:  Building  a  stronger  Single  Market  for  Europe’s  recovery”  (“the 
Industrial Strategy Update Communication”113. 

The strategies set out in the March 2020 Single Market Enforcement Action Plan, Industrial Strategy 
and SME Strategy remain valid. Considerable progress was achieved in their implementation, but it is 
important to now build on  the  successes of the first year of implementation, support  the recovery 
and accelerate the twin transition towards digitalisation and sustainability. 

This  Report  is  offers  an  analytical  underpinning  to  those  efforts  as  presented  in  the  Industrial 
Strategy Update Communication. Commission services will therefore provide annual updates. 

112 with a strong role in the Better Regulation Agenda, European Semester, Recovery and Resilience Plans and 
Single Market Enforcement Task Force 
113 COM(2021)xx, “Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe’s 
recovery.” 

39 

 
 
 
 
 
                                                           
Annexes 

A1. State of play of the implementation of the Single Market Enforcement Action Plan 

A2. Overview of the implementation of the Industrial Strategy and the SME Strategy 

A3. Industrial ecosystems fiches 

A4. Key Performance indicators – Methodology and Overview 

40 

 
 
 
 
Annex 1 State of play of the implementation of the Single Market 
Enforcement Action Plan 
To allow the Single Market to work for all and to drive our industry forward, common rules must be 
implemented and enforced across the EU. Based on a renewed partnership between Member States 
and the Commission and taking into account the findings of the Communication on barriers to the 
single market114, the Single Market Enforcement Action Plan115 presents some horizontal measures 
and 22 specific actions, with the objective to maximise the effectiveness and efficiency of compliance 
and enforcement across the EU. In the first year of implementation of the Action Plan, the 
Commission, in close collaboration with the Member States, completed a number of actions to 
strengthen joint efforts in this area.  

Since the adoption of the Single Market Enforcement Action Plan on 10 March 2020, there has been 
progress on: 

1.  promoting increased knowledge and awareness of Single Market rules among national 

authorities, courts, citizens and businesses; 

2.  remedying incorrect transposition, implementation and application of EU rules; 

3.  preventing national measures in Member States from going against EU law; 

4.  preserving the smooth functioning of the Single Market by detecting non-compliance; 

5.  strengthening enforcement and  

6. 

improving the handling of infringement cases. 

The joint Single Market Enforcement Task-Force (SMET), set up by the Single Market Enforcement 
Action  Plan,  plays  an  essential  facilitating  role  as  a  high-level  forum  where  the  Commission  and 
Member  States  collaboratively  seek  solutions  for  addressing  Single  Market  obstacles  rooted  in 
enforcement or implementation deficiencies116. SMET is an important new tool with a significant role 
to ensure that the Single Market works properly and to continue reducing regulatory burdens. In this 
context,  SMET  prioritises  and  addresses  barriers  that  hamper  the  full  functioning  of  the  Single 
Market  for  all  key  ecosystems,  notably  when  their  root  causes  lie  in  incorrect  or  incomplete 
implementation and enforcement as identified in the Single Market Enforcement Action Plan and the 
Single  Market  Barriers Report.  SMET  can  also  be  convened when  needed  to  address  single market 

114 COM(2020)93; Communication from the Commission to the European Parliament, the Council, the European  
Economic and Social Committee and the Committee of the Regions - Identifying and addressing barriers to the 
Single Market. 
115 COM(2020)94 ; Communication from the Commission to the European Parliament, the Council, the 
European Economic and Social Committee and the Committee of the Regions on a “ Long term action plan for 
better implementation and enforcement of single market rules”. 
116 According to point 1 (1) of the Terms of Reference of the special group - Single Market Enforcement Task-
Force (SMET), the Commission and Member States work together to assess the state of compliance of national 
law with single market rules, discuss the most pressing single market barriers needing to be addressed, as well 
as  horizontal  enforcement  issues  covered  by  the  Long  term  action  plan  for  better  implementation  and 
enforcement of single market rules. 

41 

 
 
                                                           
issues that call for rapid action, as was, for instance, the case with the emergency SMET meeting117, 
called  to  discuss  and  assess  Member  States’    newly  introduced  controls  of  internal  borders  and 
measures on travel restrictions that restrict the  free movement within the EU118.  

SMET’s inaugural meeting took place on 7 April 2020 at the outbreak of the COVID-19 crisis to ensure 
the good functioning of the Single Market and allow the free flow of goods across EU borders. At this 
ad hoc meeting, SMET successfully addressed issues hampering the correct functioning of the Single 
Market  due  to  COVID-19,  such  as  intra-EU  export  restrictions  of  vital  protective,  medical  and 
medicinal supplies, border controls and the need to increase production of essential equipment. The 
discussions  in  SMET  showed  a  strong  collective  awareness  that  national  intra-EU  export  bans  or 
restrictions in one Member State risked creating shortages in other Member States. Since then, SMET 
had four formal meetings119.  

Member States started by identifying the five most pressing obstacles to the well-functioning of the 
Single Market and, with the  Commission, discussed actions that can help tackling a number of the 
top  barriers  indicated  in  the  Single  Market  Barriers  Report,  matching  those  that  were  raised  by 
Member States.  

To address such barriers, SMET set out a prioritised work  plan in order to deliver clear results in a 
short time. The Task Force agreed to work on a three pillar work plan:  1) abolishing the remaining 
COVID-19 related barriers, notably in the agri-food sector; 2) addressing priority barriers identified by 
Member  States  and  the  Commission  regarding  national  enforcement  and  implementation  issues, 
such  as  insufficient  information,  complex  administrative  procedures,  lack  of  digitalised  procedures 
and barriers in professional services; and 3) reinforcing the Single Market to support the recovery.  

According  to  the  agreed  work  plan,  SMET  discussed  five  pilot  projects  with  concrete  actions 
addressing  concrete  barriers  in  the  agri-food  sector,  the  free  movement  of  professionals,  the 
construction  sector  and  the  posting  of  workers.  More  specifically,  these  proposed  projects  will 
address:  1) protectionist measures in the agri-food sector; 2) certification schemes in construction 
services and non-harmonised construction products; 3) cross-border restrictions for professionals; 4) 
elimination  of  document  requirements  in  relation  to  the  recognition  of  professional  qualifications; 
and 5) administrative burdens associated to the Posting of Workers. The objective of these concrete 
projects is to deliver tangible results with quick effect. SMET concluded that the barriers presented 
and discussed are a priority and should be eliminated. SMET, therefore, mandated the ‘SMET Sherpa 
Group’  to  put  in  place  the  necessary  steps  with  the administrations  of  each  Member  State  and  to 
report to SMET on the progress of their work. 

On 19 February 2021, an emergency SMET meeting took place to address a large number of travel 
restrictions and newly introduced controls of internal borders that Member States put in place in the 
context of increasingly tense situations and the new COVID-19 variants in most areas across Europe.  

117 Fourth formal meeting of SMET on Friday 19 February 2021. 
118 Council Recommendation (EU) 2021/119 of 1 February 2021 amending Recommendation (EU) 2020/1475 on 
a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic (OJ L 36I, 
2.2.2021, p. 1). 
119 9 June 2020, 21 September 2020, 29 January 2021 and 19 February 2021. 

42 

 
 
                                                           
SMET agreed on the need to ensure the good functioning of the Single Market, especially as regards 
the  transport  of  goods  and  the  cross-border  economic  activities  in  coherence  with  the  measures 
agreed in coherence with the COVID-19 related guidance and recommendations. Furthermore, SMET 
agreed  on  the  importance  to  preserve  the  functioning  of  the  “Green  Lanes”  and  the  close 
coordination  among  Member  States  and  the  Commission  in  line  with  the  revised  Council 
Recommendations 2020/1475. 

Together  with  the  network  of  national  SME  envoys  and  the  EU  SME  Envoy,  the  SMET  will  also 
address gold-plating in the transposition process of EU directives to keep the regulatory burden on 
SMEs to a minimum. To promote the enforcement of a Single Market in a bottom-up approach, the 
Commission has launched a call for pioneer partnerships among border regions at the end of 2020, 
encouraging regional authorities to cooperate in addressing market barriers.  

The  SMET  complements  the  Cooperation  network  between  national  enforcement  coordinators. 
Making  use  of  the  existing  Internal  Market  Advisory  Committee  (IMAC),  the  cooperation  network 
held  its  first  meeting  on  24  November  2020.  It  allows  the  Commission  and  Member  States  to 
exchange  information  and  best  practices  and  explore  possibilities  to  improve  coordination  and 
communication  on  specific  enforcement  matters  amongst  Member  States’  authorities.  For  general 
issues  relating  to  the  transposition  and  implementation  of  EU  law  by  Member  States  and  to  the 
broader  enforcement  policy  of  the  Commission,  the  services  of  the  Member  States  and  the 
Commission regularly meet in the EU Law Network, an expert group dedicated to sharing knowledge 
and exchanging best practices in this area. 

To  reflect  better  the  needs  of  the  end  users  in  the  Single  Market  and  to  support  the  European 
Semester,  the  Single  Market  Scoreboard  is  being  upgraded.  As  to  the  content  of  this  update, 
following  the  recommendations  of  the  study  published  in  May  2020120,  consultations  were  carried 
out  with  stakeholders  and  with  Member  States,  focusing  on  the  expansion  of  the  scope  and  the 
selection of new policy areas  and indicators. As to the  IT system, a new system is being upgraded, 
which  would  address  the  policy  and  user  needs.  The  database  and  data  visualisation  tool  enables 
users, for their own research and policy needs, to access the wealth of data and to compare thematic 
datasets and performances across time and Member States121. 

1. 

Increasing knowledge and awareness of Single Market rules 

A first series of actions of the Single Market Action Plan aims to increase knowledge and awareness 
of  Single  Market  rules  among  national  authorities  and  courts  as  well  as  citizens  and  businesses.  
Firstly,  guidance  helps to improve  the  application and enforcement  of EU principles and rules. The 
Commission, therefore, adopted a number of guidance documents to increase knowledge of Single 
Market rules. In the area of goods, the Guidance on the application of Regulation (EU) 2019/515 of 
the European Parliament and of the Council of 19 March 2019 on the mutual recognition of goods 

120 https://ec.europa.eu/internal_market/scoreboard/_docs/2020/survey/final-report_en.pdf  
121 https://ec.europa.eu/internal_market/scoreboard/ 

43 

 
 
                                                           
lawfully  marketed  in  another  Member  State122  is  to  help  both,  businesses  and  authorities  in  the 
application  of  Regulation  (EU)  2019/515.  The  Commission  presented  and  explained  these  rules  to 
many business associations and maintained close contacts with the national competent authorities 
responsible for the application of this regulation.  

The  Guidance  document  on  Article  4  of  the  Market  Surveillance  Regulation123  sets  out  practical 
guidelines  for  the  implementation  of  Article  4  of  Regulation  2019/1020  that  requires  that  an 
economic  operator  in  the  EU  should  provide  for  certain  product  categories  information  to  and 
cooperate  with  the  market  surveillance  authorities.  This  helps  market  surveillance  authorities  in 
checking  compliance  of  products of manufacturers of  third  countries,  particularly  when  addressing 
online sales.  

Also,  the  Guidance  on  the  application  of  Articles  34-36  TFEU124  includes  the  most  relevant 
jurisprudence  of  the  EU  Court  of  Justice  on  obstacles  such  as  registrations,  certifications, 
authorisations, and other product requirements including selling arrangements. The guidance covers 
identified  obstacles  in  the  main  EU  ecosystems  and  sectors  e.g.  pharma,  veterinary  and  blood 
products,  gas  and  electricity,  construction,  precious  metals,  automobiles  and  car  registrations, 
agricultural  products.  The  Commission  launched  a  broad  consultation  of  interested  parties  on  the 
update of the  Blue Guide on the implementation of EU product rules. The review  of the  updated 
Blue  Guide  is  foreseen  in  2021  and  will  also  include  guidance  on  the  Product  liability  Directive 
85/374/EEC  that  follows  the  work  of  the  Expert  Group  on  liability  and  new  technologies.  By 
absorbing the guidance for Directive 85/374/EEC, the Blue Guide will help enhancing legal clarity on 
liability claims for consumers and producers in the area of new, smart technologies. 

In the area of audiovisual services, two new guidelines were issued by the Commission on the 7th of 
July 2020 under the revised Audiovisual Media Services Directive: one on video sharing platforms125 
clarifying to which extent social media actors will be covered by the new rules, paying due regard to 
the  objectives  of  public  interest  to  be  achieved  by  the  new  rules  and  to  the  right  to  freedom  of 
expression; and the other one on the promotion of European works126, including a methodology for 
the  calculation  of  the  30%  share  of  European  works  in  Video  on  Demand  (VOD)  catalogues  and 
clarifying the definition of low audience and low turnover exemptions.  

Secondly, to improve  access  to information on rules and requirements for users the ‘Your Europe’ 
portal  was  upgraded  in  December  2020,  hence  meeting  the  requirements  of  the  single  digital 
gateway  Regulation[1].  In  line  with  this  regulation  ,  ‘Your  Europe’  is  now  the  hub  to  access 

122 Commission notice-  Guidance document  for the application of Regulation (EU) 2019/515 of the European 
Parliament  and  of  the  Council  of  19  March  2019  on  the  mutual  recognition  of  goods  lawfully  marketed  in 
another Member State and repealing Regulation (EC) No 764/2008 - C(2021) 1455 of 5 March 2021  
123 Commission notice- Guidelines for economic operators and market surveillance authorities on the practical 
implementation of Article 4 of Regulation (EU) 2019/1020 on market surveillance and compliance of products - 
C(2021) 1461 of 5 March 2021  
124 Commission notice - Guide on Articles 34-36 of the Treaty on the Functioning of the European Union (TFEU) 
- C(2021) 1457 of 5 March 2021  
125 Communication from the Commission 2020/C 223/03 
126 Communication from the Commission 2020/C 223/02 
[1] Regulation (EU) 2018/1724. 

44 

 
 
                                                           
information published  on dozens of national websites, and can thus assist citizens and businesses in 
finding and understanding applicable Single Market-related rights and rules both at EU and national 
level, and in receiving assistance where needed. The assistance service finder has been designed to 
direct citizens and businesses to the most appropriate assistance and problem-solving service. As of 
December 2023, citizens and businesses will be able to access cross-border and complete online key 
administrative procedures and access other online procedures which are as yet accessible online for 
national users. Under Article 14 of the Single Digital Gateway Regulation, all Member States need to 
connect, by December 2023, to a European Once-Only-Principle Technical System for the automatic 
exchange of evidence between public authorities in Europe. This exchange of evidence will prevent 
businesses  from  having  to  provide  the  same  documents  repeatedly,  thus  reducing  administrative 
burden  on  businesses.  Member  States  have  started  a  reflection  with  the  Commission  on  how  to 
connect  their  services  to  provide  businesses  with  answers  to  questions  on  several  areas  (e.g. 
taxation, social security, sectoral requirements) through a one-stop-shop. Moreover, it is important 
for the Single Market for goods that businesses, in particular SMEs, can rely on the Product Contact 
Points to obtain reliable and specific information about the applicable law in a given Member State.  

To  counter  systemic  obstacles  in  the  area  of  the  free  movement  of  goods  related  to  a  deficient 
application of the mutual recognition principle, the Commission services have engaged with the EU 
Product  Contact  Points  in  providing  better  and  faster  information  to  businesses  about  mutual 
recognition and the technical rules that apply at national level to non-harmonized products. Product 
Contact Points will also start informing businesses, at their request, on other EU rules on non-food 
products.  The  new  module  of  the  Information  and  Communication  System  on  Market  Surveillance 
(ICSMS) used for the  purposes of mutual recognition has been deployed in stages  since  April  2020 
and  fully  supports  the  enhanced  role  of  the  Product  Contact  Points.  The  Commission  adopted  a 
Commission  implementing  regulation  specifying  the  details  and  functionalities  of  the  ICSMS  to  be 
used for the purposes of Regulation (EU) 2019/515127.  

It is also foreseen that an updated technical environment would be provided for Member States to 
comply  with  the  Professional  Qualifications  Directive  and  the  Proportionality  Test  Directive  by 
integrating the Regulated Professions Database to the Internal Market Information System. 

Thirdly, product sellers on e-commerce platforms must be aware of EU product rules and ensure that 
no  illegal  and  unsafe  products  are  placed  on  the  EU  market.  Since  2018,  eleven  major  online 
marketplaces  already  signed  voluntary  commitments  that  go  beyond  the  EU  legislation,  called 
‘Product Safety Pledges’, to improve the safety of non-food consumer products sold online.  

The  Commission  has  recently  adopted  a  proposal  for  a  Digital  Services  Act,  which  would  set  out 
general obligations for e-commerce platforms concerning illegal content, including unsafe products. 
The Commission is examining whether the revision of the General Product safety Directive planned 
for  the  second  quarter  of  2021  should  further  spell  out  the  specific  product  safety  obligations  for 
online marketplaces.  

127 Commission Implementing Regulation (EU) 2020/1668 of 10 November 2020 ELI: 
http://data.europa.eu/eli/reg_impl/2020/1668/oj 

45 

 
 
                                                           
The protection of rights of EU citizens and businesses is primarily the responsibility of national courts 
in  the  Member  States.  It  is  therefore  important  to  strengthen  the  capacity  of  national  judges  and 
legal practitioners to enable citizens and businesses to assert their Single Market rights effectively. In 
this context, the  Single Market dimension is reflected in the European judicial training strategy for 
2021-2024 adopted on 2 December 2020128. 

Lastly,  the  Network  of  the  First  Instance  public  procurement  Review  Bodies  provides  a  forum  to 
share with Member States and the Commission best practices and contribute to the development of 
the  public  procurement  review  indicators,  a  set of  data  that  helps  Member  States  to  measure  the 
effectiveness of their review systems. The members of the Network also share their knowledge and 
questions  through  the  online  platform  set  up  by  the  Commission’s  services.  To  improve  the 
administrative  capacity of staff working in Central Purchasing Bodies and facilitate SMEs’ access to 
public procurement markets, the Commission funds a high level training programme. In addition to 
the flexibility offered by the new EU’s procurement framework, a study on SMEs’ participation in 
public procurement has been published.129 . The study aims at developing data for policy making and 
at  analysing  ways  in  which  Member  States  may  use  such  flexibility  and  put  in  place  additional 
support  for  SMEs.  Furthermore,  in  mid-2020  a  call  for  proposals  was  launched  to  promote  SME 
participation in public procurement outside the EU. 

2. 

Improving the transposition, implementation and application of EU rules 

The  second  pillar  of  the  Single  Market  Action  Plan  aims  to  remedy  incorrect  transposition, 
implementation and application of EU rules that create barriers and obstacles to the Single Market. 
Therefore,  to  improve  the  overall  timely  and  correct  transposition  of  directives,  a  ‘structured 
dialogue’ with the Member States is in place during the transposition period. For instance, to ensure 
the  correct  implementation  from  the  date  of  application,  the  Commission  services  have  been 
monitoring  the  transposition  process  of  the  European  Electronic  Communication  Code  (EECC)  and 
has been providing Member States with extensive technical guidance and legal assistance, including 
through the Communications Committee. On 4 February 2021 the Commission sent letters of formal 
notice under an empowerment procedure (‘mise en demeure par habilitation’, MDH exercise) to the 
24  Member  States  that  failed  to  notify  or  partially  notified  national  measures  transposing  the 
Directive. The Commission will then carry out its detailed assessment of the Member States’ replies 
and decide on any further action in line with the Treaties. 

 In  addition  to  issuing  the  guidances  on  video  sharing  platforms130  and  on  European  works131 
mentioned  above,  the  Commission  services  supported  Member  States  authorities  in  particular 
through bilateral exchanges and through discussions within the Contact Committee.  

128 COM(2020) 713 final. 
129 https://ec.europa.eu/growth/content/analysis-smes’-participation-public-procurement-and-measures-
support-it_en 

130 Communication from the Commission 2020/C 223/02 

131 Communication from the Commission 2020/C 223/03 

46 

 
 
                                                           
 
 
The implementation of the revised AVMSD is also addressed by the European Regulators Group for 
Audiovisual Media Services (ERGA), which is composed of the media regulators. As regards the Geo-
blocking Regulation132, the Commission services have published in 2018 an extensive Q&A document 
to  facilitate  implementation  by  traders  and  Member  States,  and  regularly  cooperate  with  the 
competent authorities in the context of the CPC network, while in November 2020 the Commission 
adopted  its  first  short-term  review  of  the  Regulation,  reporting  also  on  the  first  year  of 
implementation of the  Regulation and its initial effects133. In a similar vein,  a comprehensive Q&A 
document134  was  published  at  the  time  of  the  adoption  of  the  platforms-to-business  (P2B 
regulation)135  containing  the  first-ever  set  of  rules  creating  a  fair,  transparent  and  predictable 
business environment for smaller businesses and traders on online platforms. These Q&A were later 
updated, and guidelines for ranking transparency136 have been published on 8 December 2020, which 
support  the  adequate  and  effective  enforcement  of  the  ranking  transparency  requirements  in  the 
P2B  Regulation.  The  Commission  services  have  supported  Member  State  authorities,  in  particular 
through bilateral exchanges and discussions within the Contact Committee.  

For  the  copyright  directives,  regular  meetings  of  the  Copyright  Contact  Committee  ensured  a 
coordinated  exchange  of  views  with  Member  States.  The  Commission  completed  extensive 
consultations to gather relevant stakeholders’ views on the main topics related to the application of 
the  new  regime  for  the  use  of  copyright-protected  content  on  online  content  sharing  platforms 
introduced  by  the  Directive  on  Copyright  in  the  Digital  Single  Market137.  Regular  workshops  with 
Member States in the Company Law Expert Group supported the transposition of the 2019 Company 
Law package (Directive 2019/1151 on digital tools in company law and Directive 2019/2121 on cross-
border conversions, mergers and divisions). 

3.  Making the best use of preventive mechanisms 

To help to ensure a level playing field for citizens and businesses in the Single Market, under the third 
pillar  of  the  Action  Plan,  there  a  number  of  actions  designed  to  prevent  national  measures  in 
Member States going against EU law. In the course of 2020, the Commission has moved ahead with 
streamlining  the  operation  of  the  Single  Market  Transparency  directive  (SMTD)138,  and  the 

31 Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing 
unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence 
or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 
2017/2394 and Directive 2009/22/EC.OJ L 60I, 2.3.2018, p. 1. 
133 COM(2020) 766 final and SWD(2020) 294 final, part 1/2.  
134 https://ec.europa.eu/newsroom/dae/document.cfm?doc_id=68300. 
135 Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting 
fairness and transparency for business users of online intermediation services (Text with EEA relevance), OJ L 
186, 11.7.2019, p. 57–79. 
136 Commission Notice Guidelines on ranking transparency pursuant to Regulation (EU) 2019/1150 of the 
European Parliament and of the Council 2020/C 424/01. 
137 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and 
related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC 
138 Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a 
procedure  for  the  provision  of  information  in  the  field  of  technical  regulations  and  of  rules  on  Information 
Society services. 

47 

 
 
                                                           
development  of  its  implementation.  Steps  have  been  taken  to  develop  a  methodology  to  identify 
areas  susceptible  of  increased  regulatory  convergence,  or  harmonisation.  Moreover,  the  strategic 
importance  of  the  SMTD  was  evidenced  during  the  COVID-19  crisis,  when  it  constituted  an  entry 
point  for  urgent  measures  adopted  by  Member  States  to  tackle  the  crisis  aspects,  which  had  an 
impact  on  the  free  movement  of  medical  equipment,  medicinal  products  and  medical  information 
society services. However, not all measures were systematically notified and some were only notified 
after  their  adoption.  Also,  to  prevent  unjustified  barriers  in  the  Single  Market  for  services,  the 
Commission  has  taken  a  number  of  measures  to  improve  compliance  with  the  existing  services 
notification  procedure  established  under  the  Services  Directive  and  to  improve  the  functioning  of 
the existing notification system. It has offered, guidance and training to Member States, provided an 
Information  system  (IMI)  module  used  for 
annual  report, 
implementation of the existing notification mechanism and identified examples of newly introduced 
regulation that Member States failed to notify, thereby ensuring their notification.  

Internal  Market 

improved  the 

4.  Detecting non-compliance inside the Single Market and at the external borders 

The fourth pillar of the Single Market Action Plan aims at preserving the smooth functioning of the 
Single  Market  by  detecting  non-compliance.  To  this  end,  national  authorities  and  the  Commission 
services need to have the appropriate tools such as up to date IT systems. In view of reinforcing and 
rationalising  IT  systems,  the  Commission  services  have  launched  preparatory  work  for  the 
development of the digital interface between national customs systems and the EU Information and 
Communication system for Market Surveillance (ICSMS) via the EU Single Window Environment for 
Customs. This provides for a number of new functionalities and tasks for ICSMS, making it the digital 
backbone of the cooperation between market surveillance and customs authorities.  

To  ensure  that  the  Internal  Market  Information  system  (IMI)  becomes  the  default  tool  for 
administrative  cooperation  within  the  Single  Market,  the  Commission  services  continue  to  identify 
legislation  that  may  require  administrative  cooperation  between  Member  States,  which  could  be 
supported by IMI. Currently IMI supports 17 different Single Market related areas and continues to 
expand to new ones. In 2020, co-legislators adopted the Mobility Package, which foresees the use of 
IMI  regarding  posting  declarations  for  road  transport  operators,  and  thereby  ensuring  better 
enforcement and a digitalised, green solution for cross border procedures. The Commission adopted 
an implementing act139 to use IMI on a pilot basis in the context of the Regulation (EU) 2018/1807 on 
a framework for the free flow of non-personal data in the European Union.  

To improve enforcement in relation to EU agri-food legislation, progress has been made to make full 
use  of  the  information  management  system  for  official  controls  (IMSOC).  To  monitor  Member 
States’ official controls the AROC (Annual Report Official Controls) electronic version of the standard 
model  form  has  been  developed  in  IMSOC  allowing  the  submission  of  Member  States’  annual 
reports.  In  Multi-annual  National  Control  Plans  (MANCPs)  Network  meetings,  the  Commission 
services  engage  with  Member  States  in  discussing,  among  others,  the  use  of  the  pilot  AROC,  the 

139  COMMISSION  IMPLEMENTING  DECISION  (EU)  2020/1669  of  10  November  2020  on  a  pilot  project  to 
implement certain administrative cooperation provisions set out in Regulation (EU) 2018/1807 of the European 
Parliament and of the Council on a framework for the free flow of non-personal data in the European Union by 
means of the Internal Market Information System (OJ L 377, 11.11.2020, p. 10–12 

48 

 
 
                                                           
submission  of  annual  reports  and  the  preparedness  for  the  compulsory  use  of AROC  by  31  August 
2021. The Commission services provide trainings to Member States on how to use AROC (webinars, 
videos, guidance) and helpdesk support.  

To  improve  enforcement  in  relation  to  EU  agri-food  legislation,  the  Commission  and  the  Member 
States together made progress to make full use of the information management system for official 
controls (IMSOC). To monitor Member States’ official controls, the electronic version of the standard 
model  form  for  annual  reports  -  AROC  (Annual  Report  Official  Controls)  -  has  been  developed  in 
IMSOC for the submission of Member States’ annual reports. In Multi-annual National Control Plans 
(MANCPs)  Network  meetings,  the  Commission  engages  with  Member  States  in  discussing,  among 
others, the preparation of the MANCPs, the use of the pilot AROC, the submission of annual reports 
and the preparedness for the compulsory use of AROC by 31 August 2021. The Commission provides 
training to Member States on how to use AROC (webinars, videos, guidance) and helpdesk support.  

To  improve  Member  States  and  Commission  controls  in  the  area of  fraud  in the  agri-food  chain,  a 
project has started in 2020 to collect information on the implementation of the new arrangements 
put in place by Member States concerning controls and other official activities aimed at identifying 
and  following-up  fraudulent  or  deceptive  practices  (as  laid  down  by  Article  9(2) of  Regulation  (EU) 
2017/625140). A strong enforcement of EU law in the agri-food chain is essential to guarantee safe, 
sustainable food and its free movement in the Single Market. To verify that Member States address 
shortcomings  in  the  application  of  EU  law,  a  systematic  follow-up  of  audit  recommendations  is 
ensured,  mainly  through  general  follow-up  audits  (GFAs)  over  a  three-year  cycle,  with  interim 
targeted  reviews.  This  ensures  that  non-compliances  are  handled  in  a  coherent  manner  across 
control areas and across Member States. It also provides an efficient means of identifying horizontal 
and systemic issues, and a platform for bilateral dialogue. The publication of the results in country 
profiles ensures transparency.141 

In  addition,  in  October  2020  work  started  on  the  Impact  Assessment  of  the  review  of  the 
geographical  indications  (GIs)  policy,  including  enforcement  measures,  with  the  publication  of  the 
Inception  Impact  Assessment  on  28  October  2020.  The  on-line  Conference  “Strengthening 
geographical  indications”  on  25-26  November  2020  served  as  the  focal  point  for  stakeholders  to 
make  their  views  known  on  the  reform  process.  The  ‘GIview’  database  was  launched  on  25 
November 2020 providing transparency to enforcement bodies and producer groups responsible for 
each  GI.  ‘GIview’,  like  its  homologue  ‘TMView’,  will  –  when  fully  operational  –  give  GI  producer 
groups  access  to  the  IP  Enforcement  Portal  allowing  for  confidential  communication  between  GI 
producer groups and anti-fraud authorities, customs and police agencies.  

140  
Regulation (EU) 2017/625 of the European Parliament and of the Council of 15 March 2017 on official 
controls and other official activities performed to ensure the application of food and feed law, rules on animal 
health and welfare, plant health and plant protection products, amending Regulations (EC) No 999/2001, (EC) 
No 396/2005, (EC) No 1069/2009, (EC) No 1107/2009, (EU) No 1151/2012, (EU) No 652/2014, (EU) 2016/429 
and (EU) 2016/2031 of the European Parliament  and of the Council, Council Regulations (EC) No 1/2005 and 
(EC) No 1099/2009 and Council Directives 98/58/EC, 1999/74/EC, 2007/43/EC, 2008/119/EC and 2008/120/EC, 
and  repealing  Regulations  (EC)  No  854/2004  and  (EC)  No  882/2004  of  the  European  Parliament  and  of  the 
Council,  Council  Directives  89/608/EEC,  89/662/EEC,  90/425/EEC,  91/496/EEC,  96/23/EC,  96/93/EC  and 
97/78/EC and Council Decision 92/438/EEC (Official Controls Regulation) (OJ L 95, 7.4.2017, p. 1). 
141 The country profiles are published on the European Commission website: https://ec.europa.eu/food/audits-
analysis/country_profiles/index.cfm 

49 

 
 
                                                           
Since the adoption of the New Legislative Framework (NLF) for EU product  legislation, industry and 
products have transformed radically, in particular due to the digital aspects. Hence, the Commission 
services  have  launched  an  evaluation142  of  the  NLF143    to  reassess  not  only  aspects  related  to 
labelling and traceability but also, more generally, whether the NLF continues to be fit for purpose in 
the  current  economic  reality.  Nowadays,  products  are  increasingly  digital  and  being  frequently 
updated or upgraded after they have been put into service. The conformity assessment procedures 
must ensure that products placed on the Single Market are safe and compliant with the applicable 
legislation.  In  addition,  the  recent  COVID-19  crisis  has  put  to  test  the  resilience  of  Union  product 
legislation based on the provisions of the NLF, in particular as to whether they could adequately cope 
with a crisis. The evaluation is a first step towards ensuring that harmonised product legislation is fit, 
and  can  continue  contributing  to  address  possible  obstacles  while  building  a  strong  and  resilient 
Single Market for goods.  

Moreover,  as  announced  in  the  new  EU’s  Cybersecurity  Strategy  from  December  2020,  the 
Commission  will  consider  a  comprehensive  approach,  including  possible  new  horizontal  rules  to 
improve  the  cybersecurity  of  all  connected  products  and  associated  services  placed  on  the  Single 
Market.  To  that  end,  the  Commission  contracted  an  external  study  whose  main  objectives  are  to 
explore the current state of cybersecurity in broad categories of connected products and to identify 
the  reasons  for  lack  of  sufficient  security.  The  study  will  assist  the  Commission  in  analysing  the 
current regulatory landscape with regard to cybersecurity requirements for connected products.   

5.  Strengthening enforcement on the ground 

The  fifth  pillar  of the  Action  Plan  aims  at  strengthening  enforcement. Effective  enforcement of  EU 
product rules, regardless of the origin of the product or the sales channel, requires a well-equipped, 
digitalised, efficient and well-coordinated market surveillance policy. As foreseen in Action 17 of the 
Enforcement Action Plan, the Commission services have worked in close coordination with Member 
States to launch, from January 2021, the  new EU Product Compliance Network. In addition, as set 
out  in  Article  21  of  the  new  Market  Surveillance  Regulation,  the  Commission  could  designate 
European  Union  Testing  Facilities  (EUTFs)  to  complement  and  expand  market  surveillance  testing 
capacity  in  the  EU.  The  Network  will  notably  identify  common  priorities  for  market  surveillance 
activities  and  testing.  It  will  also  propose  their  financing,  based  on  the  budget  available  from  the 
Single  Market  Programme.  In  addition,  as  identified  in  the  Guidelines  to  Member  States  on  the 
recovery and resilience funds144, market surveillance projects can be included as part of the national 
investment  plans  to  reinforce  the  EU  resilience  and  as  cross-border  projects  financed  by  such 
recovery and resilience funds. This will help ensuring a level playing field in the EU and a dynamic and 
competitive EU Single Market with compliant products only. 

142 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12654-Evaluation-of-the-New-
Legislative-Framework-for-EU-legislation-on-industrial-products 
143 with the exception of the provisions of the Regulation (EC) No 765/2008 relating to market surveillance, 
which were already subject to an evaluation (SWD(2017) 469 final). 
144 17.9.2020 SWD(2020) 205 

50 

 
 
                                                           
The  Commission  launched  a  study  to  assess  the  impacts  of  new  technologies  and  digital  supply 
chains on market surveillance. In addition, the Commission continued its financial support to joint 
actions between market surveillance authorities on compliance, safety and horizontal issues. These 
types  of  actions  foster  cooperation,  the  sharing  of  best  practices  and  the  harmonisation  of 
methodologies. The Commission also launched a call for proposals to finance horizontal actions and 
product testing activities. To cope with the impacts of new technologies, a digitisation task force was 
set  up  of  volunteering  authorities  that  will  aim  to  upgrade  current  systems  used  for  market 
surveillance  and  to  anticipate  and  adapt  to  new  technologies  that  affect  market  surveillance 
activities.  

In  parallel,  the  implementation  of  joint  activities  to  promote  compliance  between  market 
surveillance  authorities  and  other  relevant  authorities  or  organisations  representing  economic 
operators or end users is being prepared. To further deepen the cooperation with Member States on 
the  implementation  of  the  new  Market  Surveillance  regulation,  the  Commission  hosted,  together 
with the German Presidency, an online conference looking at how market surveillance will become 
more digital, cooperative and resilient.  

To raise the profile of SOLVIT as an across-the board problem-solving tool for the Single Market, the 
Commission  services  and  Member  States  authorities  continue  to  strengthen  the  collaboration 
between SOLVIT  and different  bodies  and networks at  national and EU level,  for example by being 
part of the assistance service finder of the single digital gateway and reinforcing cooperation with the 
Enterprise Europe Network and Product Contact Points. SOLVIT will continue to raise  awareness of 
the new SOLVIT Mutual Recognition problem solving procedure, which is operational from the date 
of  entry  into  application of  Regulation  2019/515145  on  19  April  2020.  The  Commission  services will 
continue to explore the use of the SOLVIT model to meet the requirements of new initiatives. 

6. 

Improving handling of infringement cases 

In  its  last  pillar,  the  Action  Plan  aims  to  better  prioritise  enforcement  action.  The  “Single  Market 
Economy  Report  2021”  integrates  the  single  market  Enforcement  Strategic  Report  referred  to  in 
action 19 of the  Action Plan. SMET identified, as work that it should focus on, the abolition of the 
remaining  COVID-19  related  barriers,  a  number  of  priority  obstacles  to  national  enforcement  and 
implementation issues as well as the reinforcement of the Single Market to support the recovery.  

Specific actions aim to improve the handling of infringement cases. As a rule, complaints addressed 
to  the  Commission  that  are  better  fit  for  SOLVIT  will  be  referred  to  SOLVIT.  Conversely,  the 
Commission  will  continue  to  identify  structural  issues  detected  through  the  SOLVIT  application, 
which could potentially be better addressed through infringement procedures through a streamlined 
process within the Commission.  

In order to better target and structure the EU Pilot system as a rapid and effective tool supporting 
the  solution-oriented  dialogue  with  the  Member  States  at  the  pre-infringement  stage,  the 

145 Regulation (EU) 2019/515 of the European Parliament and of the Council of 19 March 2019 on the mutual 
recognition of goods lawfully marketed in another Member State and repealing Regulation (EC) No 764/2008 

51 

 
 
                                                           
Commission issued new  EU Pilot  guidelines  in July  2020.146  The new guidelines  are to ensure  more 
clarity, consistency and flexibility in the dialogue between Commission services and Member States. 
The  new  EU Pilot  guidelines  were  presented to  the Member  States’  representatives  in  the  EU  Law 
Network in December 2020.  

To  complement  the  formal  exchanges  in  infringement  procedures  with  direct  contacts,  the 
Commission services have started in July 2020 to organise package meetings with individual Member 
States  dedicated  to  specific  policy  areas.  Package  meetings  on  infringement  cases  and  other 
horizontal  enforcement  issues,  both  at  technical  and  political  level,  will  continue  to  be  scheduled 
with all Member States in 2021. 

146 EU Pilot: Guidelines for the Commission services (July 2020). 

52 

 
 
                                                           
Stocktaking of the implementation of the 2020 Single Market Enforcement Action Plan 

Colour-coding 

Implemented / launched before May 2021 

In the Commission Work Programme 2021; implementation as of 2021 

Scheduled for later implementation 

Action 

State of implementation 

Establishment of the Single Market Programme 

Single Market Barriers Report  

Single Market Enforcement Action Plan  

Action 1. Provide more specific guidance tools for 
national authorities 

 Adopted by co-legislators in 2020 
 Adopted 10 March 2020 
 Adopted 10 March 2020 
  Guidelines  on  the  practical  application  of the  essential  functionality  criterion of  the  definition of  a 
‘video-sharing platform service’ under the Audiovisual Media Services Directive 2020/C 223/02 
  Guidelines pursuant to Article 13(7) of the Audiovisual Media Services Directive on the calculation of 
the share of European works in on-demand catalogues and on the definition of low audience and low 
turnover 2020/C 223/03  

  Guidance document on Article 4 of the Market Surveillance Regulation 
  Guidance on the Regulation on the principle of Mutual Recognition 
  Guidance on the application of Articles 34-36 TFEU  
  Blue Guide on the implementation of EU for harmonised product rules 
  Guidance on strategic (social, innovation, green) and other aspects (collusion) of public procurement 

and proposing a Recommendation on Review systems  

  Practical application of the new media literacy obligations of the AVMSD (media literacy toolbox and 

guidelines to Member States) 

  Guidance on Article 17 of the Copyright Directive 
 Support to the transposition of the European Accessibility Act  
 Setting up platforms for exchange with Member States such as the one used for Public Procurement 

53 

 
 
 
 
 
 
 
Action 2. Improving access to information on rules and 
requirements for users 

Action 3. Online platforms facilitating compliance of 
products 

Action 4. Training and exchange of practices for 
national judges and practitioners 

Action 5. Capacity building for national public 
administrations 

Directives 

 Setting up a central information point on practical questions that civil servants in Member States have 

in their daily work applying single market law 

 Your Europe Portal became the interface of the Single Digital Gateway on 12 December 2020 and now 
provides not only information on EU rules and requirements, but also on national ones, both in English 
and the relevant national language 

 New  module  of  Information  and  Communication  System  on  Market  Surveillance  (ICSMS)  deployed 

since April 2020 

 The EU Product Contact Points are empowered by the "Goods Package" to provide better and faster 

information to businesses about the rules that apply to their products 

 Horizontal measures to improve compliance of products sold via online platforms have been included 

in the Commission’s proposal for the Digital Services Act  

 Revision  of  the  General  Product  Safety  Directive  scheduled  for  Q2  2021  aims  to  improve  product 

safety, including in online sales.  

 New EU database on medical devices (EUDAMED) currently under development  
 European judicial training strategy for 2021-2024 adopted and European Training Platform147 launched 

in December 2020. Other actions ongoing. 

 Conference of stakeholders on European judicial training due for May 2021 
 Ongoing. 

Action 6. Building capacity of public procurement 
professionals and strengthening the cooperation 
between national bodies 
Action 7. Structured dialogue for better transposition 
of Single Market Directives 

 EU Product Compliance Network will propose the financing of the activities set out in Article 36 of the 

Market Surveillance Regulation 2019/1020 later in 2021 

 Regular meetings of the Network of First Instance Review Bodies on Public Procurement 
 High-level training programme in 2021 to improve administrative capacity of Central Purchasing Bodies 

 Ongoing monitoring of transposition of the European Electronic Communication Code (EECC) through 

the Communications Committee  

147  https://e-justice.europa.eu/content_european_training_platform-37158-en.do  

54 

 
 
                                                           
 Regular meetings of the Contact Committee on the Audio-Visual Media Services Directive 
 Ongoing cooperation of media regulators within the Regulators Group for Audiovisual Media Services 

with voluntary cooperation mechanism put in place at the end of 2020 

 Regular meetings of the Copyright Contact Committee  
 In 2020, the Commission revamped its IT monitoring system on transposition.   
 Regular workshops with national authorities in the Company Law Expert Group (CLEG) to support the 
transposition  of  the  Directive  on  digital  tools  in  company  law  (2019/1151)  and  of  the  Directive  on 
cross-border conversions, mergers and divisions (2019/2121),  Capital Requirements Directive (CRD V) 
(2019/878/EU),  Bank  Recovery  and  Resolution  Directive  (BRRD  II)  (2019/879/EU),  Investment  Firms 
Directive ( 2019/2034/EU) and Covered Bonds Directive (2019/2162/EU)   

 Workshop on the implementation of the EECC due later in 2021 
Ongoing 

Guidance document on Proportionality Test Directive to be adopted later in 2021 

Ongoing 

Ongoing  including  upgrade  of  the  IMI  module  used  for  services  notifications,  guidance  and  training 
provided  to  Member  States,  a  detailed  annual  report  on  the  implementation  of  the  procedure  and 
awareness raising  
Ongoing 

Ongoing  

Action 8. Implementation partnership for Single 
Market Regulations 
Action 9. Improving ex-ante assessment of restrictive 
regulation under the Proportionality Test Directive 
Action 10. Streamlining the operation of the Single 
Market Transparency Directive (SMTD) 
Action 11. Preventing new barriers to providing 
services in the Single Market 

Action 12. Unlocking the full potential of the 
notification mechanism under the e-commerce 
Directive 
Action 13. Rationalising Single Market IT systems and 
setting-up a platform for online enforcement (e-
enforcement lab) 

55 

 
 
Action 14. Strengthening the fight against counterfeit 
and illegal products 

Action 15. Strengthening enforcement in the agri-food 
chain 

  New  interface  for  submission  of  posting  declarations  in  Road  Transport  sector  &  information 

exchange to enforce posting rules in 2022 
Interconnection of ICSMS and Safety Gate/RAPEX to become operational by 2025 

 

Integration of the Regulated Professions Database in IMI in 2021  

 
  Development  of  the  “Annual  Report  Official  Controls”  (AROC)  and  an  electronic  version  of  the 
standard  model  form  in  IMSOC  for  the  submission  of  MS  annual  reports  with  compulsory  use  of 
AROC from 31 August 2021.  

  Commission Notice on a guidance document on how to fill in the standard model form in the Annex 
to Commission Implementing Regulation (EU) 2019/723 published on 1 March 2021 (2021/C 71/01) 
 EU  E-Lab  project  to  establish  a  platform  with  common  e-tools  that  authorities  can  use  to  carry  out 

online investigations in relation to consumer rights and to product safety by end 2021.  

  Contribution to the EU Toolbox against counterfeiting  
  Cases against imports of illicit medical equipment   
     Pilot cases against food fraud   
  Project  to verify  the  implementation of  the  new  arrangements  by  Member  States  on  controls  and 
other  official  activities  aimed  at  identifying  and  following-up  fraudulent  or  deceptive  practices 
ongoing. Two pilot missions and eight audits have been planned for the period 2020-2022. 

 Systematic follow-up of audit recommendations to ensure that Member States implement the actions 
necessary to correct identified shortcomings by the competent services (continuous)  General Follow-
up Audits (GFAs) on 8 Member States carried out in 2020 and further GFAs are planned for 2021.  

 Continuation of “Better Training for Safer Food” training programme 
 Ongoing work on monitoring implementation of Multi-Annual National Control Plan (MANCP) and the 

review of obligations on Member States and new requirements for MS annual reports 

 Commission Notice on a guidance document on the implementation of the requirements for the multi-

annual national control plans issued 2021. 

 Regular meetings of the National Audit Systems (NAS) network. 
 Inception  Impact  Assessment  on  the  review  of  the  Geographical  Indications  (GIs)  published  on  28 

October 2020. GIview database launched on 25 November 2020  

Action 16. Development of labelling and traceability 
systems 

 Evaluation of the need to update the digital labelling and traceability requirements started in 2020  
 New customs equipment capable of reading and checking the encoded information will be developed 

56 

 
 
Action 17. EU Product Compliance Network 

Action 18. Making SOLVIT the default tool for Single 
Market dispute resolution 

Action 19. Better prioritisation of enforcement action 

as part of the Integrated Border Management Fund 2021-2027 

 The Commission will seek the digital submission of compliance information for industrial and consumer 

products  

 External study on cybersecurity of connected products in the Single Market launched in August 2020  
 Dedicated  module  for  the  identification  and  traceability  of  medical  devices  via  Unique  Device 

Identification (UDI) to be released for voluntary use in 2021 

 Operational in January 2021 
 SOLVIT will provide training to ELA staff 
 The Mutual Recognition problem solving procedure became operational on 19 April 2020 
  SOLVIT will consider future cooperation arrangements with the European Labour Authority (ELA) on 

practical aspects of its work and consideration will be given to a specific MoU on mediation 

 SOLVIT will be considered as part of a problem solving initiative in the area of protection of investment 
 SOLVIT will continue cooperation with the VAT Forum in addressing problems in the area of VAT double 

taxation 

 Addressed by this report.   
 Continued quarterly reports about structural issues detected through the SOLVIT application.  
 The system for submitting complaints is being revised to better integrate it with SOLVIT 

Action 20. Clarity and consistency in case handling 

  The  Commission’s  complaint  handling  system  was  adjusted  to  reflect  the  new  requirements  on 

Action 21. Better use of the EU Pilot system 

Action 22. Systematic periodic package meetings 

Setting up a Single Market Enforcement Task-Force 
(SMET), composed of Member States and the 
Commission. (GROW/SMP) 
Cooperation network between national enforcement 
coordinators 
Single Market Scoreboard 

preliminary assessment of complaints, and internal guidance was issued in January 2021.  

 

In  order  to  better  target  and  structure  the  EU  Pilot  system  as  a  rapid  and  effective  tool,  the 
Commission issued new EU Pilot guidelines on 30 July 2020.  

 Started in July 2020 and to continue in 2021.  
 Ongoing: Inaugural meeting took place on 7 April 2020  

 First meeting took place on 24 November 2020. 

 Being  updated  to  better  reflect  the  needs  of  end  users  in  the  Single  Market  and  to  support  the  EU 

57 

 
 
 
 
Semester 

58 

 
 
 
 
 
 
Annex 2 
Overview of the implementation of the 2020 Industrial Policy Package 

59 

 
 
 
 
 
Stocktaking of the implementation of the 2020 Industrial Strategy 

Colour-coding 

Implemented / launched until May 2021 

In the Commission Work Programme 2021; implementation as of 2021 

Scheduled for later implementation 

Creating certainty for industry: A deeper and more digital single market 

Single Market Enforcement Action Plan and Single Market Barriers Report  
Setting up a Single Market Enforcement Task-Force, composed of Member States 
and the Commission.   
SME Strategy for a sustainable and digital Europe  
Ongoing review of competition rules, including the evaluation of merger control 
and the fitness check of State aid guidelines.   

Intellectual Property Action Plan to assess the need to upgrade the legal 
framework, ensure a smart use of IP, better fight IP theft.   
Follow-up to the European Data Strategy to develop an EU data economy, 
including the launch of common European data spaces in specific sectors and 
value chains.  

State aid fitness check completed 
Evaluation of merger control published 
Review of competition rules ongoing, including the evaluation of State 
aid guidelines, the evaluation of the market definition notice, the 
review of the Horizontal and Vertical Block Exemption Regulations and 
their guidelines and the simplification of merger procedures 

Regulation on European Data Governance  

Specific data spaces have different timelines. Most of them are 
scheduled to be launched in 2021 (e.g. manufacturing and health data 

60 

 
 
 
 
 
 
 
 
 
 
 
spaces) 

Digital Services Act to update and strengthen the legal framework for a single 
market in digital services.   

Initiative on improving the working conditions for platform workers  

White paper on an instrument on foreign subsidies by mid-2020, also looking at 
foreign access to public procurement and EU funding.   

Upholding a global level playing field 

Follow-up to the white paper in  2021 

Action plan on the Customs Union in 2020 to reinforce customs controls, 
including a legislative proposal for an EU Single Window Environment for 
Customs to allow for fully digital clearance processes at the border.  
Swift adoption of the International Procurement Instrument.   
Strengthening the global rules on industrial subsidies in the World Trade 
Organization.   

Action Plan published  
Proposal for an EU Single Window Environment for Customs adopted  

 Pending148 
Annex to the Trade Policy Review Communication on reforming the 
WTO 

Supporting industry towards climate neutrality 

Strategy for smart sector integration.   
A Common European Energy data space will exploit the potential of data to 
enhance the innovative capacity of the energy sector.   
Launch the Just Transition Platform to offer technical and advisory support for 
carbon-intensive regions and industries.  

Ongoing 

148 Pending adoption by EP and Council 

61 

 
 
 
 
 
 
 
                                                           
Chemicals Strategy for Sustainability  
Review of the Trans-European Network Energy regulation.   
EU Strategy on Offshore Renewable Energy.   
EU Strategy on Clean Steel  

Comprehensive Strategy for Sustainable and Smart Mobility.   

‘Renovation Wave’ Initiative and Strategy on the built environment.  
Carbon Border Adjustment Mechanism to reduce carbon leakage, in full 
compatibility with WTO rules  

Funding proposal for Clean Steel Partnership presented in the context 
of Horizon Europe 

Building a more circular economy 

Circular Economy Action Plan adopted in parallel with this strategy, including a 
new sustainable product policy framework.  

Sustainable product policy framework to be adopted in 2021 including: 

• 
• 
• 
• 
• 

Empowering consumers for the green transition  
Substantiation of green claims  
Sustainable Products Initiative  
Circular electronics initiative (non-legislative) 
New design requirements and consumer rights for 
electronics  

New Regulatory Framework for Sustainable Batteries  
EU Strategy for Textiles.   

Embedding a spirit of industrial innovation 

Communication on the Future of Research and Innovation and the European 
Research Area to map out a new approach to innovation and ensure the EU 
budget is used with maximum impact.  
Launch Public Private Partnerships in the Horizon Europe programme )  

Single Basic Act for proposed institutionalised partnerships (Joint 
undertakings) and art 185 (public-public partnerships) adopted  

62 

 
 
 
 
 
 
 
  
 
 
  
 
 
 
Non-institutionalised partnerships to be launched  

Skilling and reskilling 

The Commission will update the Skills Agenda for Europe, including a Pact for 
Skills, and will propose a Council Recommendation aimed at modernising 
vocational education and training  
Launch of a European Pact for Skills.  
Communication on achieving a European Education Area by 2025.   
New Digital Education Action Plan (2021-2027).   
Implementation of the EU Gender Equality Strategy 2020-2025, adopted in 
March 2020.  

Ongoing  

Investing and financing the transition 

Work with Parliament and Council to ensure rapid adoption and implementation 
of the next long-term budget.   
Consider scope for coordinated investment by Member States and industry in 
the form of new IPCEIs and on the possible follow-up to the first IPCEIs on 
batteries and microelectronics.   
Review State aid rules for IPCEIs.  

Ongoing for microelectronics. 
Second IPCEI for batteries launched  

Review ongoing - Communication on Important Projects of Common 
European Interest  

Action Plan on the Capital Markets Union in 2020, including measures in support 
of integrated capital markets and more funding opportunities for citizens and 
businesses.  
A renewed sustainable finance strategy.   
A new Digital Finance Strategy.   

A new EU pharmaceutical strategy in 2020, including actions to secure supplies 
and ensure innovation for patients.  

Reinforcing Europe’s industrial and strategic autonomy 

63 

 
 
 
 
 
 
 
 
 
 
 
 
An Action Plan on Critical Raw Materials, including efforts to broaden 
international partnerships on access to raw materials.  
Follow-up to the 5G Communication and the Recommendation on cybersecurity 
of 5G networks.    

Ongoing  

Report on Member States’ Progress in Implementing the EU Toolbox on 
5G Cybersecurity  

Report on the impact of the Commission Recommendation of 26 March 
2019 on the Cybersecurity of 5G Networks published  

The Cybersecurity Strategy for the Digital Decade of December 2020 
contains an appendix with a list of actions and objectives for the next 
steps in the EU coordinated approach on 5G cybersecurity  

Action Plan on synergies between civil, defence and space industries, including at 
the level of programmes, technologies, innovation and start-ups.  

A partnership approach to governance 

Building on the successful template of industrial alliances, a new European Clean 
Hydrogen Alliance will be launched.  
Alliance on low-carbon industries  
Alliance on raw materials  
Industrial European Alliance for Industrial  Data, Edge and Cloud  

The Commission will undertake a thorough screening and analysis of industrial 
needs and identify ecosystems needing a tailor-made approach.   
An inclusive and open Industrial Forum will be setup by September 2020 to 
support this work  
The Commission’s annual Industry Days will continue to be an important event 
to bring all players together.   

European Raw Materials Alliance  

64 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
65 

 
 
 
 
Stocktaking of the implementation of the 2020 SME Strategy 

Colour-coding 

Implemented / launched before May 2021 

In the Commission Work Programme 2021; implementation as of 2021 

Scheduled for later implementation 

Action 

State of implementation 

Capacity building and support for the transition to sustainability and digitalisation 

The Commission will enhance and upgrade the Enterprise 
Europe Network including with dedicated Sustainability 
Advisors and other sustainability services  

Ongoing  

The Commission will develop Digital Crash Courses for SME 
employees to become proficient in areas like AI, cybersecurity 
or blockchain  

The Commission will launch a “digital volunteers” programme 
to allow young skilled people and experienced seniors to share 
their digital competence with traditional businesses .  

The Commission will update the Skills Agenda for Europe, 
including a Pact for Skills with a dedicated component for 
SMEs, and will propose a Council Recommendation aimed at 
modernising vocational education and training. 
The Commission will expand Digital Innovation Hubs in 
connection with Startup Europe and the EEN and provide a 

 Work being finalised 

First grants to be signed in 2021. 

66 

 
 
 
 
 
 
 
 
 
seamless service within local and regional ecosystems.  

The Commission will allocate at least EUR 300 million to 
encourage breakthrough Green Deal innovations under the 
EIC.  

For the SMEs which focus their activities on short-term 
accommodation rental services, the Commission will continue 
to explore a possible collaborative economy initiative. 

On course for implementation in 2021. 

Reducing regulatory burden and improving market access 

The EU SME Envoy and the network of national SME Envoys 
will contribute to the work of the Commission’s Single Market 
Enforcement Task Force, to address among others gold-plating 
in the transposition process with a view to keep the regulatory 
burden on SMEs to a minimum. 

The Commission will encourage Member States to implement 
the Single Digital Gateway in a business friendly way. Member 
States should link their services in a one-stop-shop. 

The EU SME Envoy will filter EU initiatives to signal to the 
Commission those that merit close attention from an SME 
perspective and have a specific role in the new Fit for Future 
Platform. 

The EU will launch an EU Start-up Nations Standard to share 
and adopt best policy practices for the growth of European 
start-ups. 

The Commission calls on Member States and their contracting 
authorities to use the flexibility offered by the EU’s new 
procurement framework to enhance opportunities for SMEs 
including through the use of digital tools and platforms to step 

 SMET has started its work and the SME Envoy network is involved. 

 Ongoing 

 Ongoing 

The European Startup Nations Standard was launched through a joint 
declaration in March 2021.  

 Ongoing. Ongoing 

67 

 
 
 
 
up cross-border procurement. The Commission will issue 
guidance and support to contracting authorities. 

The Commission will encourage Member States to develop 
proposals for regulatory sandboxes by launching a pilot.  

The Commission will launch a call for pioneer partnerships 
among border regions to enhance regional cooperation in 
enforcing the Single Market and removal of administrative 
barriers. 

Pilot to be set up later in 2021.   

Assessment of proposals ongoing 

The Commission will support the Member States in enforcing 
the Late Payment Directive by setting up monitoring and 
better enforcement tools and exploring the feasibility of 
alternative resolution/mediation mechanisms for SMEs. 

Ongoing 

The Commission will facilitate cross border cooperation with 
and among SMEs under the European Defence Fund and map 
strengths in its research and innovation eco-system.   

European Defence Fund-related actions will be deployed over 2021-2027. 

The Commission will launch a Space Entrepreneurship 
Initiative ‘CASSINI’.   

To be launched in 2021. 

The Commission will support Member States in transposing 
the recently adopted Directive on preventive restructuring 
frameworks and second chance, by helping them set up early 
warning mechanisms for companies in financial difficulties to 
avoid bankruptcy. 

The Commission will explore with Member States measures to 
create a supportive environment for transfer of SMEs. 

Ongoing. 

Commission project on improving the evidence base  and data collection 
methods on business transfers across the EU completed  in December 2020. 
Further work ongoing. 

68 

 
 
 
The Commission will continue to enhance SME access to third 
country markets including through dedicated SME chapters, 
use of dialogues to exchange good practices with trade 
partners and a new information portal (GROW).  The 
Commission will facilitate SME access to trade defence 
instruments. 

Free Trade Agreement (FTA) negotiations including SME chapters are ongoing 
with several third countries.  

The new ‘Access2Markets’ (A2M) information portal was launched in 2020 

EU Delegations will provide support by addressing queries of 
SMEs linked to the FTAs. 

 Ongoing. 

The Commission will extend the Erasmus for Young 
Entrepreneurs Global scheme. 

Preparatory Action started in March 2021. 

The Commission will support Initial Public Offerings (IPOs) of 
SMEs with investments channelled through a new private-
public fund, to be developed under the InvestEU programme 
starting 2021 under the Capital Markets Union. 

2021 

Improving access to financing 

The Commission will introduce a first of a kind risk/reward 
mechanism to boost the size of venture capital funds and 
crowd in private investments for scaling up through the 
ESCALAR initiative. 

Call with financial intermediaries published in April 2020. Projects are in the 
process of being signed. 

The Commission will launch a gender-smart finance initiative 
to stimulate funding for women-led companies and funds and 
to empower female entrepreneurship. 

2021 

The Commission will launch a green tech investment initiative 
to pool funding from the EU, Member States and the private 
sector to increase the access to equity finance for innovative 
SMEs and start-ups that develop and adopt green tech 

A market assessment is being launched. 

69 

 
 
solutions.  

The Commission will launch a blockchain-based initiative 
enabling issuance and trading of SME bonds across Europe, 
using the European Blockchain Services Infrastructure.  

Initiative launched in Q4 2020. 

The Commission will co-fund tech due diligence services under 
an EU pilot project to enable more precise valuations high 
tech start-ups and prepare their investment readiness.  

2021.  

The Commission will further simplify the existing state aid 
rules on combinations of national funds with InvestEU and 
Horizon funds, making it easier for SMEs to benefit from 
pooled resources to help them with the twin transitions. The 
Commission will also revise state aid rules for risk finance and 
the IPCEI communication, to further support SME 
involvement, ensure crowding-in of private investment while 
avoiding distortions of the level playing field. 

Ongoing with view to completion by end 2021 

The Commission will appoint a high level EU SME Envoy. 

The nomination process of the EU SME Envoy is ongoing. 

Governance: an EU-Member State partnership for delivery 

The Commission will reinforce the SME Envoys Network to 
strengthen the link between the EU and national level on SME 
policy. 

Ongoing. 

The Commission will launch a group of Strategic 
Entrepreneurship Ambassadors (GROW). 

Progressively from 2021. 

The EU SME Envoy will raise awareness on SME-related 
aspects in a regular dialogue with the Regulatory Scrutiny 
Board. 

Ongoing. 

70 

 
 
 
 
Annex 3: 14 industrial ecosystem fiches  

Industrial  ecosystems  encompass  all  players  involved  in  the  achievement  of  a  certain  socio-
economic goal: from the smallest start-ups and the largest companies cooperating to satisfy a new 
market  need,  the  research  activities  supporting  industrial  innovation,  the  regulators  steering 
economic activity through conducive policies, to the services providers and suppliers. 

As  presented  in  the  March  2020  Industrial  Strategy149,  this  approach  incorporates  the  systemic 
importance  of  all  the  horizontal  and  vertical  links  among  economic  actors.  It  recognises  the 
importance  of  those  activities  often  considered  as  ancillary  to  industry,  such  as  supply  of  raw 
material,  research  and  innovation,  the  provision  of  business  services,  or  access  to  distribution 
networks.  While  each  ecosystem  has  its  own  characteristics,  they  all  evolve  against  the  same 
background: an integrated Single Market. The ecosystem lens enables a bottom-up analysis of, and 
exchange on, the opportunities and challenges in the EU economy as the EU embarks on the twin 
green and digital transition, as well as on boosting its resilience. 

The  diverging  impact  of  the  COVID-19  crisis  across  the  European  economy,  and  the  disruptions 
experienced in spring 2020, confirmed the need for an ecosystem approach150. Further, it is also the 
approach followed to implement the Pact for Skills.  

So  far,  14  industrial  ecosystems  spanning  across  the  EU  have  been  identified  based  on  their 
economic and technological relevance, and for their expected contribution to the decarbonisation, 
digitalisation  and  resilience  of  the  EU  economy.  They  represent  approximately  70%  of  the  EU 
economy and 80% of the business economy (as a share of value added).  

These 14 industrial ecosystems are:  

1.  Aerospace and Defence 
2.  Agri-food 
3.  Construction 
4.  Cultural and Creative Industries 
5.  Digital 
6.  Electronics 
7.  Energy Intensive Industries 
8.  Energy-Renewables 
9.  Health 
10. Mobility-Transport-Automotive 
11. Proximity, Social Economy and Civil Security 
12. Retail  
13. Textiles  
14. Tourism 

149 A New Industrial Strategy for Europe, COM/2020/102 final 
150 Europe’s moment: Repair and Prepare for the Next Generation, COM(2020) 456 final and accompanying 
SWD(2020) 98 final 

71 

 
 
 
                                                           
The  boundaries  and  scope  of  the  ecosystems  are  dynamic.  For  each  ecosystem,  the  Commission 
has  identified  core  activities,  i.e.  those  that more  than  the  others  characterise  each  ecosystem151. 
These  activities  have  been  mapped  into  a  widely  used  statistical  classification  (NACE).  While  the 
match between the sectors as per NACE classification and the concept of ecosystem is not perfect 
and requires some approximation, the mapping allows for a good representation of the ecosystems. 

Ecosystems are also linked to each other. For instance, the Retail ecosystem provides (downstream) 
services to virtually all other ecosystems. Similarly, the Energy Intensive Industry ecosystem supplies 
inputs to many other ecosystems. Moreover, ecosystems overlap with each other, as some activities 
are  relevant  for  more  than  one.  For  instance,  several  professional  services  are  used  by  all 
ecosystems. In other cases, e.g. for industries providing products and services for a safer and more 
secure society, these are captured in more than one ecosystem. Similarly, activities related to waste 
management,  which  are  so  important  for  the  circular  economy,  are  instrumental  for  the  green 
transition  of  all  ecosystems.  A  share  of  these  ‘horizontal’  activities  is  attributed  to  all  ecosystems 
based on their specific contribution to the core activities of the ecosystems (see Annex 4 for detailed 
methodology). 

This  annex  presents,  for  each  ecosystem,  an  assessment  of  the  relevance  and  contribution  of  the 
industrial policy toolkit from the perspective of the different ecosystems. The individual Ecosystem 
Fiches zoom into the specificities of each industrial ecosystem. The fiches are structured as follows: 

  Transformative  initiatives:  these  are  the  main  areas  for  action  expected  to  have  a  major 
impact  on  the  sustainability,  digitalisation  and  resilience  of  the  ecosystem.  Ongoing  or 
announced  actions 
in  recent  Commission 
Communications are highlighted. 

in  the  accompanying  Communication  or 

  Towards an EU policy toolbox fit for purpose: a short description of 3-5 of the most relevant 
ecosystem-specific actions/tools which complement the transformative initiatives above. 
  The ecosystem at a glance: this section describes the ecosystem and its main components, 
the cyclical and structural trends affecting the performance of each ecosystem, its position 
in  the  global  context,  and provides  a  forward-looking  assessment of  the  key opportunities 
and challenges faced by the ecosystem. 

  Mapping policy tools in more detail. The last section provides a synthetic description of how 
policy  tools  contribute  to  the  objectives  of  the  ecosystem,  highlighting  examples  of  good 
practice and opportunities offered by these tools. The overview of the tools and instruments 
highlighted  in  each  ecosystem  fiche  is  not  exhaustive,  but  focuses  on  the  most  important 
levers for change.  

The  Single  Market  is  the  common  background  of  all  ecosystems,  thanks  to  which  research, 
engineering, production, assembly and service activities can support and integrate each other across 
borders in a flexible and dynamic manner. An open, integrated and undistorted Single Market is a 
driver for improving the competitiveness of EU businesses. EU competition policy has an important 
role  to  play,  given  its  main  objective  of  preventing  and  removing  distortions  of  competition  by 
ensuring  a  strict  enforcement  of  antitrust,  mergers  and  State  aid  rules.  Competition  policy  is 
horizontal  in  nature,  cutting  across  economic  sectors  and  industrial  ecosystems.  It  is  therefore 
relevant  in  all  markets  and  for  all  businesses.  Competition  policy  can  contribute  in  many  ways  to 

151 The identification is based on literature review (including studies supported by the Commission) and expert 
judgement. 

72 

 
 
                                                           
creating  conditions  for  achieving  existing  and/or  future  development  goals.  In  a  business 
environment where competition is preserved and promoted, businesses are incentivised to enhance 
their  efficiency,  innovate,  seize  new  opportunities  and  allocate  their  resources  in  a  more  efficient 
way, boosting thus the economy and increasing Europe’s competitiveness on global markets. Finally, 
competition  also  brings  benefits  to  downstream  users  and  consumers,  in  terms  of  lower  prices, 
better quality and more choice. The ongoing review of EU competition rules will ensure that they are 
fit for purpose for an economy that is changing fast, increasingly digital and must become greener 
and more circular.  

Similarly, trade policy also drives the EU’s growth and competitiveness across all ecosystems. The EU 
is an open economy benefiting from vibrant trade and investment links that enhance resilience and 
support  the  recovery  and  the  green  and  digital  transformation  of  the  EU  economy.  Trade  policy 
benefits EU industry, workers  and citizens by providing a stable  rules-based environment, creating 
opportunities,  safeguarding  a  level  playing  field  and  protecting  EU  industry  from  unfair  trade  by 
means of existing rules  (as well as new tools now  being elaborated), promoting EU standards and 
developing frameworks for cooperation and dialogue. The Commission set out the direction for an 
open, sustainable and assertive trade policy in the Trade Policy Review Communication adopted in 
February 2021.  

As such, the industrial policy toolkit highlighted in each fiche is not exhaustive, but focuses on the 
most important levers for change. In cases where certain tools featured in the table below do not 
directly  contribute  to the  main  challenges  of  each  ecosystem, they  have  not  been  included  in  the 
specific fiche. For example, the Proximity, Social Economy and Civil Security; Construction; Cultural 
and  Creative  Industries  ecosystems  do  not  feature  an  assessment  of  the  tools  relating  to 
‘international partnerships and dialogue’.  

The overview of the tools considered for each ecosystem is summarised in the table below. 

Table 1: List of industrial policy tools assessed and other specific tools per ecosystem 

Funding and 
budgetary 
programmes 
Recovery  and  Resilience 
Facility (RRF)  

IPCEIs (where relevant)  

CRII+/ERDF/ESF/CEF  

Supportive regulatory 
environment 

Single 
Surveillance 

Market 

Single  Market 
the 

within 

Main 
barriers 
ecosystem 
Standardisation 

Europe 
European 

Digital transformation 

International 
partnerships and 
dialogue 

Partnerships 
Raw 

Strategic 
(e.g. 
Critical 
Materials input) 
Regulatory 
dialogue/cooperation 

Networks and 
governance 

Industrial Networks  

Clusters cooperation 

Europe 

Enterprise 
Network  
Pact for Skills 

Europe 

eGovernment 

Digital Innovation Hubs 

Horizon 
(including 
Partnerships) 
Digital 
Programme 
InvestEU 

Green Transformation 

Access to finance 

Strategic 

Public 

Thematic Smart 
Specialisation 
Interregional 
Partnerships 

73 

 
 
 
 
 
 
 
 
 
Space  Programme  and 
European Defence Fund 

Procurement 
Intellectual Property  

The Ecosystem Fiches provide a basis for informed and structured dialogue with public institutions 
and stakeholders, to generate a more granular understanding of the complex and interdependent 
economic fabric of the EU. Through a joint effort of evidence-gathering, these fiches can enrich our 
understanding of the current and future determinants of the performance of ecosystems, and of the 
policy  levers  which  can  affect  it.  As  such,  the  ecosystem  fiches  could  contribute  to  transition 
pathways to be co-created for relevant ecosystems.  

74 

 
 
 
 
 
 1. Aerospace and Defence Ecosystem 

3.92 million people employed 
(direct employment) 152  

1.99% of EU value added 
(EUR 241 billion) 

3.2 million firms 
99% of SMEs 

Transformative initiatives  

Strategic dependency risk 
monitoring 
A  systematic  monitoring  of  risks 
strategic 
with 
associated 
dependencies 
products, 
in 
services,  critical  technologies, 
actors and skills in order to take 
targeted  measures  to  deliver  on 
reinforcing 
strategic 
open 
autonomy in the ecosystem. 

Secure space connectivity  

sector 

An EU space flagship153 providing 
secure  space-based  connectivity 
for 
and 
governmental 
commercial 
services, 
including  better  connecting  key 
infrastructure,  support  for  crisis 
management 
external 
actions,  surveillance  and  mass 
market. 

and 

Cassini space entrepreneurship 
initiative 
To  promote  opportunities  for 
business 
via 
start-ups 
incubation,  seed-
acceleration, 
funding  and 
for  SMEs  with 
finance  for  growth  and  pre-
commercial/innovative 
procurement.  

Towards an EU policy toolbox fit for purpose 

European  Space  Programme  and  European 
Defence  Fund  These  provide  opportunities  to  support 
resilience, open strategic autonomy and connectivity, as 
well  as  climate  action,  using  space  infrastructure  and 
services built and operated by EU industry. They include 
foster 
R&D  actions  with  defence  applications  to 
competitiveness,  (disruptive)  innovation,  and  efficiency 
of the European defence industrial base including SME’s 
and  start-ups.  A  stronger  European  defence  industrial 
base and EU as a global space power will contribute to 
an EU with a global impact. 

Pact  for  Skills  The  skills  partnership  under  the 

Pact  is  an  opportunity  to  upskill  and  reskill  EU  workers 
for the high-tech Aerospace and Defence industry of the 
future.  It  supports  high  skilled  jobs  in  a  high-tech 
industrial ecosystem. 

Europe 

Horizon 

(including 

European 
Partnerships) Provides opportunities to accelerate the 
development  of  climate-neutral  aviation  technologies 
and  reduce  EU  strategic  dependencies  in  space  value 
chains;  enhance  the  competitiveness  of  the  EU  space 
sector  in  fostering  innovation  and  new  technologies 
(New  Space,  quantum,  zero  emission  aircraft),  and 
support start-ups (Cassini). R&D partnerships proposed 
under  Horizon  Europe  in  the  domains  of  space,  clean 
aviation  and  integrated  Air  Traffic  Management  will 
play a key role. 

Strategic  Public  Procurement 

It  provides 
opportunities  for  first  contracts,  EU  as  anchor 
customer,  and  procurement  of  innovative  solutions. 
It  supports  a  stronger  home  market  for  space  and 
defence industry.  

Industrial Networks A possible Alliance on Zero Emission Aviation would aim to ensure market readiness 
for disruptive aircraft configurations (hydrogen, electric, etc.) developed by the European industry to green 
air transport and contribute to Europe’s 2050 climate neutrality objective, bringing together all actors necessary to 
solve the bottlenecks and promote the necessary investments. A possible Alliance on Space Launchers would aim to 
ensure a globally competitive, cost-effective and autonomous EU access to space, by establishing a shared roadmap 
for the next generation of European launchers, bringing together the European Space Agency, Member States and 
industry, addressing supply and demand. 

152 Figures for employment and value added are based on Eurostat National Accounts and SME shares on Eurostat Structural Business 
Statistics. 
153 See recent Action Plan on Synergies between Civil, Defence and Space Industries, COM(2021) 70 final 

75 

 
 
 
 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The Aerospace and Defence ecosystem covers manufacturing companies in 
aeronautics, space and defence; space operators and data and service providers; 
research institutes. 
This  ecosystem’s  core  manufacturers  generate  a  turnover  of  EUR  250  billion  (125  for 
aeronautics, 12 for space and 110 for defence)154, with globally competitive companies. 
Its complex supply chains are composed of large system operators and integrators down 
to  high-tech  specialised  SMEs.  In  defence,  and  partly  space,  EU  Member  States  define 
the  needs  and  act  as  the  primary  customers  for  a  wide-range  of  products.  European 
technology institutes and academia play a particularly important role in this ecosystem 
due to its high-tech nature, and act as knowledge transfer channels.  

SME 
dimension  

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy. *Sector only 
partially attributed to the ecosystem; ^Includes additional share added on top of horizontal component; +Excludes 
contribution of C25 and C33. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 
SMEs  and  start-ups  represent  an  important  part  of  the  Aerospace  and  Defence 
ecosystem  since  they  perform  many  niche,  complex  and  innovative  tasks  in  the 
manufacturing  supply  chain.  In  civil  aeronautics,  they  represent  more  than  80%  of  all 
companies,  providing,  amongst  others,  high-tech  material  processing  and  engineering 
services. In addition, SMEs are strongly represented in the downstream space sector and 
New  Space  start-up  companies  are  developing  at  a  fast  pace,  where  innovative 
applications  are  developed.  Defence-related  SMEs  are  also  key  enablers  of  innovation 
and growth of the defence sector as a whole. More than 2,500 SMEs play a central role 
in the complex defence supply chains across Europe.  

Current 
challenges 

The ecosystem faces an unprecedented crisis due to COVID-19, with turnover reduction 
up to EUR 50 billion for aeronautics (40%), EUR 28 billion for defence (25%) and EUR 3 
billion for space (25%)155. Massive job cuts are ongoing (e.g. in civil aeronautics) and will 
continue if no investment perspective is provided. Some companies critical to the supply 
chains may become targets for non-EU takeovers. Air travel may not recover 2019 levels 
before  2024156.  This  may  oblige  industry  to  maintain  reduced  production  rates  of  new 
aircraft in the next decade. This will impact the entire ecosystem, since civil aeronautics 

154 Passenger air transport is not included in this ecosystem, but in Tourism 
155 https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/ITRE/DV/2021/04-13/IPOL_STU2021662903_EN.pdf  
156 International Air Transport Association 

76 

 
 
 
 
  
 
                                                           
Forward-
looking 
assessment 

represents 50% of its turnover. Space and defence will be particularly affected by public 
sector  spending  cuts.  Companies  involved  in  defence  face  an  increasing  problem  of 
access to financing. The full impact of the crisis is expected by industry to come with 2-
4  years  delay,  due  to  a  combination  of  long  lead  times  in  this  industry,  and  the 
dependence  on  public  procurements.  In  addition,  demand  from  export  markets  is 
dramatically  reduced  (among  others  due  to  the  oil  price  fluctuations  and to  increasing 
technology-related disputes between the US and China).  

The  EU  aerospace  and  defence  industry  is  currently  highly  competitive  on the  global 
market, but needs a stronger investment capacity to continue the development of the 
disruptive  technologies  necessary  to  deliver  on  the  green  deal  (in  particular  the 
greening  of  aviation)  and  address  digital  challenges  of  Europe.  It  also  requires  a  less 
fragmented  home  market  in  defence  and  space.  This  industry  supplies  the  EU  with 
crucial  capacities  for  open  strategic  autonomy:  border  surveillance,  secure  diplomatic 
communication,  law  enforcement,  fisheries  control,  climate  variable  monitoring,  smart 
mobility  and  crisis  management  all  depend  on  aerospace  and  defence  technologies. 
Although global markets for aeronautics are expected to grow on the longer term157, it is 
uncertain  if  the  EU  aerospace  and  defence  industry  can  maintain  the  competitive  and 
technological  edge  in  the  next  five  years.  This  is  exacerbated  by  the  expected  loss  of 
skills due to lay-off of personnel in the coming years. 

Global 
context 

Competing industry on other continents benefit from a massive, stable and predictable 
home markets of public procurement, and sponsoring of their national industry. This 
has a distorting effect on the global level playing field. Many foreign markets are largely 
captive markets favouring home industries (e.g. launchers). 

157 www.iata.org/pax-forecast  

77 

 
 
  
 
 
 
 
                                                           
Mapping of policy tools in more detail  

Funding and budgetary programmes 
RRF Depending on national priorities, the RRF can be an important tool for enhancing the resilience of 
EU strategic industrial value chains, as well as their digitalisation. National Recovery and Resilience Plans 
can  support  the  investments  required  to  develop  green  aircraft  technologies.  Member  States  could 
in  their  Recovery  and  Resilience  Plans  commensurate  with  their  country 
include 
recommendations and challenge. 

investments 

CRII+/ERDF/ESF/CEF There is a need to communicate on funding and investments opportunities into 
aerospace and defence industry, for example for smart specialisation. The Connecting Europe Facility can 
finance  (i)  the  uptake  of  space  services  and  applications  relevant  for  energy,  transport,  smart  cities, 
protecting climate and environment; and (ii) the initial phase of the EuroQCI (Quantum Communication 
Infrastructure) system, contributing to the development of the secure connectivity initiative.  

The existing synergies between border management and civil protection and the Aerospace and Defence 
Ecosystem  will  continue  to  increase.  Those  are  EU-level  procurements  of  assets  and  services  (see  also 
section  on  Strategic  Procurement).  There  is  a  need  to  ensure  that  for  security-related  aspects  a 
capability–pull  relationship  is  developed  with  EU  industry,  so  that  EU  standards  can  be  set  and 
maintained. 

Horizon  Europe  (including  European  Partnerships)  Under  Cluster  4  ‘Digital,  Industry  and  Space’, 
topics  on  space  can  contribute  to  reducing  strategic  dependencies  for  strategic  value  chains;  enhance 
the competitiveness of the EU space sector in fostering innovation and new technologies (New Space), 
and support start-ups (Cassini). The climate-neutral aviation objectives in Cluster 5 ‘Climate, Energy and 
Mobility’ will support the development of a next generation of clean aircraft (ultra-high efficient, hybrid-
electric or hydrogen-powered aircraft). This will enable the European aeronautics industry to significantly 
contribute not only to achievement of the European Green Deal objectives but also to the greening of air 
transport worldwide. Institutionalised European Partnerships (e.g. in Clean Aviation, Integrated Air Traffic 
Management  and  Clean  Hydrogen)  will  play  a  prominent  role,  supporting  the  integration  and 
demonstration of disruptive technological innovations. In particular, the Clean Aviation partnership will 
ensure  technological  and  industrial  readiness  of  innovations  to  support  the  launch  of  disruptive  new 
products by 2035. 
Digital  Europe  Programme  The  Digital  Europe  Programme  will  support  the  testing  of  the  interface 
between the EuroQCI space and terrestrial components, including support for the validation of systems 
and components, and test the technology in ground and lower-altitude experiments. This action will also 
benefit  the  secure  connectivity  initiative  as  it  should  also  feature  the  innovative  quantum  technology 
built  through  the  EuroQCI  initiative158,  and  improve  quality  control.  It  will  support  European  Digital 
Innovation Hubs to stimulate SMEs and a broad, EU-wide uptake of space services and applications.  

InvestEU CASSINI Space Entrepreneurship Initiative159 will set up a dedicated space investment facility 
under InvestEU to increase the number of space companies raising VC significantly over the next seven 
years. It will channel investment guarantees via EIF to Europe-based Venture Capital Funds focusing on 

158 https://ec.europa.eu/digital-single-market/en/news/future-quantum-eu-countries-plan-ultra-secure-communication-network  
159 First announced in the EU SME Strategy, see: https://ec.europa.eu/defence-industry-space/eu-space-policy/space-research-and-
innovation/cassini_fr  

78 

 
 
                                                           
space-related investments.  The EIB’s lending policy currently largely precludes the financing of defence-
related and carbon-intensive industries, including aeronautics. Aviation-related activities, defence/dual-
use  and  space  services,  data  and  applications  could  benefit  from  inclusion  under  the  Taxonomy 
Regulation. Adaptation of the EIB lending criteria would be needed to be inclusive for the defence sector 
within  the  limits  of  the  Treaties.  A  joint  SME/RID  equity  product  implemented  by  the  EIF  will  support 
equity funds investing in strategic technologies in the area of space and defence. 
Access  to  Finance  Aerospace  and  defence  industries  face  increasing  difficulty  to  access  public  and 
commercial  loans  as  well  as  venture  capital  investment,  hindering  their  potential  for  innovation, 
scaling-up  and  integration  in  supply  chains.  The  main  problem  is  a  reputational  issue  for  investors, 
though there is an increasing requirement to the transition towards carbon-neutrality. At the same time, 
several  funding  schemes  already  exist  at  the  EU  level  that  can  fund  dual-use  (e.g.  ESIF)  and  defence 
applications  (e.g.  EDF).  The  CASSINI  Space  Entrepreneurship  Initiative  will  improve  access  to  venture 
and growth capital through a dedicated space investment facility under InvestEU, and in addition launch 
matchmaking  activities  with  potential  customers  and  VC  investors.  The  possible  inclusion  of  economic 
activities  related  to  aviation  and  space  –  including  the  construction  and  entry  into  service  of  new 
generation  aircraft  and  space  services,  data  and  applications  –  in  the  EU  Taxonomy  could  benefit  the 
ecosystem. 
EU  Space  Programme  and  European  Defence  Fund  The  EU  space  programme  will  implement  its 
different  space  components  (Galileo,  EGNOS,  Copernicus,  SSA  and  GOVSATCOM)  to  provide  secure 
space-related data, information and services without interruption. It will reinforce the EU supply chain 
autonomy and resilience for the space sector. A new EU flagship for Secure Space Based Connectivity160  
will  be  developed  to  strengthen  EU’s  open  strategic  autonomy,  resilience  and  technological  non-
dependence by (i) providing ubiquitous high speed broadband coverage in Europe, and (ii) secure, cost-
effective,  reliable  connectivity  for  governmental  and  commercial  services  to  address  identified  market 
failures.  The  European  Defence  Fund  will  support  collaborative  defence  R&D  projects  between  legal 
entities to foster the competitiveness, innovative capacity and efficiency of the defence industrial base; 
will open up national defence supply chains and ensure greater involvement of SMEs and start-ups; and 
will fund disruptive technologies.  

Supportive regulatory environment 

Single  Market  Surveillance  The  revised  market  surveillance  regulation  (EU)  2019/1020  will  enable  a 
considerable  improvement  in  efficiency  of  the  market  surveillance  of  online  sales  and  imports  of 
consumer drones. It will contribute to ensure the compliance of consumer drones with the requirements 
of  the  existing  legislation161,  while  ensuring  that  the  EU  drone  sector  remains  competitive  on  the 
global market.  

Main  Single  Market  barriers  within  the ecosystem   In  support  of  reducing  the  main  Single  Market 
barriers within the ecosystem,  the Directives on Defence and Sensitive Security Procurement (Directive 
2009/81/EC) and on intra-EU transfers of defence-related products (Directive 2009/43/EC) have not yet 
reached  their  full  potential  to  open  up  defence  supply  chains  that  remain  fragmented  along  national 
borders. Enhanced efforts by all actors to be made to enforce the Defence Procurement Directive and to 

160 Recently announced in the Action Plan on Synergies between Civil, Defence and Space Industries, COM(2021) 70 final 
161 Commission Delegated Regulation (EU) 2019/945 of 12 March 2019 on unmanned aircraft systems and on third-country operators of 
unmanned aircraft systems, Commission Implementing Regulation (EU) 2019/947 of 24 May 2019 on the rules and procedures for the 
operation of unmanned aircraft. 

79 

 
 
                                                           
ensure a stronger and more harmonised uptake of the Directive on intra-EU transfers and facilitate the 
transfers of defence-related products within the EU. 

Standardisation  The  development  of  hybrid  civilian-military  standards  are  important  to  reduce  cost-
burden  for  European  industry.  Relevant  European  standardisation  bodies  may  need  to  assess  and 
prepare for the standardisation requirements of future aircraft towards carbon-neutrality as standards 
on  new  technologies  and  products  such  as  for  LH2  tanks  and  distribution  systems  do  not  exist  yet. 
Improvement of aircraft connectivity should also be supported. At the international level, EU engagement 
in  the  development  of  standards  for  a  number  of  emerging  key  technologies  (such  as  quantum 
communication)  and  policies  (Space  Traffic  Management)162  will  be  important.  Key  applications  like 
Galileo,  as  well  as  Copernicus’s  passive  sensors,  require  protection  from  interference.  This  includes 
minimising  interference  from  other  radio  services,  which  could  be  aided  by  harmonising  spectrum  use 
and applying appropriate specifications for radio receivers and transmitters. 

Digital transformation The ecosystem is a major contributor to digital solutions and technologies, for 
example  through  satellite  communications  and  services  provided  by  the  EU  space  programme  and 
through the European Defence Fund priorities on digital transformation in defence.  

Green transformation Space is a major contributor to the green transformation, for example through 
monitoring  of  greenhouse-gasses,  and  by  services  provided  by  the  EU  space  programme  that  enable 
greener  transport  (e.g.  shorter  routing  in  marine  transport)  and  support  to  greener  agricultural 
production. As set out in the Commission’s Sustainable and Smart Mobility Strategy163, for aeronautics, 
the  transition  to  carbon-free  aviation  will  proceed  along  multiple  paths,  including  the  introduction  of 
sustainable aviation fuels, efficiency gains, more flexible routing and the introduction of new propulsion 
technologies  (notably  electric,  hydrogen  or  emerging  new  sources  of  energy).  These  measures  require 
the  mobilisation  of  large  amounts  of  capital  and  a  high  degree  of  cross-sectoral  coordination 
(aeronautics,  airlines,  airports,  energy  producers  and  distributors,  certifying  agencies,  regulators,  etc.). 
Strategic engagement of key actors in the ecosystem can increase awareness and knowledge-base, while 
also  facilitating  the  implementation  of  green  and  circular  practices,  two  of  the  aims  of  the  new 
‘incubation forum on circular Economy in European defence’164, launched and managed by the European 
Defence Agency and co-funded by the Commission's managed LIFE Programme. 

Strategic  Public  Procurement  Public procurements  from  EU  aerospace  and  defence  industry  are  key 
industrial policy tools at EU and Member State level. Contrary to other major global industrial actors, the 
EU industry lacks a reliable and predictable home market for space and defence, in the form of large 
demanding anchor customers.  

Intellectual  Property  The  cost  of  patenting  in  EU  is  much  higher  than  in  USA,  which    may  limit, 
especially  by  SMEs,  the  use  of  this  protecting  tool  and/or  their  capability  to monetise  their  know-how. 
The fragmented legal framework hampers the exploitation of industrial/commercial potential. 

International partnerships and dialogue 

Strategic Partnerships (Critical Materials and input) To ensure a global level playing field in space, 
Europe  needs  to  engage  in  the  debate  on  setting  international  rules  and  standards  for  using 

162 See recent Action Plan on Synergies between Civil, Defence and Space Industries, COM(2021) 70 final 
163 COM(2020) 789 final 
164 https://eda.europa.eu/what-we-do/eu-policies  

80 

 
 
                                                           
space.Establishing  strategic  partnerships  will  be  an  ongoing  effort,  including  in  areas  such  as  raw 
materials in order to address dependencies on raw materials and to reinforce the resilience of the space 
value chains. 

Regulatory  dialogue  /  cooperation  Many  companies  in  this  ecosystem  can  only  survive  if  they  have 
access to global markets. Economic diplomacy efforts can support making the most of the potential of 
the  EU  Space  programmes  (Galileo,  EGNOS,  Copernicus)  as  market  openers  to  facilitate  EU  companies’ 
access to markets and procurements in third countries. 

Networks and governance 

it  could  benefit  from  the 

Industrial Networks The aerospace and defence industry is represented in the recently launched 
Industrial  Alliance  on 
European  Raw  Materials  Alliance  and 
Microelectronics165.  Ensuring  market  readiness  for  disruptive  zero  emission  aircraft  (e.g.  hydrogen-
powered aircraft) will require a high degree of cross-sectoral coordination (aeronautics, airlines, airports, 
energy  producers  and  distributors,  certifying  agencies,  regulators,  etc.).  Coordination  with  Member 
States  and  industry  will  be  important  to  support  this  transition166.    In  addition,  working  on  the  next 
generation  of  EU  launchers  and  technologies  would  require  a  shared  approach  between  the  European 
Space Agency, EU Member States/Space Agencies, and industry (traditional and new space). 

Clusters  cooperation  There  is  an  active  aerospace  and  defence  cluster  where  work  is  ongoing  with 
uneven progress so far. The European Aerospace Cluster Partnership gathering 42 aerospace clusters in 
17  countries  has  strongly  contributed  to  the  competitiveness  of  the  aeronautics  supply  chain  by 
promoting collaboration between regions and industries. Moreover, the European Network of Defence-
related  Regionsbrings  together  various  EU  defence-related  clusters  and  regional  organisations  to 
exchange  best  practices and information, in  particular  to  the  benefit  of  their  client  SMEs.  Cooperation 
between  research  and  development  actors  and  the  aerospace  and  defence  industry  would  need  to 
improve  in  order  to  produce  innovative  products  and  technologies.  Clusters  can  play  a  key  role  by 
promoting  collaboration  between  these  main  actors.  Industry  cooperation  should  neither  result  in 
delaying  the  introduction  of  new  technologies  nor  in  the  crowding  out  of  other  innovative  market 
players. 

Pact  for  skills  Aerospace  and  defence  entered  the  Pact  for  Skills  as  pioneers  in  November  2020.    A 
partnership  between  all  stakeholders  was  formed  to  upskill  200,000  employees  and  reskill  300,000 
people to enter the supply chain, a public and private investment of EUR 1 billion in the next 10 years167. 
Industry  efforts  to  implement  the  ecosystem’s  skill’s  agenda  should  continue  to  be  encouraged  and 
supported, including through funding from the RRF, REACT-EU and EU programmes such as ERDF or ESF+. 

Enterprise  Europe Network  Intensified  efforts  to  rely  on  the  EEN  to  disseminate  awareness-raising 
materials  on  funding  for  defence  SMEs  as  well  as  to  facilitate  matchmaking/B2B  at  defence-related 
events.  

165 On 7 December 2020, 20 Member States signed a declaration expressing their interest to work together in order to bolster Europe’s 
electronics and embedded systems value chain with a strong focus on processors and semiconductor chips, see: 
https://ec.europa.eu/digital-single-market/en/news/joint-declaration-processors-and-semiconductor-technologies  
166 see Sustainable and Smart Mobility Strategy, COM(2020) 789 final, p. 5 
167 file:///C:/Users/subirnu/AppData/Local/Temp/1/ASD-1.pdf and More on the Pact for Skills on 
https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

81 

 
 
 
                                                           
2. Agri-Food Ecosystem 

16.3 million people employed168 

4.84% of EU value added       

(EUR 585 billion) 

Transformative initiatives 

599,000 firms                          
99.4% of SMES 

Ensuring the sustainability 
transition of the ecosystem 

Boosting agri-food SMEs digital 
uptake 

Promoting global sustainability 
of the food system 

address 

ecosystem. 

InvestEU  will 
the 
financing gap faced by SMEs and 
mid-cap  companies  in  the  agri-
This  will 
food 
stimulate  capital  expenditure  in 
green and digital technologies to 
decarbonise  and  accelerate  the 
sustainability  transition  of  the 
ecosystem.  

Achieving  the  Commission’s  aim 
of  100%  broadband 
internet 
access  in  rural  areas  by  2025169 
will  allow  SMEs  to  access  online 
marketplaces boosting recovery. 
Adequate  support  for  SMEs  is 
key  to  help  them  address  the 
lack  of  digital  infrastructure  and 
to  achieve  the  digital  transition 
of the agri-food ecosystem.  

It can provide new opportunities 
for  the  agri-food  ecosystem.  The 
implementation  of  the  Farm  to 
Fork  Strategy,  of  the  Chemical 
Strategy  and  the  ongoing  review 
of  the  EU  agri-food  promotion 
policy  will  address  the  need  to 
and 
increase 
sustainability of the food system 
and  will 
its  global 
support 
competitiveness. 

safety 

Towards an EU policy toolbox fit for purpose 

Digital  Europe  Programme  The  Digital 
further 
Europe  Programme  will  offer 
support  for  SMEs  to  grasp  the  opportunities 
offered  by  new  technologies.  It  can  especially 
boost  the  digital  transformation  of  the  sector 
through  strategic  initiatives  to  build  capacity  in 
skills,  data  infrastructure  and  technologies,  and 
innovation support.  

Pact for skills Actions under the Pact can 
be beneficial for upskilling and reskilling 
workforce  in  the  ecosystem.  The  Pact 
represents  an  opportunity  to  address  for  example 
the shortage of first line supervisors and managers 
experienced by agri-food companies. 

RRF  Ensuring  sufficient  support  for  food 
service  will  allow  operators  to  re-open, 
recover and adapt their model to the ‘next 
normal’.  The  RRF  will  offer  the  necessary  support 
the  agri-food  ecosystem, 
for  companies, 
including  SMEs,  to  invest  in  sustainable  practices 
and achieve their green recovery. 

in 

Green  transformation  The  Farm  to  Fork 
strategy170 
excellent 
opportunity  for  the  green  recovery  of  the 
agri-food ecosystem. One of the first deliverables is 
the development of a  

presents 

an 

168 Figures for employment and value added are based on Eurostat National Accounts and SME shares on Eurostat Structural Business 
Statistics. 
169 Communication - A Farm to Fork strategy for a fair, healthy and environmentally-friendly food system, COM/2020/381 
170 COM/2020/381 final 

82 

 
 
    
 
             
 
 
 
 
     
 
 
 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The  agri-food  ecosystem  covers  all  operators  in  the  food  supply  chain  (farmers,  food 
industry,  food  retail  and  wholesale,  and  food  service)  and  their  suppliers  of  inputs  and 
services  (seeds,  pesticides,  fertiliser,  machinery,  packaging,  repair,  transport,  finance, 
advice and logistics). The ecosystem hence has a very long border – and overlaps – with the 
Tourism and the Retail ecosystems.  

SME 
dimension  

Notes: The bar labelled Horizontal refers to activities which contribute to all ecosystems such as professional services 
and utilities; see Annex of the SWD on Monitoring the Implementation of Industrial Policy. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 
SMEs are the backbone of the agri-food ecosystem. 99% of food and drink enterprises are 
SMEs, representing 60% of employment and 47.5% of turnover. 78% of SMEs in the food 
and drink sector are micro enterprises (1-9 employees), representing 14.5% of employment 
and 5.7% of turnover. Only 1% of food and drink companies are leading large enterprises; 
they however employ 40% of the workforce and generate 52.5% of turnover of the sector. 
On average, food retailers are predominantly SMEs, but with important differences across 
Member  States.  Regarding  the  agricultural  sector,  farms  are  not  classified  as  SMEs  in 
business statistics, however an extremely small number of holdings may not fall within the 
SME criteria,  as only 1.0% of the EU farm holdings have a turnover of over EUR500 000 per 
year. 

Current 
challenges 

While trusted for providing high quality and safe products, the agri-food ecosystem has 
longstanding vulnerabilities. Large food companies are globally competitive (yet in need of 
skilled workforce and innovation). Innovation research is often dispersed, R&D investment 
comparatively low171. Digitalisation is increasing, but still  insufficient. Farmers have lower 
incomes  compared  to  other  economic  actors172  and  face  uncertainty,  linked  to  weather, 
price  variation  or  income  volatility.  Food  retail  needs  to  restructure  and  adapt  to  new 
consumer trends.  Overall, the ecosystem can be considered as relatively stable, with many 
small producers, processors and retailers alongside large companies with more capacity to 
invest in technological innovation. The ecosystem showed resilience during the COVID-19 

171 The EU food and Drink industry has a lower R&D investment intensity compared to several global competitors  
172 Farmers’ income is around 40% lower compared to non-agricultural income 

83 

 
 
 
 
                                                           
 
 
 
 
 
crisis  (no  food  shortages)  but  suffered  from  sudden  changes  in  demand  patterns, 
disappearance  of  key  outlets,  disruption  to  cross-border  trade  and  shortage  of 
workers173.  In  Q2  2020  food  industry  output  decreased  by  9.6%  (but  some  producers, 
dependant on hospitality, faced higher losses). The need to adapt working conditions and 
logistics has increased costs. Food service operators face high uncertainty and many may 
not recover.  
Many  workers  in  the  ecosystem  are  part-time  or  self-employed  (especially  in  the 
agricultural sector). The ecosystem also often relies on temporary contracts and precarious 
employment174  in  particular  due  to  seasonality  of  much  of  agricultural  production  (e.g. 
agricultural  seasonal  workers).  The  ecosystem  faces  challenges  linked  to  an  ageing 
workforce and to attracting staff with high-level skills, but also a long-term trend towards 
automation and other productivity raising measures.  
Another challenge faced by the agri-food ecosystem is the degradation of natural capital, 
on which it is based, resulting in spillovers affecting biodiversity and environmental quality 
at large.  Some protectionist national measures may also introduce obstacles in the Single 
Market  negatively  affecting  the  agri-food  ecosystem.  For  example,  by  providing  more 
advantageous  and  competitive  marketing  conditions  for  domestic  food  products, 
discriminating against similar imported products, and restricting the freedom of retailers to 
decide on their assortment, on the lay out of their sales surface, and on their supply chain.  

The pandemic has accelerated the up-take of innovative food business models and digital 
solutions and fostered solidarity schemes among ecosystem actors. New consumer trends 
(higher demand for healthier and more sustainable fair transition is essential and all food, 
food e-commerce and meal delivery services) can present opportunities. More innovation 
and upskilling of the workforce will boost performance.  
The ecosystem reports an ageing workforce, particularly in production activities, and the 
need  for  up-skilling  and  attracting  new  talent175.  Given  its  significant  economic, 
environmental, social and health impact, the food system needs to accelerate its inclusive 
sustainability transition. The EU Farm to Fork strategy (F2F)176 sets ambitious targets for 
producers  that  will  require  significant  investments  (and  potentially  disinvestments  in 
certain  sectors),  as  well  as  measures  to  support  producers’  position  in  the  food  supply 
chain. A fair transition is essential and all food actors need to adapt to consumer demand 
for  healthier,  more  sustainable,  and  yet  affordable  food.  The  actions  under  F2F  can 
contribute to EU food becoming a global sustainability benchmark if investments and level 
playing  field  are  assured.  The  resilience  of  the  ecosystem  will  be  strengthened  by  the 
development  of  a  contingency  plan  for  ensuring  food  supply  and food security  in  the  EU 
and by a legislative framework for sustainable food systems, both under F2F. 

Forward-
looking 
assessment 

Global 
context 

The EU is the number one food and drink exporter in the world (EUR 138 billion annual 
exports in 2018). The EU food industry, while internationally competitive (with reputable, 
high value,  quality  products177),  is  somewhat  lagging  behind  certain  competitors  (such as 
Brazil)  when  it  comes  to  labour  productivity  and  innovation.  However,  EU  agricultural 
productivity  has  increased  overtime  albeit  at  a  slower  rate  in  recent  years.  Stricter 
requirements  for  environmentally,  socially  and  economically  sustainable  food  production 
will place the EU as a leader and will make stronger international cooperation even more 
valuable, as we face global challenges such as climate change and biodiversity loss. 

173 FoodDrinkEurope Economic Bulletin Q2 2020  
174

Precarious employment can be defined at the intersection between insecure employment, unsupportive entitlements and vulnerable 

employees. EurWORK – European Observatory of Working Life 
175 FoodDrinkEurope-EFFAT Toolbox: Good practices and tools from the food and drink industry in Europe, 2016 
176 Communication - A Farm to Fork strategy for a fair, healthy and environmentally-friendly food system, COM/2020/381 
177 Including EU geographical indications 

84 

 
 
                                                           
 
 
Mapping of policy tools in more detail  

Funding and Budgetary programmes178 
RRF Ensuring support for a green recovery through the RRF is essential to make sure both food service 
and  production  do  not  derail  from  sustainability  plans  and  commitments  and  ensure  that  funds  go  to 
projects  directly  benefitting  operators.  The  following  flagship  areas  for  investments  are  particularly 
relevant for the agri-food ecosystem: ‘Power up’ (foster clean technologies and renewables) and ‘Reskill 
and upskill’ (urgent for food workers). Support for food service could be envisaged as a priority to allow 
operators  to  re-open,  recover  and  adapt  their  model  to  the  ‘next  normal’.  Investment  is  needed  in 
green  technologies  and  equipment,  digitalisation  (smart  farming  and  food  factories),  public  services  in 
rural  areas  etc.  Key  areas  of  interventions  for  agriculture  cover  digitalising  agriculture  and  rural  areas, 
carbon sinks, bio-economy and renewable energy, organic sector etc. 

CRII+/ERDF/ESF/CEF/EAFRD179  &  EAGF180 
  The  ERDF  is  an  important  source  of  funding  for  agri-
food, which is a priority in three in four EU regions (strong link to territory).  The Common Agricultural 
Policy’s EAFRD and, for certain sectoral interventions, the EAGF, also provide crucial investment funding 
to  agri-food,  with  a  specific  focus  on  rural  development  and  COVID-19  crisis  recovery.  The  European 
Maritime  and  Fisheries  Fund  is  the  main  supporting  instrument  to  the  new  Common  Fisheries  Policy, 
which  will  seek  to  support  the  fisheries  and  aquaculture  sectors.  The  Agri-Food  Smart  Specialisation 
Platform supports joint investment projects on technology and digital. ESF is important for food workers 
(ageing  workforce,  need  for  new  skills)  and  for  vulnerable,  food-insecure  people.  CRII+  offered  some 
support  for  farmers  and fishers.  It  shows  potential to be  further deployed for  crisis-related measures 
and  projects  for  food  service  operators  and  their  suppliers  (possibly  support  schemes  via  vouchers, 
promotion campaigns etc.). 
Horizon Europe (including European Partnerships) Research and innovation (R&I) are key drivers 
in  accelerating  the  transition  to  sustainable,  healthy  and  inclusive  food  systems  from  primary 
production  to  consumption.  R&I  can  help  develop  and  test  solutions,  overcome  barriers  and  uncover 
new market opportunities. Yet, innovation levels in food manufacturing and processing are uneven and 
often lower than in other sectors181. The Commission has already invested under Horizon 2020 into R&I 
projects  to  boost  innovation  in  the  agri-food  ecosystem,  including  through  EIT  Food182.  Under  Horizon 
Europe Cluster 6 ’Food, Bioeconomy, Natural Resources, Agriculture and Environment’183 further EUR 9 
billion will be invested in R&I on food, bio-economy, natural resources, agriculture, fisheries, aquaculture 
and the  environment,  including  the  use  of  digital  technologies  and  nature-based solutions  for  the  agri-
food  ecosystem.  Under  the  European  Innovation  Council,  EUR  300  million  have  been  allocated  to 

178 

For all the funding programmes, awareness among food system actors (including in remote areas) can be improved (even sector 
associations find difficulties in identifying the best instrument and delivering targeted info to stakeholders). There is a need to make sure 
‘the right funds arrive in the right place’ (directly to vulnerable producers, scalable projects on sustainability transformation etc.), design a 
form of more efficient governance and ensure the emphasis is not only on primary production.   
179 EU Rural Development Fund 
180 European agricultural guarantee fund 
181 The agro-food industry’s share of total output attributable to R&D is around 0.27% (compared to 13% in pharma), but is 
heterogeneous. 182 European Institute for Innovation and Technology 
182 European Institute for Innovation and Technology 
183 Horizon Europe Strategic Plan 

85 

 
 
 
                                                           
encourage breakthrough innovations184 delivering Green Deal objectives to high potential start-ups and 
SMEs.  In  the  agri-food  sector,  for  example,  these  innovations  can  answer  the  need  to  upgrade  the 
production methods. 
Digital  Europe  Programme  A  testing  and  experimentation  facility  on  agri-food  will  allow  the 
ecosystem  to  test  advanced  AI-based  and  robotics  technologies  for  precision  farming,  food  processing, 
wholesale,  retail,  hospitality  and  food  services.  The  programme  also  proposes  to  develop  a  Common 
European  Agriculture  Data  Space,  which  will  facilitate  trustworthy  sharing  of  agricultural  data,  thus 
enabling  an  increased  and  more  effective  use  of  data  and  digital  technologies,  and  subsequently 
increasing  the  environmental  and  economic  performance  of  the  ecosystem.  The  programme 
complements  actions  under  the  Connecting  Europe  Facility,  ERDF  and  EAFRD  towards  rural  broadband 
and digitalisation.  

InvestEU Under the SME window, debt financing will be available not only to sustain general agri-food 
SMEs competitiveness, but also to help them digitalise, innovate and become more sustainable. 
EU Space Programme and European Defence Fund Copernicus helps assess agricultural land use and 
trends, crop conditions and yield forecasts. It supports input management, farm management recording, 
irrigation  and  precision  farming.  Smart  agriculture  has  a  long-term  positive  impact  on  the  entire 
ecosystem. 

Supportive regulatory environment 

Single  Market  Surveillance  Measures  (presented  as  COVID-19-related)  by  Member  States  (a 
minimum  share  of  national  food  products  in  stores,  reserved  space  for  local  producers  and  national 
calls  to  buy  domestic) or agreements  by  domestic  firms  excluding EU  competitors  need to  be  closely 
monitored to avoid negative impacts on the Single Market. Measures need to be proportionate to their 
legitimate  objectives  (and  not  merely  protectionist).  Existing  tools  such  as  infringement  proceedings, 
competition law enforcement, the Single Market Transparency Directive  and Single Market Enforcement 
Task Force continue to play an important role for the ecosystem.  

Main  Single  Market  barriers  within  the  ecosystem Although  the  majority  of  EU  food  regulation  is 
harmonised,  national  measures  have  been  on  the  increase  in  particular  on  labelling  (e.g.  several 
Member  States  introduced  national  rules  for  mandatory  origin  labelling  of  certain  food  products  and 
diverging schemes of front-of-pack nutritional labelling - FOP). As part of the Farm to Fork strategy (F2F), 
the Commission is set to propose harmonised mandatory FOP requirements and consider the extension 
of mandatory origin indications to additional products.  These initiatives need to fully take into account 
impacts  on  the  Single  Market.  Removing  obstacles  for  retailers  and  suppliers  to  enter  in  mutually 
beneficial contractual practices beyond a pure selling and purchasing relationship would be beneficial 
for  the  ecosystem  (e.g.  collaborative  product  launches).  Agri-food  enterprises  are  amongst  those 
experiencing  the  longest  payment  durations,  especially  SMEs.  A  closer  monitoring  and  reporting  of 
payment behaviours, accompanied by potential sanctions, seem to be an effective mechanism to tackle 
late payments and ensure enforcement of the EU Late Payment Directive. The provisions of the Directive 
on Unfair Trading Practices in the agricultural and food supply chain will enter into force this year (on 1 
November 2021) and will also contribute to afford protection along the entire agri-food supply chain. 

184European Innovation Council Fund: First Equity Investments of EUR 178 million in Breakthrough Innovations, 06/01/21, IP/20/2530185 
Communication - An SME Strategy for a sustainable and digital Europe, March 2020 

86 

 
 
                                                           
Standardisation  EU  marketing  standards  for  agricultural  and  fishery  and  aquaculture  products  are 
important  to  guarantee  uniform  quality  to  consumers  and  common  criteria  in  the  SM.  As  part  of  F2F, 
review  is  underway  for  2022,  among  others  to  reinforce  the  role  of  sustainability  criteria  and  leverage 
impact on food loss and waste and healthier diets. Standards will also underpin future food sustainability 
and  animal  welfare  labels.  The  food  industry  sees  further  EU  level  standardisation  as  a  constructive 
opportunity for the ecosystem. 

Digital  transformation  Advanced  technologies  such  as  AI,  robotics,  block  chain,  high  performance 
computing or the Internet of Things have potential to make farming and food processing more efficient 
and  sustainable.  More  clarity  on  data  ownership  and  governance  would  support  the  digital 
transformation  of  the  ecosystem.  The  lack  of  digital  skills  of  the  workforce  is  also  one  of  the  main 
barriers for digitalisations of the agri-food ecosystem. To this regard, two programmes proposed by the 
SME  strategy185  are  also  relevant  to  support  SMEs  in  the  digital  transition,  the  ‘digital  volunteers’ 
programme will promote the transfer of expertise from high-tech businesses to more traditional SMEs, 
and the Digital Crash Courses will help SME employees to become proficient in areas like AI, cybersecurity 
or blockchain. 

Green  transformation  The  F2F  strategy  foresees  the  adoption  of  a  Legislative  Framework  for 
sustainable food systems by 2023, sets sustainability targets for primary producers and outlines related 
legislative  initiatives186.  Higher  ambition on  climate/environment  is  part  of  the  EU  agri-food  promotion 
policy187 and of the new CAP proposal and reflected in Member State specific recommendations adopted 
by the Commission concerning future CAP strategic plans188. The food industry and retail are covered by 
horizontal environmental legislation and the Circular Economy Action Plan and will be concerned by new 
labelling requirements under F2F. The Commission is developing with stakeholders a Code of Conduct189 
to  foster  sustainable  practices  by  food  business  operators190  .  The  Commission  is  also  working  on  a 
proposal for a legislative initiative on sustainable corporate governance for Q2 2021, to foster long-term 
sustainable  and  responsible  corporate  behaviour,  including  requirements  to  include  sustainability  into 
corporate  strategies.  Future  measures  will  continue  to  guarantee  the  integrity  of  the  Single  Market, 
avoiding disproportionate SME burden and the erosion of the level playing field. 

Strategic  Public  Procurement  Food  procurement  can  make  a  major  contribution  to  a  healthier  and 
more sustainable (yet affordable) food offer, especially to vulnerable groups (children, patients and the 
elderly). The F2F foresees finding the best modalities to set minimum mandatory criteria for sustainable 
food procurement in Q3 2021.  

Intellectual Property Geographical Indications  (GIs  - PDOs,  PGIs191)  create  important  value, especially 
for small producers (overall GI sales value est. EUR 74.76 billion). GI products can have sales value that 
are  twice  as  high  compared  to  similar  non-protected  products.  Many  are  internationally  competitive 
exports and require protection internationally. As announced in the F2F, the European Commission has 
launched a GI reform, for better enforcement and sustainability192. F2F will help the scaling of EU action 

185 Communication - An SME Strategy for a sustainable and digital Europe, March 2020 
186 E.g. revision of pesticide, feed additives, animal welfare legislation etc. 
187 The ongoing review of the EU agri-food promotion policy will address the need to increase sustainability of the food system and will 
support the ecosystem’s global competitiveness. 
188 CAP Strategic Plans 
189 See section on Networks and Governance 
190 COM may consider further legislation following evaluation of its impact 
191 Protected Denominations of Origin and Protected Geographical Indications are schemes to protect names of foods and drinks against 
copying/fraud and certify that they were made to high standards in a specific country or region. E.g. Feta Cheese, Champagne  
192 COM may consider further legislation following evaluation of its impact 

87 

 
 
                                                           
against  food  fraud,  e.g.  by  improving  import  controls  (for  protecting  EU  food  and  drink  geographical 
indications e.g. spirits from counterfeited goods).  

International partnerships and dialogue 

Strategic  Partnerships  (Critical  Materials  and  input)  The  EU  imports  significant  quantities  of 
agricultural raw materials from third countries, when EU production is insufficient or inexistent such as 
in  the  case  of  vegetable  oils,  soya  beans,  rice,  maize  or  fish.  The  EU  is  also  dependant  on  imports  of 
tropical products (e.g. coffee, cocoa, palm oil) and soya for feed, where sustainability can be an issue. The 
Commission is now developing in the meantime a contingency plan under F2F to ensure food supply and 
security  in  the  EU  in  times  of  crises,  and  is  developing  a  legislative  proposal  to  minimise  the  risk  of 
deforestation  and  forest  degradation  associated  with  products  placed  on  the  EU  market.  In  the  same 
vein, free trade agreements negotiated by the EU contain a trade and sustainable development chapter 
and  sustainable  food  system  requirements  covering  animal  welfare,  limited  use  of  pesticides  and 
antimicrobial  resistance.  Where  possible  organic  equivalence  arrangements  have  been  negotiated  e.g.: 
USA, Canada, Japan, etc. 
Regulatory  dialogue  /  cooperation  The  EU  has  pre-existing  regulatory  dialogues  under  Free  Trade 
Agreements  (FTA)  (e.g.  Canada,  Japan,  UK)  and  outside  FTA  frameworks  (e.g.  China,  Korea,  Ukraine, 
Taiwan). Regulatory cooperation is particularly useful in the areas of Technical Barriers to Trade, labelling 
and market surveillance and are therefore beneficial for EU exports of food products. 

Networks and governance 

Clusters  cooperation  EU  agri-food clusters have  a key role  in supporting food SMEs  in innovation 
and  digitalisation193,  as  they  capture 
in  uptake  of  technologies,  skills, 
infrastructure, business development and research. The co-operation with the EU Clusters Alliance 
has  been  very  beneficial  in  providing  real-time  information  on  developments,  opportunities  and 
needs of agro-food companies.  

important 

linkages 

Pact for skills The agri-food ecosystem faces a challenge in attracting staff with high-level skills not 
typical in the food area (digital skills, behavioural science, genetics, etc.), and in transferring skills as 
existing workers move to retirement. Food companies experience shortage of first line supervisors 
and  managers.  Hence,  action  under  the  Pact  can  be  beneficial  for  food  workers  and  overall 
performance.  The  ecosystem  is  characterised  by  part-time  and  self-employment  (especially  in 
SMEs/agricultural sector)194. )195. A Roundtable for skills for the agri-food ecosystem took place on 18 
February  2021196.  It  is  expected  to  lead  to  the  creation  of  a  partnership  for  skills  for  the  sectors 
concerned  with  participation  of  frontrunners  who  will  have  an  impact  on  reskilling  or  upskilling 
needs in the ecosystem. Work is also ongoing under the ‘Blueprint on sectoral cooperation on skills 
for bio-economy, new technologies and innovation in agriculture’. 

Enterprise Europe Network As 99% of food producers are SMEs (78% micro enterprises) the EEN 
can benefit even more the ecosystem (including via its agri-food group) to provide advisory services 

193 There are more than 200 clusters active in areas such as agricultural services, food processing, forestry, livestock processing and wood 
products registered on the European Cluster Collaboration Platform 
194  The ecosystem also relies on temporary contracts and precarious employment (e.g. agricultural seasonal workers) 
195  The ecosystem also relies on temporary contracts and precarious employment (e.g. agricultural seasonal workers) 
196 Roundtable report 

88 

 
 
                                                           
for  the  sustainability/digital  transition  and  specifically  to  enable  food  companies  to  adhere  to  the 
new  requirements  foreseen  under  the  Farm  to  Fork  strategy.  Targeted  information  on  access  to 
finance  and  to  the  (new  and  existing)  financial  instruments  with  a  focus  on  green  funding  can  be 
helpful in this respect.  

Digital innovation Hubs Several of the Digital Innovation Hubs support agri-food companies in their 
digital transformation, and are also involved in the Agricultural Innovation Partnership (EIP AGRI), or 
based  on  an  existing  Food  innovation  pole.  Digital  Innovation  Hubs  in  agri-food  will  speed  up  the 
uptake of innovative digital solutions. 

Thematic  Smart  Specialisation  Interregional  Partnerships  The  Smart  Specialisation  (S3) 
Interregional  Partnerships  on  high  tech  farming,  consumer  involvement,  nutritional  ingredients, 
traceability and big data, and smart sensors for agri-food can play a key role in this ecosystem197. 

197 EU regions have joined forces to exploit complementary strengths across Europe, build synergies and enhance the development of and 
investments in EU value chains.  

89 

 
 
 
 
                                                           
3.  Construction Ecosystem 

9.6 % of EU value added  
(EUR 1,158 billion) 
Transformative initiatives 

An updated and functioning EU 
regulatory framework for a Single 
Market of sustainable 
construction products 
The revision of the Construction 
Regulation201  will 
Products 
facilitate  the  harmonisation  of 
technical  rules  and  trade  of  safe 
and 
construction 
sustainable 
products across the EU. 

5.3 million firms                 
99.9% of SMEs 

Tapping into the large potential of 
new data driven business models 
in construction 

The  digitalisation  of  data  along 
the  value  chain  will  allow  the 
development  of  new  business 
improve  the 
based  on  data, 
productivity  and  environmental 
performance  of  the  construction 
ecosystem  and  of 
the  built 
environment  as  well  as  boost 
novel services.  

24.9 million people employed198 

from 

Boosting confidence of property 
owners and investors to 
accelerate renovation and build 
efficient buildings199  
The  Renovation  Wave200  aims  to 
renovate  35  million  inefficient 
buildings  by  2030  and  to  fuel  a 
fossil  to 
switch  away 
renewables  and  waste  heat 
policy 
through 
instruments, 
and 
technical  assistance.  This  is  an 
opportunity  to  modernise  the 
operation,  human  capital  and 
technological 
of 
construction ecosystem, as it will 
need 
these 
to 
renovations.  

of 
funding 

a  mix 

deliver 

basis 

Towards an EU policy toolbox fit for purpose 

Access to Finance As buildings represent more 
than  50%  of  the  total  investment  needs  to 
achieve  climate  targets,  the  EU’s  Sustainable 
Finance  Taxonomy  is  expected  to  strengthen  criteria  in 
financial  incentives  for  more  ambitious  renovation  and 
decarbonisation of the building stock.  

The 

Industrial  Networks 
industry-lead 
Construction  2050  ‘alliance’  and  the  European 
Cluster  Collaboration  Platform  enhance  opportunities 
for collaboration with market operators at all levels. The 
New  European  Bauhaus  initiative  will  support  creative 
and  interdisciplinary  collaborations  to  (re)design  the 
built environment and future ways of living. 

RRF 

The 

flagship 

‘Renovate’ 

strongly 
encourages  Member  States  to  put  forward 
investment  and  reform  plans  to  renovate  and 
decarbonise existing buildings. It could also support the 
implementation  of  the  Affordable  Housing  Initiative  to 
promote  efficient  and  circular  processes,  boost  social 
engagement  models 
residents  and 
stimulate cultural innovation at district level. 

to  empower 

potential 

Standardisation  Standards  being  proposed  by 
the European Standardisation Organisations have 
the 
the 
In 
implementation  of  EU  policies  and 
particular,  standards  will  need  to  include  information 
about  environmental  performance,  climate  resilience 
and accessibility for persons with disabilities. 

support 
legislation. 

better 

to 

Digital  Innovation  Hubs  DIHs  under  the  Digital  Europe  Programme  are  key  to  support  the  digital 
transformation of construction SMEs in order to improve their processes, products and services202. 

198 Figures for employment and value added are based on Eurostat National Accounts and SME shares on Eurostat Structural Business 
Statistics. Data from 2018. 
199 Improved energy and resource efficiency of public and private buildings will contribute to the doubling of the renovation rate and the 
fostering of deep renovation (COM(2020) 575 final)  
200 ‘A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives’, COM(2020) 662 final  
201 Ibid, page 6. 
202 Digital Transformation Scoreboard 2018: In the Digital Intensity Index construction is below 10%, meaning that the sector has a very 
slow absorption rate of digital technologies. 

90 

 
 
    
 
             
 
 
 
 
     
 
 
 
                                                           
Sectors included in 
the ecosystem 

The ecosystem at a glance 

The  construction  ecosystem  covers  contractors  for  building  and  infrastructure 
projects,  some  construction  product  manufacturers203,  engineering  and  architectural 
services  as  well  as  a  range  of  other  economic  activities  (e.g.  rental  and  leasing  of 
machinery  and  equipment,  employment  agencies).  About  24.9  million  people  are 
employed in the ecosystem. Declared migration and mobility movements across the EU 
accounted for an inflow between 2 and 4.5 million individuals per year (including both 
extra and intra community movements). According to CEDEFOP204, about 1 million new 
and  replacement  workers  will  be  needed  by  2025.  Additionally,  the  skills  needed  in 
construction are likely to change to meet the demands for ‘green’ and energy-efficient 
buildings. 

SME dimension  

Current challenges 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such  as 
professional  services  and  utilities;  see  Annex  4  of  the  SWD  on  Monitoring  the  Implementation  of 
Industrial  Policy.  Includes  additional  share  added  on  top  of  horizontal  component;  +Excludes 
contribution of M71.  
Source: Eurostat, National Accounts. Data from 2018 (or latest year available).  

The  level  of  concentration  of  the  activity  is  very  low,  i.e.  the  production  structure  is 
dominated  by  micro  and  small  enterprises.  99.9%  companies  of  the  ecosystem  are 
SMEs,  which  represent  90%  of  employment  and  83%  of  the  total  added  value.  The 
fragmentation  of  the  ecosystem  is  accentuated  by  the  fact,  that  around  90%  of  the 
companies are microenterprises, representing 45% of employment and 32% of the total 
added  value.  The  value  chain  can  be  better  described  as  a  ‘network  of  competence’ 
rather than a set of vertical relations. 

The  main  challenge  is  to  boost  property  owners,  including  public  authorities,  and 
investors’  confidence  to  invest  in  the  green  and  digital  transition  of  the  built 
environment. Contractors estimated that their activity in Europe fell by 6% in 2020, with 
Ireland,  Spain  and  France  being  the  countries  most  affected.  Energy  efficiency 
investments seem also to have dropped by 12%. 205 
National  recovery  measures  should  help  to  reinvigorate  demand  for  buildings’ 
renovation  and  revitalise  the  ecosystem,  while  applying  high  health,  safety  and 
environmental  standards.  Being  a  highly  labour  intensive  industry,  coordination  of 
national  approaches  regarding  sanitary  measures  and  recognition  of  qualifications 

203 Some categories of products which are essential to construction, such as cement, glass, ceramics and tiles, plastic pipes are covered 
under the EII ecosystem. 
204 European Centre for the Development of Vocational Training,  skills forecast, 2016 
205 COM(2020) 662 final, page 2 

91 

 
 
 
 
 
 
 
                                                           
Forward-looking 
assessment 

Global context 

would  facilitate  the  availability  and  mobility  of  workforce  across  borders.  Liquidity 
remains  a  primary  concern  in  particular  for  SMEs  contractors,  considering  their  low 
margins of profit and uncertainties about  the prospects of new projects in the year to 
come. Late payment delays are also increasing, which puts additional burden on SMEs. 
Shortage of skilled labour force in innovative green solutions and digital tools must also 
be addressed. 

EUR 275 billion per year until 2030 is needed to renovate and decarbonise the existing 
building stock206. This  could create 160,000 new jobs.  But  the construction ecosystem 
needs to modernise. It needs to embrace new technologies207 to improve productivity, 
reduce emissions and environmental impacts along the life-cycle of buildings, take up 
circular approaches and new business models208. This requires the development of new 
high  quality  job  profiles.  In  parallel,  regulatory  and  administrative  processes  such  as 
permitting and procurement need to evolve. The better collection, organisation and use 
of  information  and  data  from  construction  is  key  to  modernise  the  ecosystem  and 
increase transparency. Circular techniques such as design for deconstruction and reuse 
of  components  require  different  approaches  than  the  traditional  linear  model  and 
require further development  of the European sustainability indicators (e.g. Level(s)209). 
This  has  important  implications  for  construction  permits,  liabilities,  procurement, 
insurance, certification of innovative products, building codes, and compliance checks. 

Except  for  some  Member  States  such  as  Denmark,  the  Netherlands,  Belgium  and 
Estonia,  imports  do  not  play  a  significant  role.  The  outlook  for  extra-EU  trade  of 
services is moderate, with an annual forecasted average growth of 1.5% until 2025. The 
Chinese Belt and Road Initiative could raise new competitive challenges on the internal 
market  contributing  to  an  increased  presence  of  Chinese  State-Owned  construction 
enterprises in public works contracts. 
Looking at geographic patterns in the internationalisation of construction, proximity is a 
key  factor  in  determining  trade  in  construction  products.  The  exports  value  of 
construction products across non-EU27 trading partners is heavily concentrated on deals 
with the US, Switzerland, Norway, and Russia, with total exports above EUR 1 billion. 

206 See ‘Identifying Europe’s recovery needs’, SWD(2020) 98 final and ‘Stepping up Europe’s 2030 climate ambition Investing in a climate-
neutral future for the benefit of our people’, SWD(2020) 176 final. 
207 Such as automation, prefabrication, robotics, and artificial intelligence. Technologies such as Building Information Modelling (BIM) and 
augmented reality bring new possibilities for collaborative working to design and carry out construction works. 
208 For example predictive maintenance, automated checks. 
209 https://ec.europa.eu/environment/topics/circular-economy/levels_en 

92 

 
 
 
 
 
 
 
                                                           
Mapping of policy tools in more detail 

Funding and Budgetary Programmes 

RRF  The  flagship  ‘Renovate’  provides  a  unique  opportunity  for  Member  States  to  use  their  national 
recovery and resilience plans to boost renovation efforts, as proposed by the Renovation Wave. It chould 
also  help  to  improve  the  green  and  digital  capacity  of  the  construction  ecosystem  to  increase  its 
competitiveness and resilience.  . Note that a  significant  portion of RRF funding will  be also going towards 
infrastructure projects. 

CRII+/ERDF/ESF/CEF  ERDF  and  ESF  can  support  investment  in  digital  technologies,  adapting  skills 
and recycling infrastructure platform for construction and demolition waste. CEF is very important for 
Trans-European  Transport 
infrastructure  projects  and  the  construction  of  sustainable  transport 
infrastructure. The ongoing negotiation of the Operational Programmes of the European Structural and 
Investment Funds is expected to secure adequate budget allocation to the green and digital transition of 
construction and the built environment. 

Horizon Europe (including European Partnerships) Horizon Europe could cover different R&I needs 
of  the  ecosystem  to  address  the  twin  transition.  Under  Pillar  II  ‘Global  Challenges  and  European 
Industrial Competitiveness’,  cluster 4 “Digital,  industry and space”  could accelerate  the  digitalisation of 
the  sector,  such  as  the  broader  use  of  robotics,  industrial  data  platforms  and  AI  as  well  as  the 
development  of  digital  permits  and  digital  building  logbooks.  At  the  same  time,  R&I  partnerships 
developing  circular  industrial  technologies  can  provide  a  basis  for  increased  circularity  in  construction 
processes.  The  Built4People  Partnership  under  Cluster  5  “Climate,  Energy  and  Mobility  focuses  on R&I 
needs to improve the carbon emissions along the whole life-cycle of buildings (including the embodied 
carbon  of  construction  materials),  and  activities  funded  under  Cluster  6  “Food,  Bioeconomy,  Natural 
Resources, Agriculture and Environment” focus on integrated solutions for circularity in the construction 
and buildings sector.  

Just  Transition  Fund  Potential  areas  of  interest  for  construction  are:  (a)  energy  and  transport 
infrastructure;  (b)  decarbonisation  projects,  economic  diversification  of  the  regions  and  social 
infrastructure; (c) circular economy and (d) re-skilling, upskilling of workers. 
Digital  Europe  Programme  In  Digital  Europe  programme  the  support  to  industrial  data  spaces  will 
allow the construction sector to tap into the large potential of new data driven business models. Under 
the  Digital  Europe  Programme,  the  Commission  is  supporting  the  reskilling  and  upskilling  of  workers 
through short-term courses in advanced digital skills. 

InvestEU Financing under the SME window will be available not only to sustain generally construction 
SMEs  competitiveness,  but  also  to  help  them  to  digitalise  and  contribute  to  the  construction  of  more 
sustainable buildings. InvestEU will support energy and resource efficiency investments.  

Access  to  Finance  The  Sustainable  Finance  EU  Taxonomy  is  expected  to  foster  the  finance  of 
individual  construction  projects 
sustainable  activities 
(construction of transport infrastructure; water projects; new buildings; renovation of existing buildings; 
individual  renovation  measures,  installation  of  renewables  on-site  and  professional,  scientific  and 
technical activities, acquisition of buildings).  

in  companies  themselves  and  of 

Supportive regulatory environment 

93 

 
 
Main Single Market barriers within the ecosystem Obstacles to the internal market of construction 
products  remain  in  the  form  of  national  marks  and  certification,  in  conjunction with  insufficient  and 
uneven  market  surveillance.  The  revision  of  the  Construction  Product  Regulation  will  address  these 
deficiencies.    Regarding  restrictions  for  construction  services  with  market  access  and  exercise 
requirements  (e.g.  insurance  requirements  and  professional  qualifications),  infringement  action  and 
where  appropriate  ‘softer’  solutions  based  on  guidance  /  recommendations  towards  Member  States 
could  be  made.  Regarding  the  posting  of  workers,  a  more  active  enforcement  policy  may  be  applied 
where Member States are in clear violation of applicable EU law to ensure that there are no unnecessary 
administrative  barriers  to  cross-border  provision  of  construction  services.  The  European  Labour 
Authority could also possibly look at ways to assist the Commission and the Member States regarding 
the promotion of cross-border service provision in relation to better enforcement of the rules in place  
for posting of workers. 

Member States often add additional national requirements for CE-marked construction products, mostly 
in  conflict  with  the  current  Construction  Products  Regulation  (CPR).  In  addition,  there  is  an  uneven 
application of the CPR by the different authorities, magnified by unequal and generally too weak market 
surveillance. The EU acquis is incomplete and partly obsolete with regard to harmonised standards. 

Construction  enterprises  are  amongst  those  experiencing  the  longest  payment  durations,  especially 
SMEs.210  A  closer  monitoring  and  reporting  of  payment  behaviour  in  the  construction  sector, 
accompanied  by  potential  sanctions,  seem  to  be  an  effective  mechanism  to  tackle  late  payments  and 
ensure enforcement of the EU Late Payment Directive. As announced in the SME Strategy211, this could 
include  a  virtual  observatory  for  monitoring  payment  delays,  clarifying  unfair  payment  practices,  and 
exploring the feasibility of alternative resolution/mediation mechanisms for SMEs for a fast resolution of 
payment disputes in commercial transactions. 

Standardisation  There  are  concerns  about  the  slow  delivery  and  non-compliance  of  the 
candidate  standards  proposed  for  harmonisation  for  construction  products  with  the  legal 
requirements, whereas these are at the core of the system and of mandatory use under the Construction 
Products  Regulation.  This  prevents  the  system  from  meeting  Member  States and  industry’s  needs. The 
ongoing  revision  will  address  environmental  impacts,  circularity,  safety  of  construction  products  and 
adaptation to innovation and digitisation. It will also consider harmonised rules for new areas such as 3D 
printing,  prefabricated  construction  elements  or  houses,  and  building  integrated  PV  products.  Second 
generation  of  Eurocodes212,  to  be  published  in  2026,  will  enhance  safety,  sustainability  and  climate 
resilience  of  built  environment.  As  mentioned  in  the  circular  economy  action  plan,  the  revision  of 
harmonised standards could consider, where appropriate, circularity requirements. 

eGovernment  Online  information  on  applicable  formalities  or  building  permit  rules  and  procedures  is 
often  scarce,  hard-to-find  and  predominantly  in  the  local  language.  Only  nine  Member  States  have  a 
fully  digital  buildings  permit  system  in place.  E-procedures  are  only  available  to  a  very  limited extent. 
The Single Digital Gateway should improve this situation. Further transition to business models based on 
digital technologies is needed.  

Green transformation Proposed revisions of energy legislation (Energy Efficiency, Energy Performance 
of  Buildings  and  Renewable  Energy  Directives)  would  support  the  implementation  of  the  Renovation 

210 In the EU-28, 47% of all SMEs reported problems linked to late payments in 2018. Source: European Construction sector observatory. 
211 COM(2020) 103 final, see p. 11 
212https://eurocodes.jrc.ec.europa.eu/showpage.php?id=63 

94 

 
 
                                                           
wave and will offer new opportunities to the construction ecosystem. Modality for an extension of ETS to 
buildings is under scrutiny213. Targeted financial support would help to accelerate the deployment of low 
carbon  solutions,  especially  for  households  at  risk  of  energy  poverty.  Action  supporting  skills 
development  (e.g.  training,  certification)  in  the  construction  sector  would  be  important  to  support 
renovation  efforts  and  the  availably  of  skilled  labour  professionals  in  the  construction  sector.  An  EU 
roadmap to reduce the whole life carbon of buildings214 would provide a common understanding of the 
issue  and  inspire  additional  actions  toward  net-zero  emissions  in  the  construction  sector  and  national 
authorities to design their own roadmap.   

Digital transformation More harmonisation on data standardisation and rules regarding permitting and 
logbooks would further support the digital transformation of the ecosystem. The  Data Governance Act 
sets  out  a  new  legal  framework  to  foster  the  availability  of  data  for  use  by  increasing  trust  in  data 
intermediaries and by strengthening data-sharing mechanisms across the EU, which is a foundation for 
the  development  of  data  spaces  for  the  sector.  Technologies  such  as  AI,  robotics,  high  performance 
computing, the Internet of Things, Digital Twins and 3D mapping of built environments have potential to 
make construction more efficient and sustainable. 

Strategic  Public  Procurement  Need  to  boost  green  procurement  and  shift  to  life-cycle  costing 
approach.  Further  development  of  the  green  public  procurement  criteria  would help  to  uptake  a  more 
life  cycle  approach  and  circularity  principles215.  The  Big  Buyers  for  Climate  and  Environment  initiative 
helps to drive market demand for innovative and sustainable products and services216. Guidance on how 
to procure ‘green’ from the definition of the project to the implementation will help public investors217. 
There has been significant progress in the use of digital tools (Building Information Modelling) in the 
public procurement for construction, but still only 11 Member States have made its use obligatory and 
further guidance is needed. 

Networks and governance 

Industrial Networks The Renovation Wave provides opportunities for continued dialogue with the 
High Level Construction Forum. An important component of this Forum would be the Construction 
2050  ‘alliance’,  which  is  a  spontaneous  initiative  of  47  EU  associations,  from  construction  products,  to 
contractors,  SMEs,  building  owners,  machinery  producers,  social  housing  operators,  engineers, 
promoters and many more. The purpose of the industry initiative is to have a dialogue on how to work 
together to advance the needs and priorities of the wider construction and built-environment sector at 
EU level, including issues related to the EU raw material dependencies and resilience of supply chains. 

Clusters cooperation The European Cluster Collaboration Platform is the EU hub for industrial clusters, 
of which 83 clusters are working directly on construction. Many other clusters like digital or renewables 
are  also  important  for  the  construction  ecosystem.    Their  mobilisation  is  very  important  to  ensure  the 
transition of the ecosystem as a whole. 

213 ‘Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people’, SWD(2020) 176 final. 
214 ‘A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives’, COM(2020) 662 final, page 6 
215 Ibid, page 23. 
216  For  example,  to  promote  the  use  of  zero-emission  construction  machinery  and  the  use  of  circular  construction  materials  in  the 
procurement of public demolition, construction and renovation projects. 
217 ‘A Renovation Wave for Europe - greening our buildings, creating jobs, improving lives’, COM(2020) 662 final, page 23, Section 4.2. Par 
3. 

95 

 
 
 
                                                           
Pact for skills218  As  construction is  a  highly labour  intensive industry,  the human capital  is  a  critical 
factor in the green and digital transition of the construction ecosystem. Companies are reporting a lack 
of workers and skills mismatches, therefore attracting new workforce and providing it with appropriate 
skills  is  crucial.  The  Blueprint  for  Sectoral  Cooperation  on  Skills  project  addresses  short  and  medium-
term skills needs. The construction industry and the unions are also willing to be part of the Pact for Skills 
initiative,  to  foster  further  the  sectoral  collaborative  approach  in  the  skills  development.  A  roundtable 
took  place  between  stakeholders  and  the  Commission  on  November  2020.  Discussion  is  ongoing  to 
formalise commitments.  Furthermore, the SME strategy supports the ‘digital volunteers’ programme to 
promote the transfer of expertise in digitalisation from high-tech businesses to more traditional SMEs.  

Enterprise Europe Network  The EEN has a ‘Sustainable Construction Sector Group’ which will need to 
continue to evolve to help relevant SMEs address the triple transition to sustainability, digitalisation and 
resilience, in particular using the forthcoming EEN Sustainability Advisors. 

Digital Innovation Hubs Several European Digital Innovation Hubs (EDIHs) are specialised in 
construction  across  Member  States.  Together  with  the  EEN  and  the  EU  hub  for  industrial 
clusters,  the  network  of  European  Digital  Innovation  Hubs  (EDIHs)  offers  with  a  seamless 
service  to  every  company  to  take  advantage  of  digital  opportunities  to  optimise  their  production 
processes and to innovate their products and business models.  

218 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

96 

 
 
 
 
                                                           
4.  Cultural and Creative Industries Ecosystem 

8.02 million people employed 219  

3.95% of EU value added       

(EUR 477 billion) 

1.2 million firms                    
99.9% of SMEs 

as 

and 

well 

Transformative Initiatives  
Digital, entrepreneurship and 
managerial skills 
CCI  are  made  up  of  creative, 
technical 
administrative 
workers, 
as 
entrepreneurs.  It  is  of  crucial 
importance 
and 
to 
continuously  upskill  all  of  them 
in  digital,  entrepreneurial  and 
managerial 
to  ensure 
skills 
innovative  content  and  business 
comprehensive 
models. 
approach  to  these 
is 
issues 
proposed 
in  the  2020  Skills 
Agenda  for  Europe  (Pact  for 
Skills) and the MAAP. 

equip 

A 

Immersive content 

to 

its 

By  2030,  immersive  content  has 
the potential to add about EUR 1.3 
trillion  to  the  global  economy220 
and  Europe  has  an  advantage 
thanks 
cultural 
diversity and heritage as well as its 
highly  skilled  professionals.   The 
the 
activities  envisaged  under 
that 
MAAP  aim 
European  market  players  can 
reap their benefits. 

to  ensure 

large 

Scale up   

Cultural  and  Creative  Industries 
(CCI)  companies  need  to  make 
the  EU  their  native  market  to 
overcome  fragmentation  and  be 
competitive  globally.  Different 
tools  support  the  companies  in 
CCIs  to  scale  up  and  access 
markets 
national 
beyond 
borders.  For  example  Europe's 
Media  in  the  Digital  Decade:  an 
action  plan  to  support  recovery 
and 
(MAAP) 
envisages  several  measures  to 
achieve  that,  including  engaging 
digital  tools  and  new  business 
models 
collaborative 
platforms  and  leveraging  private 
investment). 

transformation 

(e.g. 

Towards an EU policy toolbox fit for purpose 

for 

the 

creation,  distribution 

Horizon  Europe  is  the  key  tool  to  advance  in 
creativity-driven 
in  particular 
innovation, 
innovation  (e.g.  Cluster  2)  and  in  digitisation,  e.g. 
through  a  Media  Data  Space  to  support  advanced 
solutions 
and 
consumption of new media products; a VR Media Lab 
to foster innovation in the VR/AR Media field; greater 
support  for  XR  technologies;  better  protecting, 
restoring and promoting European cultural heritage. 
RRF The Member State Recovery Plans offer an 
opportunity  to  support  CCIs  recovery  and 
growth  by  addressing  the  twin  (green  and  digital) 
transitions.  In  particular,  measures  to  boost  the 
production and distribution of creative digital content 
and  services  can  contribute  to  the  goal  of  allocating 
20% of the RRF expenditure on digital transition. 

InvestEU  InvestEU  will  support  access  to 
finance  of  the  CCIs  in  particular  through  the 
Guarantee  Facility  for  loans  and  MediaInvest,  a  new 
dedicated  equity  platform.  This  support  will  aim  to 
increase  the  capacity  of  the  CCIs, 
in  particular 
independent  SMEs,  to  operate  beyond  national 
borders and scale up. 

Main  Single  Market  barriers  within  the 
ecosystem  As  regards  the  revised  Audiovisual 
and  Media  Services  Directive,  Member  States  must 
ensure  full  implementation,  while  media  regulators 
must  implement  and monitor the correct application 
of the new rules in practice, and enforce them where 
necessary. 

Intellectual  Property  Full  and  timely  implementation  by  the  Member  States  of  the  2019  Copyright 
Directive and the update of the EU design protection legislation is essential, together with an effective 

enforcement of rights. 

219 Figures for value added are based on Eurostat National Accounts and estimates from DG CNECT. Figures for employment are based on 
Eurostat National Accounts. Number of firms and SME shares based on Eurostat Structural Business Statistics.   
220

PWC, Seeing is believing, 2019, https://www.pwc.com/seeingisbelieving  

97 

 
 
    
 
 
             
 
 
 
 
     
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The CCIs are a varied group221. The biggest industries are audiovisual (TV, videogames, VOD, 
cinema, VR/AR), music, books and press publishing, advertising, cultural heritage (museums, 
historical sites), performance (theatre, dance) and visual arts. In Europe, culture and creativity 
are  regarded  as  a  public  good  and  may  receive  public  support  (eg.  public  funds  play  an 
important role in the AV industry or the heritage sector) while many creative entrepreneurs are 
driving the creative economy (e.g. music, publishing and media, architecture, design). Cultural 
education is considered part of the ecosystem. 

Notes: The category ‘Additional segments’ includes additional value added from digital services not well (only partially) 
captured  by  other  categories:  SVOD,  digital  game  sales,  ebooks,  music  steaming and  platform  advertising;  estimates 
from DG CNECT. No employment data available. The bar labelled Horizontal refers to activities which contribute to all 
ecosystems  such as  professional  services  and  utilities;  see  Annex of  the  SWD  on  Monitoring  the  Implementation  of 
Industrial Policy. *Sector only partially attributed to the ecosystem.  
Source: Eurostat, National Accounts. ‘Additional segments’ based on various data sources (DG CNECT). Data from 2018 
(or latest year available). 
The employment in CCIs was growing at a rate of 1% annually 2008-2016, with e.g. 3% in the 
AV industry222 and before COVID the outlook was good. Workers in CCIs face very high level of 
job  insecurity  (very  high  shares  of  self-employment223,  working  part-time  and  on  non-
permanent  contracts).  They  are  better  educated  than  average  (59%  have  tertiary  education, 
compared to 34% EU27 average). Both  creative and technical professionals need to strengthen 
digital skills.  
Apart  from some big market  players, like broadcasters and several media conglomerates, the 
CCIs are composed of a high number of small, independent companies. SMEs in CCI are smaller 
than the market average224, due to a high share of freelancers and micro-enterprises. The CCI 
market  is  fragmented  along  national/linguistic  territories.  SMEs  (mostly  micro)  employ  over 
90% of workforce in such sectors as visual arts and design (and contribute to over 80% of the 

SME 
dimension  

221 There are several descriptive definitions in use, including  UNESCO Framework for Cultural Statistics, 2009, the European Commission 
Green Paper Unlocking the potential of cultural and creative industries, 2010. The new 2021 Creative Europe Programme Regulation Art 2) 
defines the cultural and creative sectors as including architecture, archives, libraries and museums, artistic crafts, audiovisual (including 
film, television, video games and multimedia), tangible and intangible cultural heritage, design (including fashion design), festivals, music, 
literature, performing arts, (including theatre and dance), books and publishing, radio, and visual arts. 
222 KEA for EIF, Market Analysis of the Cultural and Creative Sectors in Europe, 2018, p. 12-15.  
223  EU27  self-employment  average  was  14%  in  2019,  in  CCS  33%.  Eurostat  Cultural  Statistics,  https://ec.europa.eu/eurostat/statistics-
explained/index.php/Culture_statistics_-_cultural_employment. Eurostat Cultural Statistics does not have the exact same remit as the CCS 
ecosystem, but covers most of the same sectors 
224 Average number of employees in 2016 was 2.7. Source:  KEA for EIF, Market Analysis of  the Cultural and Creative Sectors in Europe, 
2018, p.11. www.eif.org/what_we_do/guarantees/cultural_creative_sectors_guarantee_facility/ccs-market-analysis-europe.pdf 

98 

 
 
 
 
 
                                                           
Current 
challenges 

Forward-
looking 
assessment 

Global 
context 

value added of these sectors) and almost 85% in audiovisual production and music publishing 
(78% of value added)225. 
The COVID crisis has accelerated major trends in digital, and the CCIs need to increase efforts to 
develop  new content  and new business models. Technological developments  such as  AI, AR, 
IoT and 3D printing are a field full of potential for CCIs in terms of content creation, services, 
distribution  and  relation  to  end-users.  In  parallel,  the  crisis  has  exacerbated  the  underlying 
fragmentation,  underinvestment,  and  lack  of  skills.  European  enterprises  are  vulnerable  to 
acquisitions by extra-EU actors with a risk for European cultural diversity. For example, global 
online platforms have grown226 while revenues of traditional venues have dropped e.g. cinemas 
by - 64%.  Also, the internet has become the primary advertising medium, with a market share 
of 40% in 2017, at the expense of printed media and TV.  Meanwhile only 22% of the heritage 
collections  have  been,  on  average,  digitally  reproduced.    Europe  also  needs  to  compete  in 
emerging markets, such as virtual reality which is estimated to add EUR 1.3 trillion to the global 
economy  by  2030.  The  most  urgent  need  is  access  to  finance  to  mitigate  bankruptcies  and 
unemployment. Digital skills also need to be upgraded to enable take up of digital more widely. 
The same is true for entrepreneurial and managerial skills to strengthen professionalization and 
scaling up.  Furthermore, it is essential to establish a true level playing field for all CCIs players 
and a fair environment for creators and those investing in creative content and services, as well 
as creative entrepreneurs. 
Without  a  strong  policy  response  to  overcome  the  industry’s  fragmentation  the  global 
platforms’  massive  investments  in  content  risks  relegating  European  independent  players  to 
mere  service  providers.    Harnessing  the  benefits  of  digitisation  will  be  key  for  future 
competitiveness.    The  CCIs  are  key  to  the  single  market  because  they  have  great  spill-over 
effects  in  terms  of  innovation  across  the  economy  and  promote  European  exports  by 
enhancing the image of Europe across the world. 
The  Commission  adopted  the  European  Media  in  the  Digital  Decade:  an  action  plan  for 
recovery and transformation227, supporting recovery and enhancing competitiveness of news 
media  and  audiovisual228  entertainment  through  10  actions  around  three  areas:  to  help  the 
media sector recover in particular by investing in content production and distribution to ensure 
diversity  in  the  context  of  dominant  global  players;  to  support  transformation  through 
innovation harnessing data and exploiting the potential of the emerging AR/VR/XR market; to 
enable companies, for example by scouting media start-ups, and empower  European citizens 
by  increasing  access  to  content  and  strengthening  media  literacy.    Future  measures  could 
ensure inclusion and gender equality. 
North  America  leads  the  AV  market  (turnover  of  EUR  10.4  billion),  while  the  EU  is  the  third 
biggest market (EUR 5.3 billion)229. The traditional sectors of AV market are dominated by US 
media conglomerates and the VOD sector by US-based Netflix and Amazon. The EU could set 
the  technical  standards  to  avoid  having  to  comply  with  standards  which  are  not  relevant  for 
European  content  (e.g.  visual  effects  on  VOD  platforms),  while  keeping  on  attracting  foreign 
investments  in  AV.  The  music  market  is  also  led  by  the  USA,  but  among  the  top  ten  music 
markets, three are European: Germany, France (and UK) and Spotify is a globally successful EU 
player. The Asia-Pacific region has the biggest video game market followed by North America 
and the EU (17.4% of global revenues). In newspaper publishing, the biggest turnover is in the 
EU  followed  by  the  Asia-Pacific  region  and  the  US.    In  the  book  sector  Europe  counts  five 
among  the  top  ten  largest  publishers  (mostly  part  of  larger  European  conglomerates  like 
Vivendi,  Bertelsmann),  however  the  ‘foreign  books’  market  is  dominated  by  translations  of 
Anglo-American titles. 

results,  https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Table_4_-

225  Eurostat  Cultural  Statistics,  2017 
_Main_indicators_for_selected_cultural_activities,_by_enterprise_size_class,_EU-27,_2017.png  
226 E.g. Netflix registered a record 16 M new subscribers in Q2 2020. Source: https://variety.com/2020/digital/news/netflix-stock-record-
high-q2-forecast-1234703262. 
Source: 
https://www.forbes.com/sites/rebeccabellan/2020/02/14/tiktok-is-the-most-downloaded-app-worldwide-and-india-is-leading-the-charge 
227 COM(2020)784 
228  Digital  Decade:  Commission  launches  Action  Plan  to  support  recovery  and  transformation  of  the  media  and  audiovisual  sectors, 
https://ec.europa.eu/commission/presscorner/detail/en/IP_20_2239  
229 comparison of all sectors by region in this paragraph: Media Mapping Study, KEA &Deloitte for EC, p. x-xv. 

downloaded 

became 

Tik-Tok 

2020. 

most 

app 

the 

in 

99 

 
 
                                                           
Mapping of policy tools in more detail  

Funding and budgetary programmes  

RRF  Significant  investment  is  needed  for  the  ecosystem’s  recovery.  Strengthening  skills  and  capacity 
building is essential to face and drive the green and digital transitions, across Europe. In particular, the 
production  and  distribution  of  digital  content  is  included  within  the  20%  digital  target.  The  Member 
States  can  decide  to  co-fund  the  pan-EU  projects  like  the  audiovisual  equity  platform.  Under  the 
flagship initiative ‘Renovate’ targeted investments could make cultural infrastructure more sustainable, 
accessible to broader audiences and adapted/adaptable to the evolving needs of contemporary society. 
In line with the New European Bauhaus quality architecture and participatory design principles will need 
to  be  applied  to  adapt  and  upgrade  infrastructure  in/for  the  cultural  sector  in  a  sustainable  way.  
Engagement  with Member States  on  the  CCIs  needs  to  be  pursued  to  ensure  that  the  Recovery  Plans 
address the CCIs, as they are amongst the worst affected ecosystems.    

CRII+/ERDF/ESF/CEF  These  funds  support  adaptation of  skills,  creation  of  new  jobs  and  uptake  of 
advanced technologies.  CCIs can also directly and indirectly contribute to five proposed Policy Objectives 
of the future Cohesion Policy 2021-2027. Regional/ local development strategies could promote cultural 
assets  and  creative  businesses,  support  investment  in  infrastructure  and  in  human  capital.  However, 
more take up is necessary, including in countries with low audiovisual capacity. 

Creative Europe This Programme is dedicated specifically to the European CCIs and will be crucial for 
supporting  recovery.  The  Programme  has  the  general  objectives  of  strengthening  competitiveness  and 
protecting  and  promoting  cultural  diversity.    It  aims  at  helping  European  organisations  from  of  the 
cultural  and  creative  sectors  to  scale-up,  collaborate  across  borders,  produce  high  quality  content  and 
reach  European-wide  audiences.  The  budget  for  2021-2027  was  increased  80%  on  an  EU27  basis  and 
encompasses audiovisual, cultural and cross-sectoral strands. 

Horizon Europe (including European Partnerships) Under Cluster 2, R&I funding will be dedicated 
to  cultural  heritage  and  CCIs,  focusing  on  deepening  knowledge  of  CCIs  and  their  role  as  driver  for 
innovation,  the  interactions  and  spill-overs  to  other  sectors,  on  how  to  devise  efficient  ways  to 
strengthen the industries, as well as deeper research into specific sectors such as filmmaking and music. 
Furthermore, several R&I topics will require a deep involvement from the sector, such as for instance the 
New European Bauhaus.  Under Cluster 4, support will be given to applications of a  Media Data Space 
and  a  Virtual  Reality  (VR)  Media  Lab  and  Extended  Reality  (XR)  technologies  and  applications.    The 
European  Institute  of  Innovation  and  Technology  (EIT)  plans  to  establish  a  new  Knowledge  and 
Innovation Community (KIC) for the CCSIs.  A European-wide support structure will be created, with the 
mission to boost innovation and competitiveness of Europe’s CCIs. 
Digital  Europe  Programme  The  ecosystem  needs  to  accelerate  digitisation.  In  line  with  the  MAAP 
support will be given to (i) deployment of a media data space infrastructure and (ii) a European Digital 
Media  Observatory  –  to  tackle  disinformation.  The  programme  will  also  support  SME  to  reskill  and 
upskill  employees  to  strengthen  their  digital  skills  e.g.  through  digital  crash  courses,  and  the 
deployment of a cultural heritage data space.  The Dataspace for Cultural Heritage will aim at creating a 
common data Space to support to the digital transformation of Europe’s cultural heritage sector. It will 
build on the current Europeana platform and will vastly expand the current functionalities, in particular in 
relation to 3D digitisation, re-use of digitised cultural resources by different sectors. 

100 

 
 
InvestEU The ecosystem needs market instruments to tap into private investors and avoid dependence 
on public subsidies. Building on the successful CCIs  Guarantee Facility 2014-2020 (over EUR 2 billion in 
lending mobilised), InvestEU will fund specific products: continue loan guarantees to CCIs; establish an 
audiovisual  equity  platform;  support  pilot  equity  for  news media.   More  broadly,  CCIs  are  eligible  for 
general products under four windows of InvestEU. However, funding levels remains a challenge because 
of severe budget cuts to InvestEU. 

Supportive regulatory environment 

Single  Market  Surveillance  The  Commission  monitors  implementation  of  the  Copyright  and 
Audiovisual  Media  Services  (AVMS)  Directives,  as  well  as  the  EU  legislation  on  Design.  Stakeholder 
dialogue and further studies are conducted where necessary. The MAAP foresees that the cooperation of 
the European Group of Audiovisual Regulators (ERGA) will be strengthened to better implement AVMSD. 
A  voluntary  cooperation  mechanism  (Memorandum  of  Understanding)  was  put  in  place  at  the  end  of 
2020 by ERGA. The Commission will monitor its performance and propose improvements if necessary. 

Main  Single  Market  barriers  within  the  ecosystem  Establishing  a  true  level  playing  field  for  all 
audiovisual media players and a fair environment for creators and those investing in content have 
been  the  central  goals  of  the  revised  AVMSD  and  the  modernised  copyright  framework  (which  is 
relevant also for other CCIs). The effective and consistent implementation of the revised AVMSD and 
copyright rules at national level will be key in order to make sure that they deliver.  As regards the 
revised  AVMSD,  Member  States  must  ensure  full  transposition  while  their  media  regulators  must 
implement the new rules in practice, and enforce them where necessary. Access to and exercise of 
certain  cultural  and  creative  professional  activities  in  a  Member  State  are  made  conditional  upon 
possession  of  qualifications  and/or  other  national  requirements  (e.g.  restorer  of  fine  arts,  dance 
teacher, archivist, etc.)  These can lead to unjustified barriers to the free movement of persons and 
workers and can hamper the single market.  

Standardisation Standard setting by the EU, i.e. instead of the Motion Picture Association from US, can 
contribute to avoiding  dependence on non-EU technology.  The interoperability of data will be tackled 
as part of the Media Data Space project in the MAAP.  In addition, as a follow up to the IP Action Plan, 
work will be undertaken as regards  rights metadata.  The issue of standards for archives could also be 
considered.  Also,  many  hardware  platform  suppliers  signed  the  Open  XR  standard,  but  there  is  still  a 
need to set frameworks on a global level.  The same applies to eBook and digitisation of cultural assets 
for which standardisation and interoperability would facilitate growth. 

Digital  transformation    The  most  pressing  issues  arising  in  the  digital  transition,  such  as  the  level 
playing field with platforms and the remuneration of creators,  have been addressed in the new AVMSD 
and  Copyright  Directives.  The  Digital  Markets  Act  and  the  Digital  Services  Act  will  complement  the 
Copyright  Reform  and  the  revision  of  the  AVMSD  to  ensure  a  fair  online  environment  for  the  creative 
sectors  and  promote  a  level  playing  field  that  is  crucial  to  strengthen  European  content  and  support 
essential values such as cultural diversity and media pluralism in the digital context.  More broadly, the 
majority of internet traffic is around video and creative content, so that cultural and creative industries 
are  key  to  generating  user  profiles  and  economic  value  of  online  players.  In  order  to  become  more 
innovative and competitive, European media companies could be empowered to make better decisions 
and deploy more advanced solutions based on insights gleaned from data. The Commission proposes to 
bring  this  about  by  fostering  the  creation  of  a  European  ‘media  data  space’,  building  on  the  European 
Data Strategy (see sections on Horizon Europe/Digital Europe).  

101 

 
 
Green transformation In line with the MAAP, the Commission will collaborate closely with the industry 
and Member States on sharing existing best practices and agree on common tools and green standards. 
The  Commission  will  also  be  working  on  a  best  practice  guide  for  green  production  and  provision  of 
services230.    These  actions  will  complement  the  Digital  Strategy  on  making  infrastructure  such  as  data 
centres climate neutral.  In addition, the Commission is collaborating closely with EU Member States on 
the adaptation of cultural heritage to climate change impacts. The New European Bauhaus initiative is 
also relevant for green design and architecture. 

Intellectual  Property  The  full  transposition  and  effective  implementation  by  Member  States  of  the 
2019 Directive on Copyright in the Digital Single Market and the AVMSD can ensure copyright rules fit for 
the  digital  age.    Once  implemented,  the  new  rules  will  facilitate  licencing  and  ensure  a  fairer  market 
place  for  rights  holders  when  negotiating  with  online  platforms  and  remuneration  of  authors  and 
performers. As outlined in the IP Action Plan and the Media Action Plan, more effective enforcement of 
IP  rights  in  the  digital  environment  is  key  to  support  the  competitiveness  of  CCIs.  The  Commission will 
reinforce  cooperation  with  all  involved  players  to  ensure  existing  remedies  to  fight  against  piracy  are 
more  efficient.    Particular  attention  could  be  paid  to  fostering  the  cooperation  amongst  national 
enforcement authorities and cross-border enforcement. 

Networks and governance 

Industrial Networks  The promotion of collaboration is being pursued in the ecosystem. The Media and 
Audiovisual  Action  Plan  foresees  the  creation  of  a  European  News  Media  Forum  to  develop  an 
innovation  agenda  as  well  as  a  European  Virtual  Reality/Augmented  Reality  industrial  coalition  to 
stimulate  cooperation  across  industry  sectors.  The  Coalition  will  be  based  on  a  broad,  cross-sectorial 
approach involving  industries, technology  providers  and  creatives.  The Coalition  would  present,  by  end 
2021, a strategic paper setting out a) the extent to which VR/AR/XR are deployed in the media sector; b) 
objectives for optimum deployment of VR/AR/XR in the media  sector to be reached by 2026; c) concrete 
commitments on how the industry will contribute to meet these objectives. 

Pact for skills Digital skills need to be developed in the CCIs, both for creative and for technical workers.  
Entrepreneurial and managerial skills  are  also  key  for  professionalisation.  The  component  dedicated  to 
SMEs  makes  a  contribution  to  boosting  the  skills  of  professionals  in  the  CCIs  ecosystem.  Particular 
activities are also being carried out on cultural heritage skills by the Commission under the Blueprint for 
Sectoral Cooperation on Skills231. Sector-specific skills challenges are addressed by the Creative Europe 
Programme (training,  mobility  and experience-exchange  schemes),  including  in  synergy with  Erasmus+. 
Furthermore, the SME strategy supports the ‘digital volunteers’ programme to promote the transfer of 
expertise in digitalisation from high-tech businesses to more traditional SMEs. 

Enterprise  Europe  Network  The  Enterprise  Europe  Network  (EEN)  sector  group  on  cultural  and 
creative industries helps creative businesses innovate and grow on an international scale. It could also 
use the forthcoming Sustainability Advisors to ensure that SMEs in this ecosystem are able to make 
the  transition  to  sustainability.  The  MAAP  builds  on  the  experience  of  EEN  to  develop  a  tailor-made 
online tool guiding media companies through the relevant EU support instruments. 

230 As announced in COM(2020) 784 final, p. 13 ‘Action 6: A structured exchange of best practice with the industry and (sub)national film 
and audiovisual funds’ 
231 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

102 

 
 
                                                           
Digital innovation hubs Several of the European digital innovation hubs are specialised in media. They 
will be complemented by the Creative Europe support for Creative Innovation Labs focusing on content 
and  cross-sectoral  collaboration.      The  ecosystem  is  encouraged  to  make  the  most  of  the  network  of 
EDIHs, which offer a seamless service with the EEN and Clusters.  

103 

 
 
 
 
5.  Digital Ecosystem 

6.8 million people employed232 

Develop and deploy EU strategic 
digital technologies, capacities 
and infrastructures 

the  supply  side,  scaled-up, 
On 
targeted 
and 
coordinated 
investments in the digital ecosystem 
to  enhance  digital 
are  needed 
capabilities 
the 
support 
and 
development  of  key  sustainable, 
secure  and  trustworthy  general 
purpose  digital  technologies  and 
infrastructures233 
by 
industrial 
businesses  across  all 
public 
ecosystems 
administrations. 
all 
European  households  will  be 
covered  by  a  Gigabit  network,  with 
all  populated  areas  covered  by 
5G234.   

needed 

2030, 

and 

By 

by 

5.17% of EU value added  
(EUR 625 billion) 
Transformative initiatives 
Boost the adoption and diffusion of 
digital technologies across the EU’s 
businesses 
The  network  of  European  Digital 
Innovation  Hubs,  along  with  the  AI-on-
demand  platform,  the  AI  Testing  and 
Experimentation  Facilities  and  the  EU-
wide  Data 
create  unique 
synergies  that  help  both  less  digital-
savvy  SMEs  and  disruptive  innovators 
capture  the  real  value  of  the  data 
economy  and  deploy  AI-based tools  and 
services  by  providing 
them  with 
to 
innovation 
technical  expertise.  The  aim  is  that  by 
2030, 75% of European enterprises have 
taken  up  cloud  computing  services,  big 
data and Artificial Intelligence235.   

services  and  access 

Spaces 

1.2 million firms 
99.8% of SMEs  

Enhance digital skills and 
tackle the shortage of ICT 
specialists in Europe 
Funding  programmes,  dedicated 
investments  and 
reforms  and 
existing  initiatives  (e.g.  the  Pact 
for Skills, the Digital Skills and Jobs 
in 
Coalition)  play  a  key  role 
promoting 
for 
joint 
training,  reskilling  and  upskilling, 
to  enable  workers  to  meet  the 
needs  of  a 
in 
transition and increase the pool of 
digital  specialists.  By  2030  there 
will  be  20  million  employed  ICT 
the  EU,  with 
specialists 
convergence 
relative 
in 
proportions  of  women  and 
men236. 

labour  market 

action 

the 

in 

Towards an EU policy toolbox fit for purpose 

RRF  At  least  20%  of  RRF  funding  will  be  invested  in 

digital. It is an unprecedented opportunity to boost the 
digital  transition  across  the  EU,  through  a  number  of  high-
impact  multi-country  projects  combined  with  EU  funding 
programmes 
to  build  pan-European  advanced  digital 
capacities and infrastructures. 

robust 

Digital 

transformation  Through  current  and 
upcoming  legislative  initiatives237  the  Commission  aims  at 
framework  based  on 
building  a 
fundamental  EU  values  and  rights  and  on  robust  safety 
requirements  in  order  build  confidence  for  all  to  embrace 
digital  solutions,  a  level-playing  field  for  businesses  and  to 
foster the full potential of the data economy. 

regulatory 

InvestEU It bring financial instruments to support the 
development  of  sustainable  digital  infrastructures  and 
the  digitalisation  of  businesses  through  dedicated  InvestEU 

Digital  Europe  Programme  The  Programme 
enhances  the  deployment  of  advanced  digital 
technologies and  infrastructures  in key areas, as well of 
advanced  digital  skills.  It  will  also  support  the  broad 
adoption  of  digital  technologies  by  SMEs  and  public 
administrations.  Synergies  with  other  programmes,  e.g. 
Horizon  Europe  and  Connecting  Europe  Facility,  will 
cement this effort.   

Industrial Networks An Industrial alliance on 
Industrial Data, Edge and Cloud would strengthen 
Europe’s  presence  in  the  next  generation  cloud  supply. 
Member  States  agreed  to  cooperate  and  engage  in 
efforts to co-invest in semiconductor technologies across 
the  full  value  chain  to  this  end238.  An  Industrial  Alliance 
on  Microelectronics  &  Processors239  would  mobilise 
industrial  partners  to  establish  strategic  roadmaps,  and 
research  and  investment  plans  to  develop  capacities  for 
processor design, deployment and fabrication. 

232  Figures  for  employment  and  value  added  based  on  Eurostat  National  Accounts  and  number  of  firms  and  SME  shares  on  Eurostat 
Structural Business Statistics. 
233

 Including AI, cloud and edge computing, supercomputer and quantum computer, cybersecurity and blockchain. 

234

 2030 Digital Compass: the European way for the Digital Decade, COM(2021) 118 final, p.6. 

235

 2030 Digital Compass: the European way for the Digital Decade, COM(2021) 118 final, p.10.  

236

 2030 Digital Compass: the European way for the Digital Decade, P.5 

237 e.g. Digital Services Act, Digital Markets Act, upcoming regulatory framework for AI following the 2020 White Paper 
238  See  Member  State  Declaration  “Building  the  next  generation  cloud  for  businesses  and  the  public  sector 
https://ec.europa.eu/digital-single-market/en/news/towards-next-generation-cloud-europe 
239  See  Member  State  Declaration  ‘A  European  Initiative  on  Processors  and  semiconductor  technologies’  https://ec.europa.eu/digital-
single-market/en/news/joint-declaration-processors-and-semiconductor-technologies 

in  the  EU” 

104 

 
 
      
  
 
   
 
 
 
                                                           
windows. 

Sectors 
included in 
the 
ecosystem 

The ecosystem at a glance 

The digital ecosystem covers ICT Manufacturing, Services (excluding 
telecommunications), Telecommunications. ICT Services account for the 95% of the 
total ICT value added. Within the ICT Services subsector, telecommunications play an 
important role: they make up around 35% of the value added of the services sub-sector 
and 16% of its employment. 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy. *Sector only 
partially attributed to the ecosystem. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 
Networking and lock-in effects of digital technologies play in favour of companies with 
established dominant position in this ecosystem at the expense of smaller competitors. 
Many SMEs however are involved in niche solutions tailored to specific needs.  Some of 
the start-ups are even very successful in introducing new products, as examples of 
unicorns show. 
Although the digital ecosystem has not been among the most hardly hit240, the current 
crisis and the negative impact on investments still risk undermining the development and 
deployment of strategic digital capabilities, such as 5G, cybersecurity, HPC, AI.  
At  the  same  time,  the  COVID-19  pandemic  has  highlighted  the  crucial  role  played  by 
digital  technologies  in  all  sectors,  and  triggered  an  unprecedented  demand  for  digital 
technologies and infrastructures. Connectivity in the EU is steadily improving, businesses 
are  increasingly  taking  up  digital  solutions,  and  citizens  are  using  more  digital  tools241. 
However, significant variations still exist across sectors, Member States and regions, large 
businesses and SMEs242. Significant gaps also remain when it comes to digital skills, which 
are  a  key  enabler  of  digitalisation243.  Digital  transformation  of  sectors  like  construction 
and  transportation  is  crucial  to  achieve  more  circularity  and  further  energy  efficiency, 
and meet the EU target of carbon neutrality by 2050. 
Digital infrastructures and capabilities are essential assets to recover from the crisis, , 

SME 
dimension  

Current 
challenges 

Forward-

240 The digital ecosystem is heterogeneous; the magnitude and nature of the economic impact of COVID-19 vary depending on the market 
area. Some technology segments (such as PCs, tablets, and PC monitors) and infrastructure as a service (IaaS) are expected to experience 
continued  growth.  However,  mid-term,  a  general  decline  in  ICT  spending,  as  companies  put  non-mission-critical  investments  on  hold, 
might be expected (IDC, August 2020). 
241 Data from DESI 2020  
242 As an example, only 17% of European SMEs use advanced cloud services and only 12% big data. Among large companies these figures 
are respectively 38.5% and 32.7% (Digital Economy and Society Index 2020). 
243 42% of the EU population still lacks basic digital skills. In parallel, there remains a shortage of ICT specialists on the labour market: 64% 
of large enterprises and 56% of SMEs that recruited ICT specialists during 2018, reported that vacancies for ICT specialists are hard to fill 
(Digital Economy and Society Index 2020). 

105 

 
 
 
 
 
                                                           
looking 
assessment 

Global 
context 

to  strengthen  the  vital  and  digitally-enabled  functions  of  our  society  and  to  build  a 
more  competitive  and  resilient  economy  across  all  industrial  ecosystems.  The  EU 
suffers from significant underinvestment and dependency from other regions for critical 
parts of the supply chain. The Commission services estimate244 an annual investment gap 
of about EUR 125 billion for digital.  
In the next years, it is crucial to support reforms and investments in key areas such as: 
  Connectivity,  with  the  aim  of  reaching  the  goals  of  the  Gigabit  Society  Strategy 
(Towards  a  Gigabit  Society)  restated  in  the  ‘Shaping  Europe’s  Digital  Future’ 
Communication,  the  ‘5G  Action Plan for  Europe’,  and  expanded in  the 
Commission 
Communication 

2030 Digital Compass: the European way for the Digital Decade.

  Development  and  deployment  of  advanced  digital  technologies,  such  as  AI, 

blockchain, cloud and edge infrastructure and services, HPC, quantum. 

  Human  capital,  focusing  on  digital  skills  at  all  levels,  to  boost  social  inclusion,  help 
workers  meet  the  needs  of  a  labour  market  in  transition  and  increase  the  pool  of 
digital specialists.  

  Digitalisation  of  businesses,  by  accelerating  the  sustainable  take-up  of  digital 

solutions and a cyber-resilient digital transformation across all sectors. 

  E-government,  to  modernise  the  public  administration,  increase  its  efficiency  and 
infrastructure security and resilience, and stimulate the online interaction between 
administrations and citizens and businesses.  

Based on DESI 2020, in 2017 the value added of the ICT sector in the EU (4.1%) was lower 
than that of the US (5.9%), Japan (5.8%) and China (4.8%). In 2018, public funding of ICT 
R&D  represented  7.1%  of  EU  government  budget  allocations  for  R&D.  This  figure  has 
continuously  lagged  behind  the  US  and  Japan  where  ICT  represent  8.1%  and  10%  of 
government budget allocations for R&D245. 
Finally, the EU is dependent on other regions for key digital capacities (Asia and the US), 
whether hardware (e.g. fibre, electronic components, raw materials), computing power 
or  software  (data  processing,  cloud  and  edge  computing).  The  top  four  leaders  on  the 
public  cloud  infrastructure  market  will  account  for  over  80%  of  global  revenues  in 
2021246.  The  market  of  edge  computing  features  enormous  growth  potential  (global 
market value expected to reach over EUR 200 billion by 2024)247. To reap the benefits of 
this  potential,  it  is  important  to  leverage  on  the  existing  strengths  of  the  EU  industry 
and support the development and deployment of a European cloud-to-edge ecosystem, 
building up the European data infrastructure and data spaces. This will enable European 
industrial  sectors  to  create  value  from  industrial  data  sharing  and  to  innovate,  notably 
thanks to broader use of AI and Digital Twin technologies. 

244  SWD(2020)  98  final;  backed-up  by  studies  of  the  European  Investment  Bank  and  McKinsey  (“Shaping  the  Digital  Transformation  in 
Europe”, available here). 
245 Digital Economy and Society Index 2020, “The EU ICT Sector and its R&D Performance”.  
246 

https://www.gartner.com/en/newsroom/press-releases/2020-08-10-gartner-says-worldwide-iaas-public-cloud-services-market-grew-

37-point-3-percent-in-2019.  
247 
Forecast 
(https://www.idc.com/getdoc.jsp?containerId=prUS46878020#:~:text=According%20to%20the%20new%20Worldwide,the%202019%E2%
80%932024%20forecast%20period)  

Worldwide 

Spending 

Guide, 

IDC’s 

Edge 

by 

2020, 

106 

 
 
 
 
 
                                                           
 
Mapping of policy tools in more detail 

Funding and budgetary Programmes 

RRF  20%  of  RRF  funding  (up  to  EUR  134  billion  in  2018  prices)  will  be  invested  in  digital,  which  may 
significantly strengthen the European digital ecosystem and the ICT sector. In particular, investments in 
high-impact  multi-country  projects  in  critical  technological  areas  will  enable  the  deployment  of  large 
digital  infrastructures,  capabilities  and  production  capacities  that  will  enhance  European  digital 
sovereignty and  underpin the digital transformation of all sectors, with important spill-overs for the EU 
economy  It  is  important  to ensure  that  national Recovery  Plans  have  a  strategic  approach towards  the 
digital transition, combining both reforms and investments with a lasting positive impact on the future of 
Member States, and timely and effective implementation.  
CRII+/ERDF/ESF/CEF  These  programmes  provide  resources  for  the  deployment  of  connectivity 
networks,  the  digitalisation  of  businesses  and  the  public  sector  and  digital  re-  and  upskilling. 
Communication infrastructure, including very high-capacity networks are crucial for the development of 
the whole economy. Additionally, ESF supports more and better digital skills training to make the labour 
force ready for the digital transition.  

Horizon Europe (including European Partnerships) The second pillar in Horizon Europe will support 
R&D in ICT technologies mainly in the Cluster 4: Digital, Industry and Space. The following public-private 
partnerships  in  preparation.  (i)  The  EuroHPC  Joint  Undertaking  (JU)  aims  to  support  R&D&I  in  high 
performance computing (HPC), including quantum computing resources, and seeks to provide computing 
solutions,  improving  cooperation  in  advanced  scientific  research,  boosting  industrial  competitiveness, 
and ensuring European technological and digital autonomy. (ii) The JU on Smart Networks and Services, 
which aims to strengthen the position of the European towards next generation ‘6G’ network systems, 
devices and associated service infrastructures is being prepared. (iii) The JU on Key Digital Technologies 
(KDT)  will  reinforce  Europe’s  technology  sovereignty  in  electronic  components  and  systems  to  support 
future  needs  of  vertical  industries  and  the  economy  at  large.  Furthermore  breakthrough  innovation, 
market  deployment  and  innovative  solutions  will  be  supported  in  the  third  pillar  of  Horizon  Europe, 
including by EIT DIGITAL248. 

Just Transition Fund  To invest  in  digitalisation  and  in digital connectivity  in regions  facing  particular 
challenges deriving from the green transition.  
Digital  Europe  Programme  Deployment  of  advanced  technologies  such  as  supercomputing  and 
artificial  intelligence  and  quantum  computing  presents  unparalleled  opportunities  for  growth, 
competitiveness  and  technological  autonomy  of  the  European economy.  The  effect  of  deployment  of 
these technologies will affect virtually all sectors of the economy. Challenges related to cybersecurity and 
threats arising from an increasingly digitalised economy as well as lack of advanced digital skills needed 
to develop and deploy these technologies will be addressed by the programme. The programme will also 
support the deployment of  European Data Spaces in nine sectors (as announced in the European Data 
Strategy),  AI  Testing  and  Experimentation  Facilities,  and  the  Cybersecurity  Competence  Centre  and 
Network, enhancing the EU's open strategic autonomy. 

248 https://www.eitdigital.eu/  

107 

 
 
                                                           
InvestEU  Three  InvestEU  windows  (out  of  total  four):  sustainable  infrastructure  (including  very-high 
capacity connectivity and cloud computing); research, innovation and digital; and social investment and 
skills  (including  digital  skills  and  capabilities)  are  closely  linked  with  the  development  of  the  digital 
ecosystem.  In  addition,  the  SME  window  will  stimulate  debt  and  equity  financing  for  digitalisation 
projects of SMEs and small mid-caps. 

Access to Finance SMEs and start-ups face a major finance gap in Europe of EUR 20-35 billion despite 
substantial support programmes at EU and national level, and in some Member States, access to finance 
remains  one  of  the  key  problems  they  face.  There  is  a  need  to  diversify  sources  of  finance,  enhance 
venture capital invested in European SMEs, start-ups, and address geographical imbalances within the 
EU  (with  Central  and  South-Eastern  Europe  facing  particular  challenges).  The  Commission  is  working 
closely with Member States, notably through the Digital Innovation and Scale-up Initiative.  

EU Space Programme and European Defence Fund Space Programme will implement an autonomous 
civil  global  navigation  satellite  system  (Galileo),  a  civil  regional  satellite  navigation  system  (EGNOS),  an 
autonomous    civil  Earth  observation  system  (Copernicus),  space  situational  awareness  (SSA)  and  a  satellite 
communications service (GOVSATCOM). Uninterrupted, up-to-data and secure space-related data, information 
and services delivered by the EU space programme are enablers for developing new applications. Additionally, 
space  technologies  in  relation  to  geolocalisation,  quantum  communications  and  imaging  are  enablers 
for new ICT services, start-ups and innovative products and services. 

Supportive regulatory environment 

Main Single Market barriers within the ecosystem A substantial body of legislation has been put 
forward or was reviewed over the last years (e.g. electronic communications regulation, copyright, 
data  protection,  digital  public  services,  cybersecurity)  and  its  transposition,  implementation  and  
enforcement are closely monitored. Where gaps have been identified, the Commission has tabled 
relevant  proposals  or  is  in  the  process  of  doing  so  (please  see  the  point  below  on  ‘Digital 
transformation’). Some important barriers were identified such as: Inefficiencies in the deployments 
of  electronic  communications  networks,  mainly  due  to 
legal  and  administrative  burdens 
(burdensome  permit  granting,  high  fees,  problems  to  access  to  physical  infrastructure,  lack  of 
information  on  existing  infrastructure,  etc.).  Inconsistent  regulatory  approaches  by  national 
authorities which might create disincentives for investments into new very high capacity networks 
(VHCN).  Fragmented  approach  to  spectrum  assignments,  which  does  not  promote  wireless 
connectivity investment, in a coordinated fashion, for the benefit of internal market, (in particular 
market shaping license conditions, or setting asides spectrum for new entrants, as well as different 
types  of  authorisation  types  regimes  applicable  in  to  a  specific  band).  Lack  of  reliable,  energy-
efficient,  trusted,  secure,  interoperable  and  decentralised  cloud  and  edge  infrastructure  and 
service providers (dominance of non-EU players with limited European presence). Lack of genuine 
single market for data, lack of data sharing within/across sectoral and national borders, lack of high-
quality and high-volume data processing capacities. Digital divide and insufficient sustainable take-
up of advanced technologies (in particular by SMEs and public entities). 

Standardisation In the digital area, there is a need for global standards providing for interoperability. 
Europe  needs  to  mobilise  resources  and  reinforce  the  European  players  with  coordinated  positions 
with  Member  States  and  industry  in  global  standard  organisations  to  drive  technology  leadership, 
values and ethics. 

108 

 
 
Digital transformation  Regulatory obstacles remain in several areas, e.g. diverging national rules in 
the  area  of  online  platforms;  risk  of  inconsistent  regulatory  frameworks  among  the  Member  States  on 
advanced  technologies  (e.g.  AI);  data  sharing  across  the  Member  States  and  across  businesses  etc.  A 
number of legislative revisions to improve the current framework are already ongoing or planned (e.g. 
proposal  for  review  of  Directive  on  security  of  network  and  information  systems  (NIS  Directive);  Data 
governance  Act,  Data  Act  (proposal  planned  for  Q3  2021);  review  of  the  Broadband  Cost  Reduction 
Directive, review of the Roaming Regulation; review of the eIDAS Regulation; follow-up to the White Paper 
on  Artificial  Intelligence,  including  on  safety,  liability,  fundamental  rights  and  data).  Moreover,  the 
Commission adopted in September 2020 a Connectivity Toolbox Recommendation, and recently proposed 
for two legislative initiatives - the Digital Services Act (DSA) and the Digital Markets Act (DMA) – with the 
objective of creating a a level playing field for digital businesses, as well as a safer digital space for users 
of digital services.  

eGovernment There is significant gap between frontrunners and laggards – for example, while 94% of 
Finnish internet users use the digital public services, whereas only 32% of Italians do.249 The performance 
across Member States has converged in the last years, but there is still room for improvement. European 
countries  could  improve  the  implementation  of  digital  enablers  in  eGovernment  service  delivery.  In 
particular, some areas require attention: promotion of cross-border and interoperable public services 
(EU e-identification, the Once Only Principle, Blockchain), inclusiveness and accessibility, and strengthen 
cybersecurity250. 

Green transformation The green and digital transitions are complementary goals. Digital solutions have a 
critical  role  to  play  in  supporting  Europe’s  transition  to  a  more  sustainable  economy  and  society.  The  green 
transformation  can  boost  the  future  of  digital  technologies,  with  reduced  resource  usage,  waste  and 
greenhouse  gas  emissions.  In  parallel,  the  digital  ecosystem  itself  (networks,  data  centres,  and  connected 
objects)  will  need  to  become  more  energy  and  resource  efficient,  reuse  waste  energy,  and  use  more 
renewable energy sources. Numerous EU initiatives will address this – including climate neutral data centres 
and  electronic  communications  networks  by  2030,  the  Circular  Economy  Action  Plan  and  the  Circular 
electronics initiative251. These  will  be supported by specific  data  spaces enabling the needed data  collection 
and data sharing. 
Strategic Public Procurement Innovation procurement (public procurement that buy the development 
and/or  adoption  of  new  innovative  solutions) supports  reinforcing  industrial  competitiveness  and 
increases  private  sector  investments  in  strategic  digital  and  green  technologies.  It  is  an  underused 
instrument  in  Europe  in  key  digital  areas  (e.g.  AI,  robotics,  Blockchain,  advanced  computing  etc.)  and 
compared to other parts of the world252.Sustainable public procurement (green and socially responsible) 
can  speed  up  the  transition  of  ICT  towards  contributing  to  the  Green  Deal  climate  and  environmental 
objectives.  The  integration  of  environmental  requirement  in  public  procurement  is  essential  to  reduce 
the  impact  of  public  authorities  and  to  promote  eco-innovation.  It  promotes  fully  circular  and  fair  ICT 
infrastructure and products, maximising their lifetime, closing material chains where possible, minimising 

249 Digital Economy and Society Index, 2020. 
250  To  give  an  example,  only  20%  of  all  URLs  assessed  by  eGovernment  Benchmark  2020  meet  half  of  the  14  basic  security  criteria 
evaluated.  
251See  also  the  Codes  of  Conduct  for  Energy  Efficiency  in  ICT  and  in  particular  for  data  centres  (https://ec.europa.eu/jrc/en/energy-
efficiency/products/coc). 
252 Innovation procurement investments in Europe are only half (9.9%) of those in the US (20% of total public procurement) and even less 
than  in  South  Korea  (25%  of  total  public  procurement).  Two  areas  especially  need  a  boost  in  investments  in  Europe:  innovation 
procurements of digital solutions (Europe is underinvesting with a factor 3) and R&D procurements (Europe is underinvesting with a factor 
5 compared to e.g. the US). 

109 

 
 
                                                           
carbon emissions and the impact on the environment, and minimizing any impact on human rights and 
labour rights. 

Intellectual  Property  Regarding  Standards  Essential  Patents  (SEPs),  the  IPR  framework    can  be 
improved  to  ensure  a  balanced,  smooth  and  predictable  environment  that  supports  a  sustainable  and 
efficient standardisation ecosystem and SEP licensing environment so that contributors to the standards 
are fairly rewarded whilst implementers can access the patented technologies on reasonable terms. This 
is crucial for the rapid take up of IoT in Europe.  

International partnerships and dialogue 

Strategic Partnerships (Critical Materials and input) Implementation of the Critical Raw Materials 
Action  Plan  is  key  to  secure  access  to  primary  and  secondary  raw  materials  necessary  for  the 
development  of  digital  technologies.  Strengthening  cooperation  with  like-minded  third  countries, 
including on trade, to support safe global supply chains with interdependencies complement the strategic 
partnerships. 

Networks and governance 

Industrial  Networks  Raw  materials  are  a  critical  input  to  digital  technologies.  The  Industrial 
Alliance on Raw Materials will address the raw material dependencies and reinforce resilience of 
supply  chains.  The  Alliance  on  Data,  Edge  and  Cloud  would  aim  to  foster  joint  development  and 
deployment  of  next  generation  European  cloud  and  edge  technologies  for  businesses  and  the  public 
sector in the EU. Several declarations relevant to the digital ecosystem have been signed by Member 
States.  While  such  declarations  in  themselves  do  not  amount  the  creation  or  a  launch  of  industrial 
alliances, such declarations state the intention to join forces and collaborate on common projects and 
priorities,  e.g.  on:  Processors  and  semiconductor  technologies253;  Quantum  Communication 
Infrastructure254;  Cooperation  on  Artificial  Intelligence255;  Access  to  at  least  1  million  sequenced 
genomes in the European Union by 2022, e.g. European Blockchain Partnership256; Letter of intent on the 
testing and large scale demonstrations of Connected and Automated Driving257. 

Clusters  cooperation  There  are  1,214  clusters  registered  on  the  European  Cluster  Collaboration 
Platform out of which 274 contribute to Digital. As part of the European recovery plan,  clusters could 
help industrial  ecosystems to  develop a  robust  digital industry  and  facilitate  the deployment  of  new 
technological solutions, particularly in businesses with a low degree of digital technology uptake such as 
SMEs. 
Pact  for  skills  European  skills  partnerships258  in  key  industrial  ecosystems,  involving  a  wide  range  of 
actors,  that  will  promote  joint  actions  for  reskilling  and  upskilling  and  investment  in  training.  In  this 

see  https://ec.europa.eu/digital-single-market/en/news/nine-more-countries-join-initiative-explore-quantum-

253  Joint  declaration  on  processors  and  semiconductor  technologies,  December  2020  see  https://ec.europa.eu/digital-single-
market/en/news/joint-declaration-processors-and-semiconductor-technologies  
254  December  2019, 
communication-europe  
255  April  2018,  EU  Member  States  sign  up  to  cooperation  on  Artificial 
market/en/news/eu-member-states-sign-cooperate-artificial-
intelligence#:~:text=On%2010%20April%2025%20European,European%20approach%20to%20deal%20therewith.  
256  April  2018,  European  countries  join  Blockchain  Partnership  https://ec.europa.eu/digital-single-market/en/news/european-countries-
join-blockchain-partnership  
257  March 
2017, 
cooperative-connected-and-automated  
258 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

https://ec.europa.eu/digital-single-market/en/news/eu-and-eea-member-states-sign-cross-border-experiments-

Intelligence,  see  https://ec.europa.eu/digital-single-

110 

 
 
                                                           
context, the existing Digital Skills and Jobs Coalition will canvass pledges related to the development of 
digital  skills  in  different  sectors.  Activities  will  be  showcased  and  disseminated  through  the  European 
Digital Skills and Jobs Platform.  

Enterprise  Europe  Network  The  Enterprise  Europe  Network  (EEN)  has  an  ‘ICT  Industry  and  Service 
Sector Group’, which will help SMEs with their digital transformation, adapting their business processes 
and improving their IT readiness.  EEN will help the SMEs make use of the EU Digital Innovation Hubs 
(EDIH) services and carry out basic digital assessments for SMEs. It needs to continue to evolve to help 
relevant SMEs become more resilient and ensure that digitalisation and sustainability go hand in hand. 
Digital Innovation Hubs Acceleration of the uptake of digital technologies (such as robotics, Artificial 
Intelligence and data platforms) by SMEs will improve the capabilities of the ecosystem. The network of 
Digital Innovation Hubs (DIHs) will help ensure that every company, small or large, high-tech or not, can 
take  advantage  of  digital  opportunities  to  optimise  their  production  processes,  and  to  innovate  their 
products and business models. The geographical spread of the network covering all regions of Europe is 
key  to  offer  services  at  working  distance  to  all  companies  and  public  administrations.  DIHs  will  offer  a 
seamless service with the EEN and Clusters. 

111 

 
 
 
 
 
6.  Electronics Ecosystem 

1.79 million people employed259 

1.06% of EU value added      

(EUR 128 billion) 

104,000 firms                          

98.9% of SMEs260 

data 

Underpinning technology for 
a secure, trusted, powerful 
data ecosystem and the new 
applications of AI 
and 
Reinforce  processors 
technologies 
semiconductor 
for 
processing, 
communications  and  related 
data infrastructures, and new 
applications 
to 
capitalise  further  on  a  digital 
transition  of  all  sectors  and 
ensure  a  secure  and  trusted 
data ecosystem.  

for 

AI 

Transformative initiatives  

New chips to drastically improve the  
energy performance of data-
processing in  digital systems, 
including electric mobility 
Driven  by  AI  and  the  shift  towards 
edge-computing,  digital  applications 
will 
require  high  computational 
power together with reduced energy 
consumption.  Developing  powerful 
and  energy-efficient  processors  and 
semiconductor components is both a 
challenge and an opportunity for EU 
industry.  

Mobilisation of the European 
electronics industry to take 
action in specific areas, notably 
in processor technologies 

consolidate 
leadership 

industry  on 
Mobilise  Europe 
emerging  critical  processor  and 
technologies, 
semiconductor 
innovation-
and 
in  areas  of 
driven 
proven 
as 
such 
automotive,  as  well  as  in  new 
innovative  digital  areas  via  a 
joint  European  strategy  and 
investment in key infrastructures 
and capabilities.  

expertise, 

Towards an EU policy toolbox fit for purpose 

Horizon  Europe  (including  European 
Partnerships)  Reinforcing  potential  to  innovate 
across the value chain and lay the ground to transfer 
innovation to future industrial deployment. 

Industrial Networks Mobilising a wide range 
of  public  and private  sector  actors  to  join  forces  to 
achieve  key 
industrial  policy  objectives  on 
processors  and  semiconductor  technologies  for 
large 
digital  applications  across  key  sectors.  A 
number  of  Member  States261  have  signed  a 
declaration  expressing 
to  work 
together in order to bolster Europe’s electronics and 
embedded  systems  value  chain  with  a  strong  focus 
on processors and semiconductor chips.  

interest 

their 

RRF  Offering  Member  States  unprecedented 
opportunities to invest in specific areas, namely digital 
components 
semiconductor 
technologies).  The  RRF’s  stated  ambition  is  to  double, 
by  2025,  the  production  of  cutting-edge  semi-
conductors  in  Europe  and  to  produce  10  times  more 
energy efficient processors. 

(processor 

and 

Pact  for  Skills  Addressing  critical  skill  gaps  in 
existing and emerging digital technologies, requiring an 
overall  public  and  private  investment  of  EUR  2  billion 
providing  upskilling  and  reskilling  opportunities  for 
250,000  people  (2021-2025)  in  Europe’s  electronics 
clusters262. 

IPCEI  A  potential  new  IPCEI  would  help  drive 
innovation to the stage of first industrial deployment in 
processor  and  semiconductor  technologies  (design 
ecosystem,  supply  chain  capabilities,  first  industrial 
deployment  of  advanced  semiconductor  technologies, 

259 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics. Data from 2018. 
260 This figure is only based on the number of firms, distribution of turnover or value added will result in a different picture 
261 Joint declaration on processors and semiconductor technologies, https://ec.europa.eu/digital-single-market/en/news/joint-declaration-
processors-and-semiconductor-technologies 
262 See: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en  

112 

 
 
    
 
      
 
 
 
 
 
 
 
                                                           
Sectors 
included in 
the 
ecosystem 

towards 

leading  edge  process 
including  scaling 
innovation)  crucial  for  energy-efficiency,  uptake  of 
digitalisation  and  development  of  trusted  digital 
infrastructure. 

The ecosystem at a glance 

The  electronics  ecosystem  covers  design  and  manufacturing  of  electronic  components; 
includes raw materials (semiconductor wafers) and manufacturing tools.  The value chain 
stretches  from  design  to  semiconductor  manufacturing  to  ‘assembly-test-packaging’ 
facilities,  before  reaching  end-user  companies,  which  integrate  the  chips  into  their 
product solution. Materials, equipment and related services and tools, including specific 
design tools and so-called functional blocks, enable design and manufacturing (see fig. 2).  
The European ecosystem is characterised by vertically integrated design and manufacturing 
companies, design companies, pure-play foundries, manufacturing equipment and material 
suppliers, among others. It also includes 3 world-leading Research and Development (R&D) 
Centres of excellence (IMEC, CEA-Leti, Fraunhofer Mikroelectronik) in microelectronics and 
digital  technologies.  The  major  EU  producers  of  semiconductor  chips  operate  globally, 
serving  OEMs  in  automotive,  industrial  manufacturing,  security  and healthcare  as well as 
aeronautics,  energy  production  and  telecom.    Their  leadership  positions  in  the  afore-
mentioned market segments derive from strengths in secure hardware, power electronics, 
sensors  and  MEMS  technologies.  Furthermore,  manufacturers  of  chips  at  leading-edge 
nodes rely for their technology development on EUV photolithography machines produced 
by  a  unique  global  supplier,  which  belongs  to  the  European  electronics  ecosystem.  
Packaging,  assembly  and  test  is  located  mostly  in  Asia,  as  is  manufacturing  of  chips  at 
nodes  with  feature  sizes  below  20nm  –  used  in  microprocessors  and  memory  chips  for 
high-end computing and communications, PCs, smartphones and consumer products. 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy. *Sector only 
partially attributed to the ecosystem; ^Includes additional share added on top of horizontal component; +Excludes 
contribution of C28. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

113 

 
 
 
 
 
 
SME 
dimension  

Current 
Challenges 

Forward-
looking 
assessment 

Global 
Context 

Figure 2-The Semiconductor Value Chain 

addressing 

the  digital  market 

SMEs  play  a  strong  role  in  value  chains,  for  electronics  board  design  and  integration, 
photonics,  and  equipment  manufacturing,  often  strongly  associated  to  value  chains  of 
specific  big  companies,  but  are  as  well  active  in  chip  design.    The  EU  SME  landscape 
contrasts with an Asian landscape rather dominated by conglomerates and megafactories.  
Highly  innovative  SMEs  at  the  forefront  of  new  technology  development  face  major 
hurdles  in  assessing  adequate  source  of  finance  necessary  to  upscale  their  technology 
development, which is high capital intensive and entails high financial risks due to inherent 
long learning cycles.  
The  electronics  ecosystem  has  coped  well  with  the  challenging  situation  caused  by  the 
COVID  pandemic.  Companies 
(servers/data-
centres/telecom/Internet/IoT)  have  in  general  benefitted  from  increased  digitisation 
through the increasing volume of data traffic and use of mobile communications.  
Energy  performance  of  a  system  is  highly  dependent  on  the  energy  efficiency  of  the 
individual  components.  Europe’s  ability  to  couple  the  digital  transition  with  a  green 
transition hangs  on  its  ability  to  produce energy-efficient  chips.  European  chip  producers 
also  need  however  to  build  on and  expand  their  current  strengths263    to  data  processing 
and  communications  where  they  have  very  limited  market  presence.  This  includes  the 
design  and  production  of  processors,  which  are  of  ever-growing  importance  in  data 
processing  for  data  and  communications  infrastructures,  high-end  and  general  purpose 
computing, and future trends like highly automated driving and AI applications at the edge 
of the network. 
For manufacturing of the fastest and most efficient processors, Europe currently relies on 
in  non-EU  regions  offering  advanced  manufacturing  of 
external  foundries 
components  with  feature  sizes  down  to  7  and  5nm264.  This  is  of  concern  now  more  than 
ever  as  data-processing  represents  a  critical  capability  to  further  capitalise  on 
opportunities  in  the  digital  sector  that  are  essential  for  digital  transition,  and  hence  puts 
pressure on European industry to act to reduce strategic dependencies.  
The  EU  semiconductor  sector  will  require  a  resilient,  diverse,  and  secure  supply  chain  to 
prosper. The mapping of the electronics ecosystem for strategic dependencies provides an 
opportunity  to  conduct  an  in  depth assessment  of  the risks  associated  with the  different 
stages of the supply chain, including on the origins and sources of supplies and the extent 
to which such commercial relationships results in vulnerabilities of the EU economy. 
Business performance and future outlook remain highly dependent on how the pandemic 
continues to unfold at a global level, on the impact of the economic stimulus packages that 
will  be  implemented  and  on  a  variety  of  geopolitical  factors  (ref.  3.  Global  Context).  A 
concerted effort  to  capitalise  on  further  digital  and  green  transformation of  industry  and 
services would be beneficial for Europe at large. 
Independently,  the  market  for  AI  chips 
semiconductors and will drive future growth for the whole industry. 
Europe’s  semiconductor  footprint  is  relatively  small  compared  to  other  regions265. 
Therefore it will be an important area for Europe to focus on in  order to avoid excessive 
dependencies now and in the future, and harness the potential of new trends such as edge 
AI. US and Chinese semiconductors companies are accelerating their efforts on R&D up to 
high volume production.  
Cooperation with likeminded partners to ensure a diversified and resilient semiconductor 
supply chain will be essential. The EU strongly supports global efforts in the G20, the WTO 

largest  opportunity 

is  considered  the 

located 

in 

263 Among European stakeholders, there are two global market leaders in specific segments of power management and sensors (Infineon, 
Bosch). NXP and Infineon are leading in automotive semiconductor worldwide, ST is in the top 5 (Market share, Statista, 2019).  
264 In 2020, only 2 companies, TSMC (Taiwan) and Samsung (S. Korea) offer chips at 7-5nm. Intel (US) announced that its 7nm technology 
has been delayed until 2022. 
265 Ref. Footnote 84 

114 

 
 
 
 
                                                           
and in the context of EU’s bilateral relations, to monitor critical supply chains, keep them 
open  and  undisrupted,  and  ensure  fair  and  equitable  access  to  critical  goods.  Enhancing 
the  resilience  and sustainability  of  supply  chains  is  a  pillar  of  the  European  Union’s  drive 
towards open strategic autonomy.  

115 

 
 
Mapping of policy tools in more detail  

Funding and budgetary Programmes 

RRF  In  the  Annual  Sustainable  Growth  Strategy  2021,  the  Commission  encourages  Member  States  to 
invest  in  specific  areas,  among  these  the  Scale  Up  flagship  focusing  on  digital  processors  and  cloud. 
Several  Member  States  already  plan  reforms  and  investments  for  microelectronics  to  be  supported  by 
RRF.  Part  of  these  national  investments  can  contribute  to  a  multi-country  project  on  processors  and 
semiconductor  chips,  which  has  the  potential  to  boost  highly  innovative  design  and  fundamentally 
innovative process technology production capabilities in Europe. 

IPCEIs  The  first  IPCEI  on  Microelectronics  approved  in  December  2018  under  State  aid  rules  allows 
France, Italy, Germany, the UK and Austria266 to jointly advance innovation in microelectronics up to the 
first  industrial  deployment  through  transnational  cooperation  projects  with  major  synergies  across 
industry.  The  total  national  funding  of  EUR  1.9  billion  unlocks  EUR  6.53  billion  investment  from  30 
companies and 2 research organisations, including three SMEs. A large number of Member States267 have 
signed  a  declaration expressing  their  interest  to  work  together  in  order  to  bolster  Europe’s electronics 
and embedded systems value chain with a strong focus on processors and semiconductor chips, through 
development of a proposal for a possible new IPCEI. 

Horizon  Europe  (including  European  Partnerships)  The  Key  Digital  Technologies  (KDT)  Joint 
Undertaking  (JU)  under  Horizon  Europe  aims  at  reinforcing  Europe's  potential  to  innovate  through 
robust electronics value chains providing secure and trusted technologies tailored  to the needs of user 
industries. It will contribute to boosting the EU’s competitiveness and technological sovereignty through 
support  for  R&D  into  essential  electronic  components  and  related  manufacturing  equipment.  The  R&I 
Programme also fosters the use of advanced electronics in other digital and non-digital priorities, often in 
partnership  with  industry  and  academia,  such  as  R&I  in  Artificial  Intelligence,  High-Performance 
Computing and mobility. 
Digital Europe Programme Testing and Experimentation Facilities for Edge AI under Digital Europe will 
support market development of Edge AI, of high strategic relevance for Europe. The proposed platform is 
meant to provide the opportunity for EU enterprises, large and small, to test prototypes with the most 
advanced AI computing technologies.  

InvestEU  programme 

InvestEU  The 
identifies  processors  design,  edge  AI  and  semiconductor 
manufacturing  among  the  areas  of  strategic  relevance  for  investments  particularly  in  the  Research, 
Innovation and Digitalisation Window.  

Access  to  Finance  As  the  electronics  ecosystem  is  highly  capital  intensive,  SMEs  and  Start-ups  face 
major  hurdles  in  accessing  adequate  source  of  finance  to  upscale  their  technology  developments.  In 
addition,  technology  development  entails  high  financial  risks  due  to  inherent  long  learning  cycles.  
Sources of finance need to be diversified, to significantly complement funding of European programmes 

EU  Space  Programme  and  European  Defence  Fund  Synergies  with  the  space  programme  and  the 
European  Defence  Fund  could  be  further  explored  to  tackle  specific  secure  critical  dependencies  on 

266 The participation of Austria was approved on 23 March 2021: https://ec.europa.eu/commission/presscorner/detail/en/ip_21_1343 
267 Joint declaration on processors and semiconductor technologies, https://ec.europa.eu/digital-single-market/en/news/joint-declaration-
processors-and-semiconductor-technologies 

116 

 
 
                                                           
sourcing electronic components from outside the EU, and demand for state-of-the-art technology, which 
is more prevalent than in the past.  

Supportive regulatory environment 

Standardisation  Standardisation  needs  and  opportunities  are  in  emerging  markets  and  applications 
enabled by semiconductor technologies, namely autonomous driving, future connectivity for 6G, edge AI 
and  security.  On  automotive,  as  the  technology  for  highly  automated  vehicles  and  electric  vehicles 
continues  to  develop  at  global  level,  in  addition  to  EU  legislation,  setting  and  /or  updating  safety 
standards for electronics in vehicles, and connectivity with the infrastructure, other vehicles and humans 
would  be  crucial  for  Europe  to  maintain  industrial  competiveness  in  the  field.  On  connectivity  and 6G, 
setting specification standards on next generation 6G core technology early ahead would be important  in 
order to re-build a position in a strategic field interlinked with automotive, in particular highly automated 
driving, and with interoperability and security of critical infrastructure.  

Green  transformation  Energy-efficient  electronics  are  at  the  heart  of  the  green  and  digital 
transformation  contributing  to  optimisation  of  resource  usage,  reduction  of  greenhouse  gas 
emissions,  environmental  monitoring  and  protection,  etc.  Numerous  EU  initiatives  address  this  – 
including the target on climate neutral data centres by 2030 and the Circular Economy Action Plan. 
The Circular Electronics Initiative will contribute to the green transformation of electronics and the 
reduction of emissions by making the life of devices longer, tackling waste, increasing the circularity 
of value chains and encouraging and enabling users to use their devices for longer (right to repair). 
Significant  research  efforts  will  be  devoted  to  designing  and  developing  highly  efficient  processor 
chips.  

Strategic Public Procurement There is scope to exploit European industry’s strengths in secure and 
low-power  technologies.  Development  of  standards  for  green  and/or  circular  electronics  and 
cybersecurity,  and  eventual  certification  schemes  could  facilitate  strategic  public  procurement, 
which in turn would stimulate standardisation activities. 

Intellectual  Property  Intellectual  Property  and  patents  are  a  key  ingredient  of  the  electronics 
ecosystem.  An  additional element  in the electronics  ecosystem  are  de-facto  standards  established 
by  market  leaders  or  ad-hoc  cross-industry  collaborations.  A  significant  number  of  EU  companies 
with  relevant  intellectual  property  (IP)  have  been  acquired  by  foreign  groups,  which  has  created 
critical dependencies for the ecosystem. Moreover, as in most other ecosystems, the transfer of IP 
developed in academic R&D to the market remains a weakness in Europe compared to other areas 
of the world. Regarding foreign acquisitions, the recent EU foreign direct investment (FDI) screening 
regulation  that  became  operational  on  11th  October  2020  will  provide  the  Commission  the 
possibility  to  assess  the  risks  of  foreign  investments  for  companies  active  in  the  semi-conductor 
sector, among others, in terms of impact on security and public order from a European perspective.  

Networks and governance 

Industrial  Networks  On  7  December  2020,  a  large  number  of  Member  States268  signed  a 
declaration expressing their interest to work together in order to bolster Europe’s electronics and 

268 Joint declaration on processors and semiconductor technologies, https://ec.europa.eu/digital-single-market/en/news/joint-declaration-
processors-and-semiconductor-technologies 

117 

 
 
                                                           
embedded systems value chain with a strong focus on processors and semiconductor chips. In this joint 
declaration,  Member  States  put  forwards  a  possible  industrial  alliance  on  microelectronics  and 
processors, which could mobilise industrial partners, as well as possibly designing a proposal for a new 
IPCEI. 

Pact for skills Microelectronics is one of the sectors included in the launch of the Pact for Skills. The 
shared  engagement  and  approach  to  skills  development,  pooling  efforts  from  public  and  private 
stakeholders,  are  the  right  ingredients  to  address  the  critical  skills  gap  in  the  field  of  electronics 
components and systems.  The implementation, supported by networking, knowledge and resource hubs, 
also  requires  an  active  collaboration  of  MSs  to  achieve  the  common  objectives.  Skills  partnership  for 
microelectronics requiring overall public and private investment of EUR 2 billion providing upskilling 
and reskilling opportunities for 250,000 people (2021-2025) in Europe’s electronics clusters269. 

Enterprise Europe Network The Enterprise Europe Networks (EEN) has a well-functioning Sector 
Group on the ICT Industry & Services. The Group and EEN as a whole could look to cooperate more 
closely  with  the  Digital  Innovation  Hubs  and  cluster  organisations  to  promote  the  sector.  It  could 
also use the forthcoming Sustainability Advisors to ensure that SMEs in this ecosystem are able to 
make the transition to sustainability. 

Digital  Innovation  Hubs  Several  of  the  European  Digital  Innovation  Hubs  are  specialised  in 
electronics and are well-placed to support SMEs to include advanced chips in their products and 
services.  The  network  of  European  Digital  Innovation  Hubs  (EDIHs)  can  help  ensure  that  every 
company,  small or  large,  high-tech  or  not,  can  take  advantage of  digital  opportunities  to  optimise 
their production processes, and to innovate  their products and business models. The geographical 
spread of the network covering all regions of Europe is key to offer services at working distance to all 
companies and public administrations. 

269 More on the Pact for Skills https://ec.europa.eu/social/main.jsp?catId=1517&langId=en  

118 

 
 
 
 
 
                                                           
7.  Energy-Intensive Industries Ecosystem 

7.8 million people employed 270 

4.55% of EU value added 
(EUR 549 billion)       

548,000 firms                          
99.4% of SMEs 

The EIIs will need a substantial 
amount of decarbonised 
energy at an internationally 
competitive price  
The transition of EIIs to climate 
neutrality  requires  access  to 
substantial 
of 
decarbonised energy across the 
EU.  The  cost  of  decarbonised 
for 
energy  will  be  crucial 
international  competitiveness 
of the EU’s EIIs.  

amounts 

Transformative initiatives 

Creating markets and 
stimulating demand for green 
and circular products is key for 
accelerating the twin transition 
The  markets  for  green  products 
are  still  underdeveloped  both 
within 
the  EU  and  globally. 
Creating  markets  for  green  and 
circular  products  is  the  key  step 
for  large-scale  green  transition 
of  the  EIIs  Ecosystem.  Actions 
under 
the  Circular  Economy 
Action  Plan  and  the  Sustainable 
Initiative271  will  be 
Product 
important  in  this  regard.  Public 
buyers can play a role in creating 
demand. 

Full scale transition of EIIs to 
climate neutrality will require to 
address unprecedented investment 
challenge 

investments 
and 

to 
The  EII  ecosystem  needs 
into 
accelerate 
research 
innovation, 
demonstration,  and  the  rollout  of 
breakthrough  technologies.  It  is  a 
full  scale 
precondition  for  the 
green transition of the EIIs. Actions 
under  Horizon  Europe,  Recovery 
and  Resilience  Facility  will  be 
important for some aspects of this. 

Towards an EU policy toolbox fit for purpose 

Green transformation A combination of all 
relevant policy tools could be used to create 
lead markets for green and circular products 
for  private 
the  business  case 
and  support 
investments.  No  single  tool  will  be  sufficient,  but 
availability  of  large  amounts  of  decarbonised 
energy  at  a  globally  competitive  prices  is  at  the 
top of the list. 

in 

requires  major  changes 

Digital  transformation  Digitalisation  of 
(1) 
EIIs 
collection  and  use  of 
industrial  data  and  (2) 
development  of  digital  product  passports  to 
increase  traceability  of  material  flows  and  (3) 
Artificial 
and  High-Performance 
Computing  based  simulation  and  prediction  to 
enable  better  integration  of  renewable  energy 
sources into EIIs and improve the quality, efficiency 
and speed of safety and sustainability assessments. 

Intelligence 

Access  to  Finance  Needs  to  reflect 
industry's  needs  during  the  transition  to 
climate neutrality. De-risking of initial investments 
through tools like Contracts for Difference need to 
be explored. 

 Industrial  Networks 
for 
enabling  transition,  pooling  resources  and 

Important 

sharing risks.  

270 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics. 
271 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12567-Sustainable-products-initiative  

119 

 
 
    
 
             
 
 
 
 
     
 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The Energy-Intensive Industries (EIIs) Ecosystem covers chemicals, Steel, Paper, Plastics, 
Mining,  extraction  and  quarrying,  Refineries,  Cement,  Wood,  Rubber,  Non-ferrous 
metals, Glass, Ceramics. They supply intermediate products to each other and to many 
downstream  sectors  of  the  economy,  are  closely  integrated  with  energy  providers  as 
well  as  with  the  waste  and  recycling  industries  due  to  their  need  for  secondary  raw 
materials.  

SME 
dimension  

Current 
challenges 

Forward-
looking 
assessment 

Note: The bar labelled Horizontal refers to activities which contribute to  all ecosystems such as professional 
services and utilities; see Annex of the SWD on Monitoring the Implementation of Industrial Policy.  
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

SMEs represent 99.4% of companies active in the EIIs ecosystem and have 51.25% share 
of employees working in this ecosystem. SMEs also represent 31.3% of the EII ecosystem 
turnover  and  36.9%  of  value  added.  All  parts  of  the  ecosystem  have  a  mix  of  large 
companies  and  SMEs.  At  one  extreme,  the  refineries  sector  accounts  for  40  large 
companies, at the other, the manufacture of wood products has around 100,000 SMEs. 
Annual production dropped significantly in 2020 (ranging from around 22% for the steel 
sector,  10-16%  for  cement,  10-15%  for  flat  glass  and  1-11%  for  non-ferrous  metals, 
amongst  surveyed  companies).  This  is  largely  driven  by  major  drops  in  demand  in 
downstream  industries,  notably  in  automotive  and  construction,  starting  in  March 
2020.  Although  most  industries  showed  a  strong  recovery  since  the  first  wave  of  the 
pandemic,  the  growing  uncertainty  deteriorated  the  overall  business  sentiment  and 
resulted  in  massive  temporary  layoffs.  Uncertainty  about  global  economic  recovery 
looms  over  investment  decisions  needed  to  support  ongoing  activities  of  Energy-
Intensive Industries (EIIs) in the EU.  
The  EIIs  ecosystem  can  be  an  enabler  for  greening  both  upstream  and  downstream 
value chains. Building on the current global leadership of European EIIs in terms of their 
environmental  footprint,  the  twin  transition  further  creates  new  opportunities  for 
growth  and  innovation,  notably  through  the  creation  of  new  markets  for  green  and 
circular  products.  EIIs  require  significant  investments  into  research  and  innovation, 
demonstration,  and roll-out  of  new  technologies,  such  as  hydrogen-based  steelmaking, 
carbon  capture,  utilisation  and  storage,  and  system  integration  for  circularity.  At  the 
same  time,  the  EIIs  ecosystem  includes  sectors  that  are  among  the  most  ambitiously 
regulated in the EU, which in turn makes them particularly vulnerable to carbon leakage 
and loss of competitiveness in case of differences in level of ambition between the EU 
and other global players persist.  
Steel,  non-ferrous  metals,  chemicals  and  the  majority  of  other  EIIs  operate  in  global 
markets where their products are traded globally at international prices with very limited 
possibility  for  passing  additional  costs  related  to  higher  regulatory  requirements  to 
downstream customers.  
EIIs will have to go through unprecedented challenges requiring significant investment to 

120 

 
 
 
 
 
 
Global 
context 

achieve the green and digital transition while remaining globally competitive.   
The EU needs to address the resilience of EIIs and other related ecosystems as currently 
China is controlling production of some of the critical raw materials that are needed for 
EU’s green transition and is actively securing future access to many other raw materials. 
A number of countries have built major production capacities in EIIs’ products through 
aggressive  support  policies,  including  China  (in  all  EIIs),  Gulf  countries  (aluminium), 
Indonesia  (nickel/stainless  steel),  resulting  in  major  overcapacities  (steel,  aluminium) 
threatening and putting pressure to operators worldwide. This has led to proliferation 
of  trade  defence  measures  (e.g.  anti-dumping,  US  section  232  measures).  Specifically, 
China  considers  steel,  aluminium  sectors  as  strategic  and  built  major  capacities  during 
the  last  decades.  Currently  China  represents  more  than  50%  of  global  production  in  a 
number  of  these  products  and  is  on  a  path  to  increase  its  global  market  share  further 
(estimated to represent 50% of global sales of chemicals by 2030). The EU trade defence 
measures  –  applied  in  compliance  with  our  international  commitments  -will  remain 
crucial to correct distortions and for a level playing field and survival of EIIs in the EU. 
The  share  of  the  EU  EIIs  in  the  global  output  is  likely  to  decrease  due  to  the  higher 
growth  in  other  regions.  Loss  of  a  global  market  share  raises  a  concern  for  EIIs 
competitiveness, given the enabling role EIIs play in providing critical and strategic inputs 
for most of other industrial ecosystems, for the green and digital transition, as well as the 
resilience of the EU. 

121 

 
 
 
 
Mapping of policy tools in more detail 

Funding and budgetary programmes 
RRF  The  RRF  provides  an  unprecedented  opportunity  for  cooperation  between  Member  States  to 
coordinate investment efforts on common challenges including the green transition of EIIs and industry 
and  national  recovery  and  resilient  plans  need  to  reflect  this  appropriately.  Projects  related  to 
demonstration and first deployment of new technologies, such as hydrogen-based steelmaking, carbon 
capture, utilisation and storage, sustainable chemical recycling technologies for plastic waste and system 
integration  for  circularity,  development  of  infrastructure  relevant  for  twin  transition  (hydrogen,  CO2 
transport)  as  well  as  projects  in  line  with  the  EU’s  Action  Plan  on  Critical  Raw  Materials  272  could  be 
prioritised. The Member States are encouraged to invest in common flagship areas like ‘Power Up’ which 
stated  ambition  is  to  support  the  building  and  sector  integration  of  almost  40%  of  the  500  GW  of 
renewable  power  generation  needed  by  2030,  support the  instalment  of 6 GW  of electrolyser  capacity 
and the production and transportation of 1 million tonnes of renewable hydrogen across the EU by 2025.   

CRII+/ERDF/ESF/CEF  The  twin  transition  of  EIIs  calls  for  up-skilling  and  re-skilling.    ERDF  and  ESF 
supports  the  adaptation  of  skills,  creation  of  new  jobs  as  well  as  smart  specialisation,  the  uptake  of 
advanced  technologies  and  industrial  transition.  Building  cross-border  infrastructure  links  (CEF)  is 
important for the industry's transition to climate-neutrality and circularity (Hydrogen infrastructure, CO2 
transport).  Ongoing  efforts  will  be  needed  to  direct  investments  into  the  priority  areas  based  on 
pathways or sectoral roadmaps that are being implemented by the EIIs and to secure adequate budget 
allocation. 

Horizon  Europe  (including  European  Partnerships)  New  technological  solutions  and  their  uptake 
are  at  the  core  of  Processes4Planet273,  Clean  Steel274  and  Clean  Hydrogen275  partnerships  in  Horizon 
Europe. Some of the destinations under Clusters 4, 5 and 6 are highly relevant for further development 
and demonstration at industrial scale, including hydrogen-based steelmaking, carbon capture, utilisation 
and storage,  safe  and sustainable  by  design chemicals,  decontamination  of  waste  streams,  and  system 
integration  for  circularity  as  well  as  innovation  for  safety,  sustainability  and  circularity  of  plastics, 
including  bio-based  and  biodegradable  plastics.  The  Research  Fund  for  Coal  and  Steel  Modernisation 
Package revising the legal bases of the RFCS Research Programme aligns the research objectives in Steel 
to  the  Green  Deal  objectives.  It  will  also  allow  for  the  use  of  ECSC  assets  to  fund  breakthrough 
technologies under the Clean Steel partnership in combination with Horizon Europe funding.   

EU  ETS  Innovation  Fund  It  supports  low-carbon  innovation  in  energy  intensive  industries.  The  Fund 
supports  both  the  decarbonisation  of  industrial  processes  and  substitute  products  which  deliver  low-
carbon  alternatives  to  the  carbon-intensive  ones.  The  support  also  includes  carbon  capture,  use  and 
storage in the sectors covered by Annex 1 to the EU ETS Directive276.  

272 The EU’s Action Plan on Critical Raw Materials published in September 2020, 
https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1542  
273 Processes4Planet is a new public-private Horizon Europe partnership will aim to transform energy-intensive process industries and help 
the EU reach 2050 climate goals. Processes4Planets is a successor to the Horizon 2020 public-private partnership Sustainable Process 
Industry through Resource and Energy Efficiency (SPIRE). 
274 ‘Clean Steel - Low Carbon Steelmaking’ is a co-programmed Horizon Europe partnership proposed in the context of the European 
Union’s goal to achieve climate neutrality by 2050.  
275 The Clean Hydrogen partnership aims at accelerating development and deployment of European clean hydrogen technologies, 
contributing to a sustainable, decarbonised and fully integrated energy system. 
276 https://ec.europa.eu/clima/policies/ets_en  

122 

 
 
                                                           
EU  ETS  Modernisation  Fund  The  Modernisation  Fund  supports  the  decarbonisation  of  energy  and 
industrial  sectors  in  its  ten  beneficiary  Member  States.  Energy  efficiency  investment  or  renewable 
electricity generation in energy intensive industries are among its priority areas. 
Digital Europe Programme It will support the setup of Manufacturing Data Spaces, which integrates 
material  and  semi-finished  products  data  into  the  supply  chain  of  the  Manufacturing  sector.  Data  and 
material  flows  will  also  be  relevant  for  the  Green  Deal  Data  Spaces  that  can  contribute  qualified 
information  to  product  passports  and  support  the  reuse  of  material  and  energy.  The  Digital  Europe 
Programme, will fund the design and delivery of specialised programmes in key capacity areas like data 
and  AI,  cybersecurity,  quantum  and  HPC  and  support  the  reskilling  and  upskilling  of  workers  through 
short-term courses in advanced digital skills. 

Just  Transition  Fund  EIIs  are  interlinked  between  themselves  and  often  operate  in  a  form  of  EIIs’ 
clusters,  the  Just  Transition  Fund  will  address  the  needs  of  carbon-dependent  regions  related  to  the 
transition. Eligibility criteria for projects in areas covered by the Emission Trading System (like EIIs) could 
allow investments in sectors with great investment needs but insufficient supply of robust clean solutions 
available  on  the  market,  provided  that  they  lead  to  sufficient  levels  of  greenhouse  gas  emission 
reduction277. 

InvestEU  The  SME  window  will  provide  enhanced  condition  to  implementing  partners/financial 
intermediaries  in  order  to  stimulate  them  to  finance  SMEs  in  transition  towards  sustainability  and 
climate-neutrality. Investments in Raw Materials and EIIs under the Sustainable Infrastructure Window, 
in particular in view of the need for resilient EU value chains, are envisaged. InvestEU will contribute to 
the  Just  Transition  Mechanism  by  deploying  an  InvestEU  Just  Transition  Scheme,  aiming  to  support 
economically viable investments by private and public sector entities aligned to Just Transition objectives. 
Actual investments will be followed in the course of the InvestEU implementation. 

Access  to  Finance  De-risking  of  initial  investments  into  industrial  scale  demonstrators  of  green 
technologies and launch of markets for green and circular products is needed. EU ETS Innovation Fund 
and EU ETS Modernisation Fund support respectively low-carbon innovation and decarbonisation in the 
EIIs. Further analysis on de-risking measures (e.g. carbon contracts-for-difference, insurance schemes and 
special  purpose  vehicles  for  off  balance  sheet  financing)  is  needed  to  support  the  uptake  of  new  low 
carbon technologies at industrial scale. The Green Tech Investment Initiative, as mentioned in the SME 
strategy, is also relevant to increase the access to equity finance for innovative SMEs and start-ups that 
develop and  adopt  green  tech  solutions.    Green  tech  investment  could  encourage  the  development  of 
innovative solutions that will help the energy intensive industries to achieve the green transition. 

The sustainable finance taxonomy will be essential to achieve the goals of the European Green 
Deal. Taxonomy criteria reflect best performance levels in terms of greenhouse gas emissions and 

will be regularly reviewed to ensure they chart a credible pathway toward decarbonisation.  

Supportive regulatory environment 

Main Single Market barriers within the ecosystem A truly Single Market for goods and movement of 
workers  provides  the  scale  and  business  environment  needed  for  EIIs’  global  competitiveness  and 
transition  to  climate-neutrality.  Enhanced  use  of  the  SMTD  (Directive  (EU)  2015/1535  addressing  the 

277 They must lead to a substantial reduction in greenhouse-gas emissions going substantially below the relevant benchmarks established 
for free allocation under the ETS Directive). 

123 

 
 
                                                           
prevention of technical barriers in the internal market) and  enforcing Single Market rules, can support 
the removal of barriers in this ecosystem. A disparity between Member State regulation can be observed, 
for instance in how some of them transpose EU chemical legislation, air and water quality rules and the 
consequences  for  basic  industries  or  mining  and  extractive  activities.  National  gold  plating  regulation 
hinders  cross  border  activities  and  creates  fragmentation  in  the  Single  Market.  Fragmented  definition 
and  regulation  of  these  industries  can  be  addressed  by  means  of  encouraging  cooperation  and  best 
practice exchange among the regulators.  

Standardisation  Standardisation  is  instrumental  for  creation  of  markets  for  green  and  circular 
products within the EU and internationally. They facilitate the uptake and consolidation of mature green 
solutions. This work needs to advance and EU could aim to keep leadership in green standard setting as 
new players intensify their activity in global fora.  

Green  transformation  For  green  transformation  at  a  largescale,  the  policy  framework  could  further 
support  the  business  case  for  private  investments.  Breakthrough  technologies  for  deep 
decarbonisation require substantial upfront investments and higher operational costs to produce 
green  products  in  the  business  environment  where  prices  are  set  internationally  and  differentiation 
between  green  and  conventional  products  is  currently  lacking.  The  EU  ETS  and  many  environmental 
regulations,  e.g.  Extractive  Waste  Directive,  Industrial  Emissions  Directive  and  Environmental  Impact 
Assessment  Directive,  are  crucial  in  defining  the  operating  environment  for  EIIs.  While  markets  for 
climate-neutral and circular products are scarce, different levels of environmental regulation can affect 
the  competitiveness  of  energy-intensive  industries.  A  level  playing  field,  an  effective  carbon  leakage 
prevention framework and measures to create markets for sustainable products (including through the 
EU’s  Sustainable  Products  Initiative)  are  required  to  address  these  concerns.  All  relevant  policy  tools 
could be used to create lead markets for green and circular products. In most of cases there is still no 
business  case  for  transformative  investments,  all  available  tools  could  be  used  to  adjust  policy 
framework, including (1) Sustainable Product Policy, allowing to distinguish clean and circular products 
on the market; (2) competition policy and public procurement, allowing necessary cooperation between 
market  players  and  launch  of  the  new  markets  for  green  and  circular  products278;  (3)  availability  of 
financial instruments allowing to de-risk initial investments that are too risky for individual companies; 
(4)  development  of  relevant  infrastructures  and  supply  of  large  quantities  of  renewable  energy  and 
internationally  competitive  prices.  Furthermore,  the  regulatory  framework  has  the  potential  to 
encourage  the  use  of  energy  management  systems  and  better  process  controls  to  reduce  energy  use, 
support  industry  to  make  cost-effective  energy  efficiency  investments,  invest  in  cogeneration,  favour 
industrial  symbiosis,  encourage  sharing  of  information  about  waste  heat  and  finding  economically 
attractive uses for it. 

Digital  transformation  Digital  technologies  and  better  use  of  data  will  act  as  crosscutting 
enablers for industrial transformation. The Commission’s proposal for a Data Governance Act279 

aims to respond to the lack of clear rules/mechanisms for secure data sharing.  

Strategic Public  Procurement  Public  procurement  is  an  important  tool  for  creating  markets  for  green 
and  circular  products.  There  is  a  need  to  boost  green  procurement  and  shift  to  life-cycle  costing 
approach,  including  trade-offs  between  production  and  use-phase  emissions.  The  importance  of  public 

278 The competition framework sets out criteria for assessing adverse effects on competition and pro-competitive effects of cooperation 
projects. 
279 COM/2020/767 final, p.5 

124 

 
 
                                                           
procurement  is  not  fully  reflected  in  public  policies,  and  low-carbon  and  circular  products  public 
procurement strategies are insufficiently implemented in practice. Development of Sustainable Product 
Policy  and  its  reflection  in public  procurement  strategies  will  allow  to  use  public  procurement  as  an 
effective tool to launch and develop the markets for green and circular products. Guidance on how to 
procure ‘green’ from the definition of the project to the implementation would help public investors.  

Intellectual  Property 
Intellectual  Property  will  remain  very 
strengthening the leadership in green and digital economy and to prevent innovation leakage.  

important  for  maintaining  and 

International partnerships and dialogue 

Strategic Partnerships (Critical Materials and input) Raw materials are at the core of the green and 
digital  transition.  Securing  supply  of  raw  materials  is  particularly  relevant  for  all  sectors  in  the  EIIs 
ecosystem.  The  EU  needs  to  boost  extraction  and/or  production  of  key  raw  materials  in  the  EU  and 
complement  it  with  undistorted  and  sustainable  supply  of  raw  materials  from  global  markets.  The 
implementation of the Critical Raw Materials Action Plan is a key task for the coming years. Continued 
efforts to diversify supplies, establishing strategic partnerships and securing of adequate financial tools 
for their implementation will be an ongoing work.  

Networks and governance 

Industrial Networks  These are very important for enabling transition, pooling resources and sharing 
risks.  The  already  launched  alliances  (on  Batteries,  Plastics,  Clean  Hydrogen  and  Raw  Materials)  are 
relevant  for  EIIs.  Reflections  whether  to  launch  a  Renewable  and  Low-Carbon  Fuels  Value  Chain 
Alliance have been announced in the sustainable and smart mobility strategy280.  

Clusters  cooperation  The  European  Cluster  Collaboration  Platform  (EU  hub  for  industry  clusters)  has 
validated 42 clusters on plastics, 7 in iron and steel, 21 clusters on paper and packaging, 8 in mining and 
quarrying (with a European Cluster Partnerships on Geo-Energy281 with clusters from 5 Member States + 
Turkey), 2 on non-ferrous metals, 2 on ceramic materials and powders. Their mobilisation would be very 
important to ensure the transition of the ecosystem as a whole. 

Pact  for  skills  Development  of  skills  is  needed  to  support  green  transition  in  line  with  EU  Skills 
Blueprints  and  other  European  programmes282.  The  green  transition  will  require  major  and  quick 
transition.  It  is  unclear  whether  activities  related  to  the  Pact  for  skills  will  be  fully  solve  the  skill 
mismatch fast enough. Furthermore, the SME strategy supports the ‘digital volunteers’ programme 
to promote the transfer of expertise in digitalisation from high-tech businesses to more traditional 
SMEs. 

Digital  Innovation  Hubs  They  support  the  introduction  of  data-driven  business  models  based  on 
new technologies such as blockchain, Artificial Intelligence (AI) and High Performance Computing, to 
substantially  increase  the competitiveness  of SMEs  in the Energy-Intensive  Industries  with process 
optimisations  and  new  instruments  for  circularity.  They  will  offer  a  seamless  service  with  the 
Enterprise Europe Network partners and the cluster organisations. 

280 COM/2020/789 final 
281 https://www.clustercollaboration.eu/escp-profiles/geo-energy-europe  
282 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

125 

 
 
                                                           
126 

 
 
 
 
 
8.  Energy – Renewables Ecosystem  

1.2 million people employed283 

1 % of EU value added 
(EUR 122 billion) 

111,000 firms                          
99.4% of SMEs  

Scaling up investments in 
renewables to achieve the 2030 
climate targets  

The  renewables  market  needs  to 
double and at least an estimated EUR 
50  billion  per  year  is  needed  in  both 
production  of  and  infrastructure  for 
renewables  to  achieve  the  increased 
climate ambitions for 2030. Significant 
growth  in  the  use  of  renewables  in 
transport,  industry  and  buildings  is 
needed,  as  well  as  increases  in  public 
and  private  investments  in  R&I284  and 
public procurement. The Recovery and 
Resilience  Facility  includes  a  ‘Power 
investments 
Up’  flagship  to  direct 
towards renewables. 

Transformative initiatives 
Transforming towards an 
integrated energy system  

nature 

aggregators 

decentralised 

The 
of 
renewables will require seamless data 
producers, 
exchange 
between 
and 
infrastructure, 
storage  providers, 
together  with 
consumers  and  their  appliances  all 
through  an  energy  data  space.  Better 
to 
energy 
data-driven 
consumers,  interoperable    appliances, 
services,  platforms  and  management 
for  an 
systems  will  be 
integrated 
ecosystem.  A 
energy 
Digitalisation  of  Energy  Action  Plan  is 
scheduled for 2022. 

services 

crucial 

Strengthen the European 
renewables ecosystem as  global 
leader in technology 
development  
The  European  supply  chain  will  need 
to be strengthened to facilitate access 
to  rapid  growing  markets  within  the 
EU  and  globally,  including  activities  to 
support  the  supply  and  end-of-life 
options  for  the  critical  raw  materials 
for 
production, 
digitalisation,  and  for  the  production 
of  batteries  and  electrolysers.  The 
Clean  Energy 
Industrial  Forum  has 
been  re-launched  to  support  the 
competitiveness of the industry. 

renewables 

Towards an EU policy toolbox fit for purpose 

increase 

InvestEU  Catalysing  private  investment  is  key 
for 
to 
accelerating 
in 
industry,  buildings,  and  transport  to  achieve  the 
greenhouse emission reduction targets for 2030. 

renewables  supply  and  uptake 

financing  needed 

the 

Strategic  Public  Procurement  The  uptake 
of  renewables  in  buildings  and  transport 
applications  can  be 
facilitated  through  public 
procurement,  especially  by  triggering  additional 
investments  in  renewables  and  the  development  of 
integrated energy systems. 

 Main  Single  Market  barriers  within  the 
ecosystem  Creating  a  common  European 
market  for  renewables  is  key  to  ensure  investor 
certainty  and  cost-effective  deployment.  Permit 
procedures in Member States are perceived as one of 
the biggest obstacles to this growth potential, as they 
are  lengthy  and  complex  (particularly  the  ones  also 
involving environmental impact assessments). 

Green  transformation  The  current  EU 
target  of  at  32%  renewables  by  2030  will 
need  to  be  increased  under  the  revision  of  the 
renewable energy directive. The introduction of  new 
certification  schemes  for  all  renewable  and  low-
carbon  fuels285,  including  renewable  hydrogen,  will 
allow more transparency to the end-consumers, and 
can  entice  the  rapid  penetration  of  renewables  in 
end-use sectors like industry, buildings and transport. 
Digital Europe Programme Digitalisation of the energy sector is critical for delivering an integrated 
energy  system,  provide  a  cost-effective  transformation  towards  a  decarbonised  energy  system,  and 
maintain European leadership in renewable energy technologies and integrated energy systems. This requires 
the rapid development of energy data spaces, interoperable smart energy solutions, platforms, management 
systems,  and  tools  to  provide  better  data-driven  energy  services  as  well  as  facilitate  energy  infrastructure 
planning. 

283 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics. Data from 2018. 
284 (COM (2020) 953)  
285 EU strategy on energy system integration, COM(2020) 299 final 

127 

 
 
    
 
             
 
 
 
 
     
 
 
 
 
                                                           
Sectors 
included in 
the 
ecosystem 

SME 
dimension  

Current 
challenges 

The ecosystem at a glance 
include  wind  energy,  solar  energy 

Renewables 
(photovoltaics,  thermal  and 
concentrated  solar  power),  hydropower,  bioenergy  (including  sustainable  biofuels), 
geothermal  energy,  ocean  energy,  and  heat  pumps.  Furthermore,  sustainable  energy 
storage  solutions,  smart 
technologies  and  energy  conversion 
technologies,  including  electrolysers,  are  an  important  part  of  a  clean  energy 
ecosystem.  

infrastructure 

Notes:  Data  relative  to  the  sector  D35  refers  to  a  share  of  29%  of  the  total,  and  is  used  as  a  proxy  for  the 
renewable share  of  energy generation.  This  coefficient  is  based  on  the renewable share of  energy generation  in 
each sub-sector: 32% of 35.1 (electricity); 4% of 35.2 (gas); 20% of 35.3 (steam). Applying these coefficients to VA 
and  employment  is  of  course  an  approximation,  and  should  be  taken  with  caution.  The  bar  labelled  Horizontal 
refers to activities which contribute to all ecosystems such as professional services and utilities; see Annex 4 of the 
SWD on Monitoring the Implementation of Industrial Policy. *Sector only partially attributed to the ecosystem. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 
 In  the  electricity  sector  alone,  more  than  50000  SMEs  are  active  in  the  production  of 
renewable  electricity  as  well  as  560  companies  with  a  turnover  of  >50  million.  The 
renewable heating and cooling sector is very diverse with many SMEs, and distinct supply 
chains for different biomass options, solar heating, geothermal heating, and heat pumps. 
The  sector  has  a  high  turnover/job  compared  to  other  sectors  (800k/job),  and  every 
million of investments in renewables and flexibility creates 25 jobs286. 
The  backlog  of  application procedures  due  to  long  permitting  processes  and  complex 
environmental and spatial planning needs to be reduced287. Due to the COVID-19 crisis, 
data  show  that  there  were  10%  fewer  final  investment  decisions  for  total  utility-scale 
renewable  projects  (excluding  large  hydropower)  in  the  first  half  of  2020  than  in  the 
same  period  in  2019288,  although  early  estimates  suggest  that  overall  investments  in 
renewables  in  the  European  market  increased  compared  to  2019289.  For  wind,  a  30% 
disruption  is  expected  in  2020  compared  to  2019  forecasts,  and  20%  disruption  is 
expected for  solar  and heat  pumps.  This  is  estimated  to  result  in  an  investment  gap  of 
EUR  14  billion  for  2020.  The  wind  and  solar  PV  industry  –  the  largest  markets  in  the 
EU290  –  also  encountered  supply  chain  bottlenecks  due  to  manufacturing  plants  that 
were  closed,  namely  in Italy  and  Spain  in  April  2020, and  in China.  With  the  required 
market  scale  up,  additional  provisions  are  needed  to  strengthen  the  supply  chains  and 
create industrial-based cooperative platforms, including for raw material supply. Biomass 
and  solar  thermal  projects  encountered  difficulties  in  intra-EU  travel  for  employees, 

286 IRENA (2020) The Post-Covid Recovery; IEA (2020) Sustainable Recovery  
287 https://ec.europa.eu/energy/sites/ener/files/renewable_energy_progress_report_com_2020_952.pdf 
288 IEA (2020) Renewables 2020 
289 BNEF (2021) Energy Transition Investment Trend 2021, data includes the UK. 
290 EUROSTAT, December 2020. 

128 

 
 
 
 
 
                                                           
Forward-
looking 
assessment 

Global 
context 

whilst  rooftop  solar  PV  and  heat  pumps  encountered  issues  with  installers  unable  to 
access  residential  homes.  Yet,  the  renewables  industry,  except  for  biofuels,  has  been 
relatively resilient in the wake of the recovery, with a slight growth of solar PV compared 
to 2019.  
To  reach  the  EU  climate  ambitions  for  55%  greenhouse  gas  emission  reductions  for 
2030,  the  share  of  renewables  needs  to  grow  from  20%  today,  to  approximately  38-
40% in the energy mix. This means the current investment gap is set to increase beyond 
the  EUR  30  billion  per  year  as  estimated  based  on  the  current  target  of  at  least  32% 
renewables by 2030, and EUR 49 billion per year for the increased climate ambitions291. 
The  renewables  sector 
is  therefore  a  major  growth  market  with  significant 
opportunities for net job growth opportunities, whilst reflecting planetary boundaries. 
For  2050,  the  jobs  in  the  renewables  sector  are  expected  to  double  to  2.7  million  in 
Europe292. With the share of renewables expected to double in the decade, there are also 
new  opportunities  to  expand  manufacturing  of  renewable  energy  technologies  for  the 
European market. Principles of the circular economy will have to be integrated through 
policies  on  eco-design  and  sustainable  products.  EU  instruments  will  be  needed  to 
including  through  higher  targets  for  renewables 
catalyse  private 
deployment.  
Increased annual investments are needed to enable energy system integration, including 
through  electrification  of  end-use  sectors,  including  heat  pumps,  better  use  of  organic 
waste  resources  and  heat,  and  additional  production  of  renewable  fuels  and  gases, 
including  renewable  hydrogen.  Furthermore,  significant  investments  are  needed  to 
ensure  that  infrastructure  is  available  to  bring  renewable  energy  sources  to  the  end-
the 
consumers, 
strengthening  of  the  grid  and  repurposing  existing  gas  infrastructure  to  support  the 
transport  of  renewable  hydrogen, 
including  support  for  e-mobility  and  ports. 
Investments to make the end-use sectors ready for renewables supply are also needed, 
including building renovations, new industrial processes and e-mobility solutions.   
The  European  renewables  industry  is  a  global  leader  in  certain  technologies,  with 
significant exports – especially in the wind energy sector and enabling technologies for 
the  integration  of  renewables,  such  as  batteries  and  smart  grid  technologies.  In 
cumulative  terms,  the  European  renewables  market  accounts  for  25%  of  the  global 
market. 

local  electricity  and  heat  networks, 

including  strengthening 

investments, 

The EU is also expected to remain the largest market for renewable heat, with significant 
growth expected from renewable electricity. The renewables market remained relatively 
strong  in  2020,  is  expected  to  rebound  in  2021,  with  the  EU  being  the  second  largest 
market after China293.  

291 SWD (2020) 98 
292 IRENA (2020) Global renewables outlook 
293 IEA (2020) Renewables 2020 

129 

 
 
 
                                                           
With an established market and regulatory framework, the EU renewables industry is an 
attractive  market for  foreign investors. At  the  same  time, emerging  markets  across  the 
world  provide  significant  opportunities  as  the  clean energy  transition moves ahead.  EU 
companies have significant opportunities in emerging markets across the world, but are 
increasingly confronted with market access and regulatory barriers put in place by third 
countries  to  promote  their  domestic  industry.  Free  trade  and  investment  agreements 
and  trade  enforcement  are  important  instruments  to  ensure  undistorted  trade  and 
investment  in  clean  energy  technologies,  and  ensure  market  access  for  our  companies 
Whilst  the  annual  EU  market  for  renewables  will  have  double  to  achieve  the  2030 
targets,  the  majority  of  growth  markets  will  be  outside  of  the  EU.  At  the  same  time, 
international  competition  is  increasing  with  new  technology  suppliers  from  countries 
with rapidly growing renewables market expanding their activities across the globe. 

130 

 
 
 
 
 
Mapping of policy tools in more detail  

Funding and budgetary programmes 
RRF  The  ‘Power  Up’  Flagship  underlines  the  importance  of  renewable  and  hydrogen  projects  for  a 
sustainable recovery. It would be important to integrate renewables investments in other flagship areas, 
such  as  the  ‘Renovation  wave’  and  the  ‘smart  mobility’,  linked  to  a  charging  infrastructure  of  Electric 
Vehicles.  For  investments  in  renewables,  local  infrastructure  and  local  projects  have  the  highest  job 
potential. The RRF’s stated ambition is to support the building and sector integration of almost 40% of 
the  500  GW  of  renewable  power  generation  needed  by  2030,  support  the  instalment  of  6  GW  of 
electrolyser capacity and the production and transportation of 1 million tonnes of renewable hydrogen 
across the EU by 2025.   

CRII+/ERDF/ESF/CEF These instruments are important to address the growing investment gap in the 
renewables  sector  as  part  of  efforts  to  increase  climate  relevant  spending  under  MFF.  The  Connecting 
Europe  Facility  will  be  available  as  of  2021  to  support  cross-border  renewables  projects,  which  could 
boost  the  industry.  Furthermore,  the  Renewable  Energy  Financing  Mechanism  has  been  established  to 
allow support for renewables projects across EU Member States. Supporting cross-border cooperation in 
the field of infrastructure network development to establish meshed infrastructure and joint application 
processes of different Member States will help to integrate the sector based on experience of Member 
States in the area of joint public procurement. 

Horizon Europe (including European Partnerships) Continuous innovation will be needed to remain 
competitive, and improve the efficiency and capacity of technology, including in areas like new materials, 
new  manufacturing  processes,  and  new  solutions  for  the  installation,  operation  and  maintenance  of 
renewables projects. Digitalisation of energy will also require innovation to ensure interoperable systems 
and services, integration of renewables and appliances in balancing the grid and piloting of energy data 
spaces  (as  from  2021).  Due  to  the  rapid  growth  of  mainly  wind and solar  PV,  the development  of  new 
processes to support recycling and reuse of components, including critical raw materials, is essential for 
the unhindered growth potential and to reduce the industry’s environmental footprint. It is necessary to 
reinforce research and innovation in the area of downstreaming and upscaling of renewable fuels. This 
includes advanced biofuels (which are the most readily deployable technologies of renewable fuels, and 
this  could  contribute  to  put  in  place  hundreds  of  commercial  plants)  as  well  as  the  production  of 
renewable hydrogen. The newly established Clean Hydrogen Partnership will be very important to help 
scale up the European supply chain for renewable hydrogen. The Clean Energy Transition Partnership is 
also  playing  a  central  role.  It  will  contribute  to  development  of  the  renewable  technologies  that  are 
upstream in hydrogen and clean hydrogen value chain and are absolutely needed for a clean hydrogen 
production. Under the European Innovation Council, 300 million euros have been allocated to encourage 
breakthrough  innovations  delivering  Green  Deal  objectives  to  high  potential  startups  and  SMEs.  The 
engagement in Mission Innovation, in close collaboration with the Clean Energy Ministerial, contributes 
to  strengthening  the  EU  role  in  the  world,  in  the  context  of  the  European  Green  Deal,  by  keeping 
countries involved in concrete discussions how to work on, learn from and facilitate deployment of clean 
energy innovations, and by keeping investment in clean energy high on the political agenda.  

EU  ETS  Innovation  Fund  The  Innovation  Fund  supports  investments  in  innovative  renewable  energy 
technologies,  energy  storage  and  carbon  capture  and  storage.  This  also  includes  production  of  low-
carbon fuels/carriers such as clean hydrogen and manufacturing facilities such as batteries or PV panels. 
The  Fund  also  supports  decarbonisation  of  industrial  processes  and  cross-sectoral  projects  with 

131 

 
 
renewable energy generation, storage and use. The support also includes carbon capture and use in the 
sectors covered by Annex 1 to the EU ETS Directive294.  

EU  ETS  Modernisation  Fund  The  Modernisation  Fund  supports  the  decarbonisation  of  energy  and 
industrial sectors in its ten beneficiary Member States. Renewable electricity generation, modernisation 
of energy networks or production of green hydrogen are among its priority areas for support. 

Just Transition Fund Significant investments in renewables in coal as well as carbon-dependent regions 
could match existing infrastructure and skills in these regions, and could be promoted as one of the key 
markets to help regional development.  
 Digital  Europe  Programme  The  digitalisation  of  the  energy  sector  is  critical  for  delivering  an 
integrated  energy  system,  and  a  cost-effective  transformation  towards  a  decarbonised  energy  system. 
These include activities and pilots on interoperability of data and data spaces as well as data platforms 
and frameworks that build on the experience of large-scale pilots under Horizon 2020. The programme 
will call for the creation of an Energy Data Space in 2023 which could provide a trusted data access, and 
support data sharing between energy generation, transmission System operators (TSOs) and distribution 
system operators (DSOs), across end-use sectors like mobility, commercial and residential buildings and 
appliances,  and  industrial  processes.  Furthermore,  the  testing  and  experimentation  facility  for  smart 
cities  and  communities  will  allow  this  ecosystem  to  test  the  integration  of  renewables  in  community 
based  energy  systems.  Under  the  Digital  Europe  Programme,  the  Commission  is  also  supporting  the 
reskilling and upskilling of workers through short-term courses in advanced digital skills.  

InvestEU The Juncker Plan, predecessor of InvestEU, resulted in 50 TWh of additional electricity 
generation  per  year,  of  which  over  91%  from  renewable  resources295.  To  achieve  our  climate 
ambitions, we need close to a 1000 TWh of additional renewable power produced per year in 2030. The 
investment gap identified is EUR 30 billion per year for the current renewables target and EUR 50 billion 
per  year  to  achieve  the  increased  climate  ambitions.  With  renewable  power  generation  getting 
increasingly  competitive,  a  new  merchant  market  is  emerging.  By  decreasing  the  risks  associated  with 
investments  associated  with  renewable  technologies,  InvestEU  helps  reducing  the  cost  of  capital, 
especially in less mature markets Furthermore, new risks instruments will need to be created to cater to 
small- and medium-size enterprises to support the uptake of renewables. 
Access  to  finance  The  EU  taxonomy  regulation  on  the  establishment  of  a  framework  to  facilitate 
sustainable investments and the delegated act provide the framework conditions for guiding investments 
towards  renewables.  At  the  same  time,  there  are  increasingly  financing  resources  available  from 
institutional  investors  for  new  supply  projects  in  the  renewables  sector;  however  significant  gaps  still 
exist for local financing of infrastructure and small end-consumers.  

EU  Space  Programme  and  European  Defence  Fund  The  EU  Space  Programme  and  the  Defence 
Defence  Fund  could  play  a  catalysing  role  in  increasing  the  project  pipeline  and  procurement  of 
renewables in space and military applications, especially through innovation spillovers and in support of 
security  and  operational  reasons.  This  could  include  support  for  research  and  innovation.  Similar 

294 https://ec.europa.eu/clima/policies/ets_en  
295 https://ec.europa.eu/commission/sites/beta-political/files/energy-sector-factsheet-oct_19_en.pdf 
https://ec.europa.eu/commission/sites/beta-political/files/energy-sector-factsheet-oct_19_en.pdf 
https://ec.europa.eu/commission/sites/beta-political/files/energy-sector-factsheet-oct_19_en.pdf 
https://ec.europa.eu/commission/sites/beta-political/files/energy-sector-factsheet-oct_19_en.pdf  

132 

 
 
                                                           
activities  to  support  renewables  programmes  are  already  taking  place  in  other  countries,  e.g.  the 
renewables & microgrid programme developed by the US Department of Defense. 

Supportive regulatory environment 

 Main Single Market barriers within the ecosystem The Electricity Regulation and Directive 
have been updated and put in place, and their timely and correct implementation, together with 
a  liquid,  competitive  market  offering  dynamic  price  contracts  is  crucial  to  support  the  integration  of 
renewables, including through a more central role for energy communities. This includes the use of heat 
pumps  becoming  competitive  and  benefitting  from  cheaper  electricity  in  off-peak  hours.  The  gas 
regulation and Directive will need to be updated to ensure a higher uptake of renewable gases and the 
preparations  for  the  decarbonisation  of  gas  package  are  underway.  Many  projects  are  developed 
independently  from  each  other  despite  the  fact  that  the  efficient  use  of  generated  electricity  can  be 
greatly  enhanced  by  so-called  meshed  grids  linking  the  suppliers  and  consumers/transmitters  of 
renewable electricity irrespective of the Member States concerned.   

Furthermore,  for  the  emerging  market  of  renewable  hydrogen  a  regulatory  framework  needs  to  be 
developed  that  is  fit-for-purpose  for  this  nascent  but  rapidly  growing  market,  including  through  the 
revision of the TEN-E regulation. Enhanced market surveillance and targeted support to the build-up of 
supply  chains  will  help  to  further  boost  the  European  renewables  industry,  particularly  for  rapidly 
growing markets such as for wind, solar PV, and heat pumps. 
Standardisation  A  framework  for  standardisation  of  renewable  energy  technologies  is  in  place,  as 
well  as  means  to  track  and  inform  consumers  about  renewable  electricity,  gases,  heat  and  fuels. 
However, new standards will be needed to integrate distributed renewables in end-use sectors, ensure 
interoperability  of  different  digital  energy  services  and  systems,  and  certification  will  need  to  be 
established for renewable fuels to ensure a fair comparison across the different decarbonisation options. 
The  EU  could  play  a  more  active  role  in  accelerating  the  development  of  standards,  including 
international cooperation. 
Digital  transformation  Digitalisation  has  been  recognised  as  one  of  the  six  enablers  for  a  more 
integrated energy system based on renewables. In the energy sector, access to data across sectors like 
mobility, buildings and energy is instrumental for sustained investment. A ’Digitalisation of Energy Action 
Plan’  has  been  announced  for  2022  in  the  European  strategy  for  energy  system  integration.  This 
communication will cover i) the development of a data-driven energy services market that will support 
flexibility of the energy system while providing better services to consumers; ii) empowering citizens to 
be part of the transformation ; iii) Enhancing the uptake of digital technologies in the energy sector; iv) 
Cybersecurity, and v) Addressing the energy consumption of ICT.  

eGovernment  Permitting  and  administrative  processes  need  to  speed  up  to  allow  the  renewables 
market  to  accelerate.  Digitalisation  is  expected  to  be  key  in  doing  so.  The  renewable  energy  directive 
already  foresees  simplified procedures, including  through  one-stop-shops,  but  additional efforts will be 
needed to address existing barriers that hinder the rapid deployment of renewables. Furthermore, urgent 
efforts to monitor and verify the implementation of existing rules and regulation around permitting are 
needed. 

Green  transformation  On  the  supply  side,  complex  and  burdensome  administrative 
procedures  are  perceived  as  one  of  the  biggest  obstacles  to  the  growth  potential  of  wind  and 
solar photovoltaic (PV) sectors. The timely transposition of the Renewable Energy Directive could address 

133 

 
 
this issue, including through the enhanced screening and elimination of redundancies in national permit 
procedures,  reinforcing  the  ability  in  Member  States  for  a  systematic  improvement  of  the  handling  of 
permit applications. Furthermore, new legislation is considered to increase the existing target of at least 
32%  share  of  renewables  in  2030,  in  particular  by  the  increased  uptake  of  renewables  in  end-use 
sectors  like  industry,  buildings,  and  transport.  A  revision  of  the  renewable  energy  directive  is  being 
prepared, where new options to increase the share of renewables in transport, heating and cooling, and 
industrial applications are considered. There is also a high need of building capacity for renewable fuels 
to  limit  emissions  in  compliance  with  the  Effort  Sharing  Regulation  and  the  increased  ambition  of  the 
European Green Deal to meet EU Climate Policy Goals in 2030 and beyond. 

Strategic  Public  Procurement  Public  procurement  can  play  a  crucial  role  in  enabling  the 
development  of  integrated  energy  systems  at  local  level,  especially  by  triggering  additional 
investments in renewables. Furthermore, additional investments in infrastructure networks are needed 
to tackle fragmentation and the inefficient use of the generated electricity.  

Intellectual Property Patenting activity in clean energy technologies peaked in 2012, and has been in 
decline since296. The energy-renewables ecosystem is a high IPR-intensive industry and faces increasing 
competition from outside the EU, making the existing IPR framework all the more important. The unitary 
patent  system  proposed  under  the  IPR  Action  plan  will  be  a  key  tool  for  the  EU's  industrial  recovery, 
especially for the renewable energy ecosystems.  

International partnerships and dialogue 
Strategic  Partnerships  (Critical  Materials  and  input)  The  renewables  industry  is  an  important 
driver  for  the  demand  of  raw  materials,  including  critical  raw  materials,  where  international 
competition for access to these materials is expected to increase. The EU needs to address raw material 
dependencies  and  reinforce  resilience  of  supply  chains,  including  through  international  dialogue  and 
undistorted trade and investment. Furthermore, developing domestic production capabilities for critical 
raw  materials  could  improve  security  of  supply,  as  well  as  recycling  and  other  end-of-life  options  to 
recuperate raw materials. Research and innovation can play a key role in this regard.  
Regulatory dialogue / cooperation Energy dialogues are in place with the major economies, in which 
renewables  and  renewables  policies  are  taking  centre  stage.  However,  renewables  could  also  be 
introduced in other cooperation mechanisms, such as investment, trade, and industrial fora.  

Networks and governance 

Industrial  Networks    The  Clean  Energy  Industrial  Forum  for  Renewables  has  been  re-established297, 
which  will  be  an  important  vehicle  to  ensure  political  visibility,  attract  investments,  and  ensure  a 
European supply chain. The yearly Competitiveness Progress Report298 will support the monitoring of the 
indicators of the Clean Energy Industrial Forum for Renewable.  

Alliances for batteries and clean hydrogen are already in place, which are crucial enabling technologies 
for upscaling the renewables sector. Players from the renewable ecosystem are actively involved in the 

296 (COM (2020) 953) 
297 Based on the energy system integration and the offshore energy strategies 
298 As stipulated under Governance Regulation (2018/1999) article 35 (m). 

134 

 
 
                                                           
European  Clean  Hydrogen  Alliance.  Alliance  on  Raw  Materials  will  address  the  raw  material 
dependencies and will reinforce resilience of supply chains.  

Clusters cooperation Several cluster cooperations on renewable energy and energy efficiency exist. The 
tool could be promoted more widely in conjunction with the Just Transition Fund. 

Enterprise  Europe  Network  The  Enterprise  Europe  Network  serves  a  significant  amount  of 
companies offering and looking for renewable energy technologies and services. For this purpose, the 
EEN has also established a very active Sector Group on ‘Intelligent Energy’, which gathers expert advisors 
in renewable energy sources, among others. As part of the EEN’s roll-out of Sustainability Advisors and 
sustainability  services,  these  services  could  be  promoted  more  widely  in  conjunction  with  the  new 
financing mechanisms that are being established for the industry.  
Pact  for  skills  The  clean  energy  technology  sector  continues  to  face  challenges,  in  particular 
availability of skilled workers at the locations where they are in demand299. Growth and jobs will not be 
achieved unless adequate and sufficient education and training opportunities are provided. The Pact for 
Skills300 will be key for the acceleration of the renewables industry, including for offshore renewables as a 
major market for further deployment. The tool could be promoted widely in conjunction with the new 
financing mechanisms that are being established for the industry. Further initiatives would be necessary. 
Promoting training and skills would be one of the cornerstones of an industrial strategy on renewables. 
Furthermore, the SME strategy supports the ‘digital volunteers’ programme to promote the transfer of 
expertise in digitalisation from high-tech businesses to more traditional SMEs. 
Digital  Innovation  Hubs  Digital  innovation  hubs  will  be  important  to  help  local  SMEs,  especially 
downstream,  as  well  as  end-users  to  take  advantage  of  a  more  digitalised  and  decentralised  energy 
system, including through local optimisation and use of distributed renewable energy resources. 

Thematic  Smart  Specialisation  Interregional  Partnerships  Partnerships  such  as  the  Sustainable 
Buildings  Partnership,  the  Advanced  manufacturing  for  energy  applications  Partnership,  Solar  Energy 
Partnership,  Bioenergy  Partnership  and  the  Geothermal  Energy  Partnership  promote  interregional 
cooperation that support the development of renewable industrial ecosystem. 

299 (COM (2020) 953) 
300 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

135 

 
 
 
 
                                                           
9.  Health Ecosystem 

24.8 million direct employment301 

9.5% of EU value added 

493,000 firms                                      
99.7% of SMEs 

Transformative Initiatives 

Boosting EU resilience and open 
strategic autonomy in the health area 

Capacity building & digital upskilling 
to foster innovative healthcare 
services 

Build a healthier society & empower 
citizens via advances in eHealth & 
leveraging the health data potential 

initiative 
The  structured  dialogue 
announced 
the  pharmaceutical 
in 
strategy  for  Europe  will  identify  the 
causes  and  drivers  of  potential 
vulnerabilities,  and  of  potential 
dependencies  of  medicines  supply 
chains.  The  pharmaceutical  strategy 
will also explore how to tackle unmet 
needs 
rare 
diseases).  The  HERA  Incubator  will 
help  address  the  threats  of  new 
COVID-19  variant  and  the  Task  Force 
for  Industrial  Scale-up  of  COVID-19 
vaccines  will  help  to  detect  and 
respond  to  bottlenecks  in  production 
and supply of key inputs in real-time.  

antimicrobials, 

(e.g. 

The  current  human  and 
financial 
capacity  constraints  of  healthcare 
to  be  addressed, 
systems  need 
light  of  future  health 
especially 
in 
emergencies 
ageing 
EU’s 
and 
population.  Skilling  of  health  workers 
for  the  digital  transformation  is  also  a 
critical 
issue.  Proportionality  tests 
before adoption of  new regulation  of 
professions,  twinning  exercises  and 
dissemination of good practices could 
help  to  foster  innovative  health  care 
services. 

in 

Data 

The  biggest  opportunities 
the 
coming years will stem from the digital 
health  technologies.  The  upcoming 
Regulation  on  Artificial  Intelligence, 
legislative  proposal  on  the  European 
Health 
and 
standardisation will bring more clarity 
to  health  data  sharing,  the  use  of  AI, 
eliminate 
regulatory  barriers  and 
support a common EU-approach in the 
use of telemedicine services. The Data 
Governance  Act  proposal  enables 
secure health data sharing. 

Space 

Towards an EU policy toolbox fit for purpose 

RRF  can  be  used  to  address  many  of  the  Health 
ecosystem  needs  via  investments  and  reforms  of 
national health systems, strengthening resilience  and 
crisis preparedness, primary care, increasing access to 
services, addressing the supply chain vulnerabilities as 
well  as  digital  skills  of  healthcare  workers,  tele-
medicines  solutions  and  research,  development  and 
innovation 

such  as 

Industrial  Networks 
industrial 
alliances,  European  Clusters  Alliance,  European 
Enterprises Network and Pact for Skills may be useful 
implement  solutions  to 
tools  to  co-design  and 
current  challenges:  COVID-19  demand  peaks,  lack  of 
skills,  lack  of  reliable  intelligence  on  supply  chains, 
raw  material  dependencies,  technological,  political 
and governance challenge in the health tech field. 

Strategic  Public  Procurement  facilitates  the 
purchase  of 
innovative  and  affordable  health 
technologies302, including green and digital solutions. 
Public procurement plays a key role in bringing the EU 
industry,  research  centres,  and  EU  and  national 
regulatory authorities together  and facilitates public- 
private cooperation with a view to address the needs 
of public health and health systems. 

Strategic  Partnerships  in  the  health  area  could 
help  to  identify  and  address vulnerabilities  of  global 
supply  chains  of  medical  goods  such  as  personal 
protective 
devices, 
pharmaceuticals that are of a key element of the EU’s 
resilience and crisis preparedness. The EU has already 
started to work with WTO members to increase the 
cooperation and facilitate trade in health goods.  

equipment, 

medical 

301 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics. 
302 WHO definition:  A health technology is the application of organized knowledge and skills in the form of devices, medicines, vaccines, 
procedures and systems developed to solve a health problem and improve quality of lives. 

136 

 
 
 
 
 
 
 
 
                                                           
The ecosystem at a glance 

Sectors included 
in the ecosystem 

Manufacturing of pharmaceuticals and their key inputs, medical devices and equipment 
and personal protective equipment; Healthcare services (medical and residential care); 
Health tech and related services. Companies are often part of global and complex supply 
chains. EU-based production for the goods segment has been declining partially due to re-
location  or  subcontracting  of  production  extra  EU.  The  biggest  part  of  this  ecosystem’s 
contribution  to  the  EU  added  value  is  generated  by  health  services  provided  through 
health workers and health care facilities.  

SME dimension 

Current 
challenges 

Note: The bar labelled Horizontal refers to activities which contribute to all ecosystems such as professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy.  
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 
The industrial structure of the Health ecosystem is diffused, with some big players and a 
significant number of SMEs. However, potential synergies between those two groups are 
not fully tapped and thus the upscaling of SMEs is seriously hindered. In addition, an even 
more important limiting factor is the fact that the demand side, which consists mainly of 
public buyers of the supplies or services, is highly fragmented. This fragmentation makes it 
very difficult for SMEs to access business opportunities. As a result the health ecosystem is 
not  fully  functioning  and  is  hindered  in  its  function  of  becoming  an  incubator  of  new 
innovative breakthroughs that are needed if we want to give the EU health industry a real 
boost and contribute to economic growth in the EU. 
The  main  structural  weaknesses  are  supply  chains  vulnerabilities,  healthcare  capacity 
constraints  and  fragmentation.  As  part  of  the  supply  chain  is  located  in  third  countries 
(Asia in particular), goods production for the EU market relies on critical inputs from there 
(e.g.  certain  chemicals  for  medicines,  certain  components  of  medical  devices,  personal 
protective  equipment).  Healthcare  suffers  (human  and  financial)  capacity  constraints303. 
This is partly due to skill shortages and pay and working conditions are obstacles to attract 
and  retain  skilled  staff  needed  to  ensure  resilience  of  the  system  in  the  longer-run. 
Coordination  between  national  and/or  public  authorities  within  Member  States  remains 
difficult.  Too  often,  public  buyers  award  contracts  to  the  bidder  with  lowest  price  only, 
which leads to market concentration and thus reduces the number of suppliers based in 
the  EU.  Further,  they  do  not  always  have  good  knowledge  of  market  suppliers.  With 
regards logistics and supply chain management, there remains room for improvement in 
most  Member  States.  The  COVID-19  crisis  created  demand  peaks  and  showed 
coordination  gaps  at  EU  level.  The  existing  structural  weaknesses  and  constraints 
impacted  the  capacity  to  deal  with  surge  in  demand  despite  efforts  to  ramp  up 
production.  During  the  first  wave,  restrictions  to  the  free  movement  of  goods  on  the 
Single  Market  affected  the  availability  of  certain  medical  goods  and  personal  protective 
equipment (including for workers). The crisis highlighted the need for coordination, tools 

303 In the COVID-19 context, the need to address healthcare capacity constraints has been stressed  for instance in COM/2020/724 final 
and COM(2020) 786 final  

137 

 
 
 
 
 
                                                           
Forward-looking 
assessment 

Global context 

to  monitor  production  and  match  demand-supply  at  the  EU  level  in  certain  cases.  The 
pandemic forcefully highlighted the value of innovative health technologies, including in 
diagnostics and treatment and made the case for strengthening research and innovation 
in health. A key challenge is to build on this momentum and take major steps towards the 
digital transformation of health and care, building on digital technologies like AI and High 
Performance  Computing  while  ensuring  protection  against  cyber  threats  but  answering 
the unmet needs at the demand site. Projects such as Innovation Broker can contribute to 
facilitate  such  matching.  New  COVID-19  related  challenges  and  threats  continue  to 
emerge, ranging from variants to vaccine adaptation or mass production. 
Strengthening  supply  chains,  improving  the  resilience  of  health  systems,  ensuring 
accessibility  to  and  affordability  of  medicines,  medical  devices,  health  technologies, 
health  services  and  continuity  of  care  in  health  emergencies,  addressing  public  health 
and health systems’ needs and seizing opportunities of digital and green transition are 
the  priorities  of  this  ecosystem.  However,  lack  of  reliable  intelligence  on  supply  chains 
can  hinder  sound  policymaking.  Improving  the  resilience  of  healthcare  system  requires 
more  investment  in  capacity  (including  recruitment  and  skills),  coordination,  prevention 
and quality of care. Strategic public procurement  and better knowledge of the suppliers 
by  buyers  can  lead  to  more  efficient  purchases  of  medical  goods  and  to  the  supply  of 
greener solutions and innovation allowing for optimised care pathways.  
In order to boost COVID-19 vaccines production capacity in Europe, the Commission has 
set-up  a  Task  Force  for  Industrial  Scale-up  of  COVID-19  vaccines  to  detect  and  help 
respond  to  issues  in  real-time.304  To  address  the  threat  of  variants,  the  Commission  will 
establish  and  operate  a  new  bio-defence  preparedness  plan  called  HERA  Incubator,  to 
access and mobilise all means and resources necessary to prevent, mitigate and respond 
to the potential impact of variants.305 
The EU health industries are key players although in terms of global sales, the relevant 
market  segments  are  dominated  by  North  America  (e.g.  in  2018,  North  America 
accounted for 48.9% of global sales of medicines compared to Europe (incl. Switzerland) 
accounting  for  23.2%306)  or  Asia  (e.g.  for  components  for  masks  and  gloves;  regarding 
generic active pharmaceutical ingredients (APIs), the EU accounts for 24% of the world’s 
API  production  compared  to  65.5%  being  produced  in  Asia  Pacific).  Europe  (incl. 
Switzerland)  accounts  for  27%  of  the  medical  devices  market307.  While  R&D  is  a  critical 
factor  in  global  competition,  EU  invests  relatively  less  than  trading  partners:    19.2%  of 
industrial R&D investments in the EU goes in health innovation (compared to 26.4% in the 
US)308. The EU share of private unicorns in the health sector is 10% (compared to 8% in the 
US and 6% in China309). The EU pioneered on sophisticated biologic innovative medicines 
(and biosimilars), however, Asia and the US are rapidly catching up. 

304 COM(2021) 78 final  
305 COM(2021) 78 final  
306 https://www.efpia.eu/news-events/the-efpia-view/blog-articles/would-the-last-pharmaceutical-investor-in-europe-please-turn-the-
lights-out/  
307 https://www.medtecheurope.org/wp-content/uploads/2019/04/The-European-Medical-Technology-Industry-in-figures-2019-1.pdf  
308 2020 EU Industrial Research and Development Scoreboard 
309 2020 EU Industrial Research and Development Scoreboard 

138 

 
 
 
 
                                                           
Mapping of policy tools in more detail  

Funding and budgetary programmes 

RRF    The  RFF  can  address  many  needs  identified  for  this  ecosystem:  (i)  supply  chains 
vulnerabilities;  (ii)  resilience  of  healthcare  systems;  (iii)  investment  in  innovative  and  sustainable 
production technologies,  (iv)  digital  solutions.  A  number  of  countries  have  proposed  to  invest  in  their 
health systems in order to improve resilience in different domains.  

CRII+/ERDF/ESF/CEF  ERDF  can  be  used  to  transform  and  improve  health  systems  and  regional 
health infrastructure,  for  digitalisation  (e.g.  the  Smart  Specialisation  Strategy,  Digital  Innovation  Hubs, 
Testing  and  Experimentation  Facilities)  and  transformation  of  health  systems  (e.g.  integration  of  care, 
strengthening of primary care, disease prevention and health promotion, increasing the access to health 
services).  For  instance,  in  Brussels,  ERDF  funded  centres  for  integrated  care  for  vulnerable  people, 
oncology  training  programmes,  an  application  to  access  new  rapid  tests  for  chronic  disease,  a 
transdisciplinary and inter-university laboratory. ESF+ can support improving accessibility, including for 
persons with disabilities, effectiveness and resilience of health systems. Reallocations under CRII+ were 
used  to  purchase  medical  equipment,  medication  and  personal  protective  equipment  for  healthcare 
facilities during the COVID crisis. The REACT-EU initiative aims at increasing support to Member States, 
bridging  the  gap  between  first-response  measures  and  longer-term  recovery.  It  provides  additional 
funding for the most important sectors assisting the crisis repair actions that will be necessary to lay the 
basis for a green, digital and resilient recovery. This involves among others support to health systems.  

Horizon Europe (including European Partnerships) Cluster 1 ‘Health’ can support innovative health 
technologies,  ensure  that  they  match  public  health  needs  and  health  systems’  needs,  ensure  
including  the  green  manufacturing  of  such  health 
accessibility,  affordability  and  availability, 
technologies  as  well  as  the  uptake  of  innovative  and  digital    health  solutions,  which  effectively  make 
health systems more effective and resilient. The planned European Partnership on Innovative Health310 
and  the  European  Partnership  on  Health  and  Care  Transformation311  are  expected  to  contribute 
significantly  towards  these  goals.312  Cluster  4  ‘Digital,  Industry  and  Space’  can  promote  affordability, 
sustainability  and  security  of  supply  of  pharmaceuticals  and  chemicals,  smart  and  multifunctional 
biomaterials  for  health  innovations,  as  well  as  provide  concepts  for  circular  economy  solutions  for  
unsorted plastic (and other) waste such as personal protection equipment. Horizon Europe will create a 
network  of  relevant  research  and  technology  organisations  to  increase  uptake  of  digitally-enabled 
solutions. 
Digital Europe Programme Digital Europe together with the Connecting Europe Facility will be used to 
create,  scale  up  and  deploy  the  digital  infrastructure  needed  to  establish  the  health  data  space.  In 
particular,  both  programmes  address  the  challenges  of  securely  linking  different  kinds  of  health  data 
across  borders  (such  as  electronic  health  records,  images,  and  genomic  data)  and  enabling  its  secure 
accessibility for research and innovation purposes. Digital Europe will also enable innovators in the sector 
to  deploy  their  AI  and  robotics  based  products  faster  in  the  market  through  a  dedicated testing  and 
experimentation facility.  The Digital Europe Programme will fund the design and delivery of specialised 

310  https://ec.europa.eu/info/files/european-partnership-innovative-health_en 
311 https://ec.europa.eu/info/files/european-partnership-health-and-care-systems-transformation_en 
312 https://ec.europa.eu/info/files/european-partnership-innovative-health_en  

139 

 
 
                                                           
programmes  in  key  capacity  areas  like  data  and  AI,  cybersecurity,  quantum  and  HPC  and  support  the 
reskilling and upskilling of workers through short-term courses in advanced digital skills.  

InvestEU The Research, Innovation and Digitisation (RID) window will fund high-risk and/or large-scale 
projects  in  the  areas  of  infectious  diseases  and  antimicrobial  resistance;  rare  and  complex  diseases; 
biomarkers/diagnostics/medical  devices;  and  neurodegenerative  diseases,  specifically  targeting  late 
stage  clinical  development,  validation  and  market  entry.  InvestEU  aims  to  fill  in  the  investment  gap  as 
regards the innovation and modernisation of health and care systems, and allows to provide support for 
renovation of hospital and other care facilities.  

Supportive regulatory environment 

Single Market Surveillance There are issues with capacity of Notified Bodies and with new waves of 
infections  there  is  the  risk  of  having  non-compliant  personal  protective  equipment  entering  the  EU 
market (NB: also relevant under enforcement of Single Market legislation).  

Main  Single  Market  barriers  within  the  ecosystem  Regulatory  barriers  in  the  health  ecosystem 
relate to complex regulatory environment and a lack of interoperable solutions. Systematic notification 
via the SMTD Directive (EU) 2015/1535 of new draft national technical regulations and  cooperation on 
the  adoption  of  voluntary  international  standards  for  electronic  health  records,  medicines  and  smart 
medical  devices  will  help  eliminating  these  obstacles.  High  regulation,  market  fragmentation,  and 
questions  about  cost-effectiveness  and  lack  of  understanding  of  new  technology  hinder  innovative 
health  care  companies  to  thrive.  This  can  be  overcome  by  twinning  exercises  and  demonstration 
actions, dissemination of good practices, the provision of assistance to SMEs and the promotion of the 
development  of  digital  skills.  Restriction  of  specific  technologies  or  modes  of  pursuit  of  health 
professions  affects  the  development  and  use  of  modern health technologies  and prevents  the  efficient 
practice  of  health  care  providers.  The  proper  implementation  of  Directive  (EU)  2018/958  on  a 
proportionality test before adoption of new regulation of professions will help to eliminate unjustified 
restrictions. In the area of health public procurement, it appears that public buyers often do not comply 
with  the  EU  public  procurement  rules,  however  monitoring  tools  are  very  limited.  Member  States 
introduce  measures to  limit  the  free  movement  of  pharmaceuticals  (parallel  trade)  if  there  are  risks  of 
shortages. 

Standardisation    It  can  help  to  consolidate  EU  position  on  global  markets  and  to  improve  healthcare 
cost-efficiency. The EU is leading the global effort towards regulatory convergence. The development of 
harmonised  quality  and  safety  standards  for  personal  protection  equipment  and  medical  devices  is 
improving. A Commission recommendation on a European electronic health record exchange format to 
unlock  the  flow  of  health  data  across  borders  provides  a  framework  for  the  further  development  of 
common  technical  specifications  for  secure  health  data  sharing  across  EU  Member  States.  CEN  is 
currently  developing  Technical  Specification  for  mHealth.  However,  when  it  comes  to  procurement,  a 
general lack of standardisation makes it difficult for public buyers to avoid vendor lock-in. Standards for 
widely used medical equipment would reduce this risk.  

Digital transformation The Commission’s proposal for a Data Governance Act313 aims to respond to the 
lack  of  clear  rules/mechanisms  for  secure  health  data  sharing  across  borders.  Lack  of  common 
approaches between Member States (e.g. secondary use of health data; reimbursement rules for use of 

313 COM/2020/767 final 

140 

 
 
                                                           
telemedicine services) results in fragmentation, which could be addressed in the legislative proposal on 
the European Health Data Space in 2021. Stronger framework for use of Artificial intelligence is needed. 
The revision of the pharmaceutical legislation will assess additional needs for the digital transformation 
of the sector. 

eGovernment The current legal framework already mandates the use of digital solutions in key stages of 
the public procurement life cycle, such as the bids submission and the acceptance of invoices. The uptake 
of  digital  tools  is  rapidly  increasing.  However,  data  quality  still  needs  to  be  improved.  The 
implementation of the new eForms (Implementing Regulation (EU) 2019/1780) and the future Open Data 
Space for Public Administrations314 can help achieving better governance in the Public Sector. 

Green transformation The pharmaceutical strategy315 sets ambitious agenda regarding environmental 
impact  of  pharmaceuticals  and  of  their  manufacturing  and  waste,  with  a  specific  focus  on  the 
antimicrobial resistance. During the COVID-19 crisis, production of critical single-use personal protective 
equipment  (e.g.  masks)  was  ramped  up  thus  creating  additional waste,  which  if  not  properly  managed 
and  littered,  goes  against  the  commitments  to  fight  plastic  pollution  and  the  commitment  to  shift 
towards a more circular economy. A further need of this ecosystem concerns the renovation of hospitals 
to  improve  their  energy  performance.  The  green  tech  investment  initiative,  as  mentioned  in  the  SME 
strategy, is also relevant to increase the access to equity finance for innovative SMEs and start-ups that 
develop  and  adopt  green  tech  solutions.  Green  tech  investment  could  encourage  the  development  of 
innovative solutions that will help the health ecosystem to achieve the green transition. 

Strategic Public Procurement A better uptake of the strategic use of procurement would help improve 
the sustainability of these supply chains. Moreover, value-based procurement is a  useful tool to better 
integrate digital technology and innovative solutions in the health sector. This procurement is not limited 
to the purchase of medical goods, but considers the care path of the patient integrating criteria related to 
health  system  performance  and  patient  outcomes,  and  aiming  at  more  efficient  processes  and  better 
health outcomes. 

Intellectual  Property  The  Commission  announced  in  November  2020  measures  to  simplify  and 
streamline the EU pharmaceutical intellectual property system and re-stated the European Commission’s 
support for a rapid roll out of the unitary patent system. It will explore new types of incentives to tackle 
unmet needs (e.g. antimicrobials, rare diseases). 

International partnerships and dialogue 

Strategic Partnerships (Critical Materials and input) There are no strategic partnerships to address 
vulnerabilities stemming from production of certain critical inputs in third countries (personal protective 
equipment,  medical  devices,  pharma)  although  many  countries  share  similar  concerns  regarding  for 
instance  the  concentration  of  sources  of  supply,  manufacturing  and  quality  issues.  Better  information 
exchange could contribute to addressing such vulnerabilities and strengthening the resilience against the 
external  shocks  in  case  of  another  global  health  crisis.  To  improve  the  predictability  of  the  trade  in 
health  goods,  the  EU  will  work  together  with  WTO  members  on  increased  cooperation  and  trade 
measures facilitation on a multilateral level. 

Networks and governance 

314 COM/2020/66 final  
315 COM(2020) 761 final 

141 

 
 
                                                           
Industrial  Networks  The  Industrial  Alliance  on  Raw  Materials  will  address  the  raw  material 
dependencies  and  will  reinforce  resilience  of  supply  chains.  While  not  being  an  industrial  alliance,  a 
structured dialogue316 with the actors of the pharmaceutical value chain, public authorities, civil society 
and  research  community  was  announced in  the 2020 pharmaceutical  strategy  for  Europe.  It  aims  to 1) 
gain a better understanding about the functioning of the global pharmaceutical supply chains; 2) identify 
causes and drivers of potential vulnerabilities, including potential dependencies, threatening the supply 
of  medicines;  and  3)  put  forward  measures  and  formulate  policy  options  to  be  considered  by  the 
Commission and other authorities in the EU to strengthen the EU’s resilience and ensure the security of 
supply  of  medicines.  The  deployment  of  European  Health  Data  Space  will  provide  the  necessary  data 
sharing infrastructure for diagnostic tools and treatments. 

Clusters  cooperation  There  are  many  cluster  organisations  working  on  health  related  topics.  The 
European  Clusters  Alliance  supports  the  uptake  of  Digital  Health  Solutions,  including  the  Council  of 
European Bioregions (CEBR).  

Pact  for  skills  The  Pact317  will  facilitate  public-private  cooperation  and  set  up  large-scale 
partnerships,  including  at  regional  level.  These  partnerships  will  involve  all  stakeholders,  notably 
SMEs  who  struggle  with  access  to  skills.  It  will  also  facilitate  access  to  information  on  EU  funding 
instruments for skills by offering a single-entry point at EU level. A multi stakeholder roundtable on 16 
February 2021 kick-started this process. It will depend on private actors and national authorities in charge 
of re- and up-skilling policies to take targeted actions and establish a partnership. Furthermore, the SME 
strategy supports the ‘digital volunteers’ programme to promote the transfer of expertise in digitalisation from 
high-tech businesses to more traditional SMEs. 

Enterprise  Europe  Network  EEN  provides  support  to  SMEs  and  facilitates  business  and  technology 
partnership. It proved useful to address demand peaks during crisis e.g. the specific ‘Healthcare against 
COVID’ market place helped SMEs and public services to solve personal protective equipment shortages 
in 2020.  

Digital Innovation Hubs Several of the European Digital Innovation Hubs  (EDIHs) are specialised in the 
health sector. The network of EDIHs being set up under the Digital Europe Programme can help ensure 
that  every  company,  small  or  large,  high-tech  or  not,  can  take  advantage  of  digital  opportunities  to 
optimise their production processes, and to innovate their products and business models.  

316 https://ec.europa.eu/health/human-use/strategy/dialogue_medicines-supply_en  
317 More on the Pact for Skills: https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

142 

 
 
                                                           
10. Mobility – Transport – Automotive Ecosystem 

14.6 million people employed318 
(at least 16 million including 
indirect jobs) 

7.5% of EU value added         

(EUR 906 billion) 

1.8 million firms                      
99.7% of SMEs 

Transformative initiatives 

Shift To Clean Mobility 

Fostering Automation 

investment 

So  far,  the  European  Battery 
Alliance  catalysed  more  than 
EUR  20  billion  of  private  and 
public 
from  60 
companies 
in  12  Member 
States.  It  shows  how  strategic 
be 
dependencies 
successfully  addressed. 
is 
expected  that  by  2025,  EU 
battery  cell  production  would 
reach 200-300 GWh. This would 
allow  to  produce  4  to  6  million 
electric  vehicles320.  The  Clean 
Hydrogen  Alliance  will  also  be 
key for the whole ecosystem. 

can 

It 

transport 

EU already has a legal framework 
for  the  approval  of  autonomous 
Safety 
vehicles 
(General 
Regulation)  and  for 
increased 
interoperability  and  capacity  of 
(European  Rail 
rail 
Traffic  Management  System). 
Ensuring  the  deployment  of  key 
digital  enablers  and  removing 
barriers  to  data  sharing  will  be 
critical to improve efficiency and 
develop 
market 
new 
opportunities. A vehicle will soon 
generate  up  to  4,000  gigabytes 
per day321. 

Together 

A Fit For Purpose Legal 
Framework  
The recently adopted Sustainable 
and  Smart  Mobility  Strategy  set 
out a predictable pathway for the 
ecosystem. 
with 
existing  initiatives,  they  foresee 
legislative  adaptations 
major 
(Euro7,  CO2  standards,  FuelEU 
Maritime,  Rail  Freight  Corridors 
regulation,  Combined  Transport 
and  batteries  regulation).  The 
ecosystem as a whole has to face 
huge  investments  both  in  legacy 
and  green  technologies  at  the 
same  time.  In  the  automotive 
sector  alone,  each  car  maker  will 
have to spend up to €50 billion to 
address  automation,  connectivity 
and  electrification  challenges319. 
Clarity  on 
is 
therefore a must. 

legal  framework 

Towards an EU policy toolbox fit for purpose 

Industrial  Networks  Any  possible  future 
alliance will benefit from the success of the 
in  building  a 

European  Battery  Alliance 
sustainable and circular value chain.  

Pact  for  Skills  The  green  and  digital 
transformation  will  have  huge  impact  on 
employment as well as up/re-skilling. Skills will be 
needed in chemistry (batteries), electronics, cyber 
security and artificial intelligence, as well as basic 
digital skills for the whole workforce. 

RRF  EU  Recovery  and  Resilience  Fund  will 
help  Member  States  to  invest  and  launch 
reforms  plans  that  will  contribute  to  roll  out 
recharging  and  alternative  refuelling  infrastructure 
as well as fleet renewal. The RRF’s stated ambition 
is  to  build,  by  2025,  one  million  out  of  the  three 
million charging points needed in 2030 and half of 
the  1000  hydrogen  stations  needed.  Better 
integration and interaction of the different modes of 
mobility (and the needs of different transport users) 
will also be critical. 

318 Figures for direct employment and value added are based on Eurostat National Accounts and number of firms and SME shares on 
Eurostat Structural Business Statistics. Data from 2018. 
319 McKinsey 
320 Data represents expected production (based on announced industry investments), with average battery capacity of 50kWh. Sources: 
Benchmark Minerals Gigafactory Tracking, Innoenergy, Own calculations on basis of announced investments 
321 Intel. 

143 

 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The Mobility – Transport – Automotive Ecosystem covers automotive, rail and waterborne. It 
is  characterised  by  long  and  complex  supply  chain.  The  ecosystem  is  dominated  by  a  few 
players that became global players. 

SME 
dimension 

Current 
challenges 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy. *Sector only 
partially attributed to the ecosystem; +Excludes contribution of C25 and C28. 

Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

SMEs are not only predominant in retail (e.g. automotive), they are also directly engaged 
in  production  (and  are  often  key  suppliers  to  many  larger  manufacturers  as  they  offer 
unique expertise and technical know-how at the level of components and sub-assemblies. 
They promote innovation through their flexibility, agility and highly specific knowledge. As 
an example, around 16 % of companies in the segment of the manufacture of locomotives 
and rolling stock and around 20% companies in the segment of signalling and train control 
equipment  are  SMEs.  The  main  challenges  for  SMEs  in  the  ecosystem  are  access  to 
international markets, access to finance and protection of intellectual property rights. 

The  automotive  industry,  that  was  already  facing  structural  challenges  (CO2,  pollutant 
emissions, electrification), was hard-hit and suffered an unprecedented 23.7%322 decrease of 
passenger  car  sales  in  2020.  Several  carmakers323  had  to  be  bailed  out  due  to  liquidity 
problems. The massive use of furlough schemes did not prevent the announcement of several 
plant  closures/job  losses324  at  manufacturer  or  supplier  level.  Market  volume  in  the  rail 
industry  expected  to  drop  by  8%  in  2020  due  to  the  COVID-19  crisis.  The  long  term  rise  in 
public debt risks reducing the size of rail products market, in particular in the western part of 
the  EU.  However,  in  the  short  term  large  amount  of  unprecedented  fiscal  stimulus  and  EU 
recovery programmes may limit this risk. The pandemic has hit European shipyards extremely 
hard in 2020, with new orders in Europe declining325 around 60% in terms of  Compensated 
Gross Tonnes (CGT) and by 77% of value. Yet, the impact of the COVID-19 pandemic was less 

322 Source ACEA. 
323 FCA and Renault received state aid under the Temporary Framework to support the economy in the context of the coronavirus 
outbreak. 
324 Nissan, Renault, Bridgestone, Continental, etc. 
325 Shipbuilding includes the construction of ships and vessels both for commercial and naval use (i.e. for defence purposes), so there may 
be overlaps with the ASD ecosystem, although COVID19 has impacted the two market segments differently. 

144 

 
 
 
 
                                                           
Forward-
looking 
assessment 

Global 
context  

pronounced in Asia, where governments have put in place enormous stimulus packages, local 
content policies and financing tools targeted to their domestic shipbuilders.326 Given the huge 
investments needed to accompany the industrial green and digital industrial transformation 
and the global context competition rules are a vital part of the twin transition on green and 
digital. 

All three components of the ecosystem face the same challenges in terms of decarbonisation, 
digitalisation  and  global  competition.  Clean  technologies  will  reduce  assembly  costs 
(electrified  vehicles  have  much  less  components),  while  self-driving  and  connectivity  (e.g. 
access  to  in-vehicle  data)  will  create  new  markets  and  services  building  on  software  and 
computing  systems,  requiring  the  acquisition  of  new  skills  in  Europe.  Huge  investments  are 
necessary  to  address  these  challenges327,  triggering  technological  alliances  between 
manufacturers  or  with  big  technology  companies.328  Certain  players  also  consider  shifting  to 
new  business  models  to  generate  to  revenue  streams  to  compensate  for  the  stagnation  of 
volume  sales.  While  short-term  stimulus  (scrapping/purchasing  schemes)  may  address  weak 
demand,  more  structural  measures  are  needed  to  accompany  the  huge  investments  and  to 
accelerate further decarbonisation (where the  whole  ecosystem  is lagging) and digitalisation. 
The  rebound  of  the  ecosystem  will  very  much  depend  on  investments  not  only  in  the  new 
technologies  but  also  in  the  associated  infrastructure  as  well  as  reskilling  of  the  workforce. 
Digitalisation  and  automation  can  offer  new  opportunities  for  skilled  workers,  notably  young 
workers and women. Intermodality must also be enhanced. 

The  pandemic  has  shown  EU’s  supply  chain  dependence  (e.g.  specialised  engines,  electronic 
components) on third countries. EU companies are facing competition from Asia also in sectors 
where they were leaders. This happened in commercial cargo shipbuilding  (in recent decades 
predominantly  to  Japan,  South  Korea  and  China)  and  it  is  happening  now  in  certain  rail  and 
automotive  markets  (EU  is  now  the  second  after  China  in  terms  of  car  market  size  and 
production).  The  example  of  the  maritime  industry  shows  that  a  niche  strategy  (cruise  and 
passengers  ships)  can  be  risky,  especially  when  faced  with  pandemic  and  global  crisis.  It  is 
essential  to  ensure  that  EU  makes  the  most  of  competition  rules  and  Trade  Defence 
Instruments329  in  today’s  world330  and  to  make  the  most  of  Trade  Defence  Instruments331. 
Export  markets  are  crucial  to  keep  leadership  and  finance,  investments  in  new  technologies. 
Existing Free Trade Agreements (FTA) have been beneficial so far. Completion and finalisation 
of ongoing or completed trade negotiations (with e.g. Mercosur) will be important to provide 
new outputs to EU industry. As well as improved market access to EU industry. 

326  Compared  to  Chinese  shipyards’  where  order  intake  declined  of  around  20%  from  last  year  (in  terms  of  CGT).  Source:    SEA  Europe 
Market Monitoring. 
327 VW alone will spent EUR 75 billion for electrification and digitalisation until 2025. 
328  For  example:  (VW/Ford  on  self-driving).  On  digitalisation  uptake  either  EU  OEMs  are  partnering  with  big  tech  companies  (Daimler-
Nvidia or Waymo-FCA/Waymo-Volvo), or are developing in-house digital brands (VW /Car.software). 

330 A New Industrial Strategy for Europe, COM/2020/102 final 
331 For example, in the shipbuilding sector, traditional ‘border measures’ such as countervailing or antidumping duties are difficult to apply 
to unfairly traded ships. Indeed, these ships are often not imported/registered in the EU. 

145 

 
 
 
 
 
 
 
                                                           
 
Mapping of policy tools in more detail  

Funding and budgetary programmes  

RRF Funding Member State actions on charging and refuelling infrastructure, promotion of future-proof 
clean and digital technologies to accelerate sustainable, accessible and smart transport technologies (e.g. 
electric vehicles and clean vessels); stimulating demand through fleet renewals and a modernisation of 
rail  and  waterborne  infrastructure  (‘Recharge  and  Refuel’)  in  line  with  the  objectives  of  the  smart  and 
sustainable mobility strategy, support the deployment of Cooperative Intelligent Transport Systems and 
5G  corridors  for  Connected,  Cooperative  and Automated  Mobility  (CCAM)  and rail in  combination with 
CEF  funding.  Crucial  to  support  also  R&I,  automotive  &  transport  industry  modernisation  and 
transformation  of  manufacturing  and  business  model  (e.g.  Manufacturing  4.0,  robotisation  and  value 
creation model implementation, relocation of production lines).  

IPCEIs In December 2019, the Commission authorised State aid for the first battery IPCEI which involves 
17 companies spread across 7 Member States and a range of innovative projects all along the value chain. 
The  IPCEI  decision  authorised  the  granting  of  up  to  EUR  3.2  billion  in  State  aid  and  this  is  expected  to 
leverage a further EUR 5 billion in private sector investments. State aid for a second IPCEI was recently 
approved by the Commission in January 2021. This IPCEI involves 42 direct participants with activities in 
12  Member  States.  The  IPCEI  decision has  authorised  the  granting  of  up  to  EUR  2.9  billion in  State  aid 
with a further EUR 9 billion expected in private sector investments332.  

CRII+/ERDF/ESF/CEF  CEF  is  applicable  to  mobility,  transport  and  automotive  particularly  for 
infrastructure (alternative fuels infrastructure, (cooperative) intelligent transport systems smart grids, 5G 
corridor deployment), connected automated & connected mobility projects (incl. with cross-border, e.g. 
Project  Terminal  DE-BE-LU-FR  or  5G  sections  for  Connected  and  Automated  Mobility  (CAM)  and  rail) 
underpinned  by  cross-border  cooperation  agreements  between  Member  States,  e.g.  Via  Baltica.  CRII+ 
support  SMEs  (working  capital,  cash  flow  issue)  and  job  creation/youth  employment  for  targeted 
automotive and mobility projects. ERDF and CEF are important funding tools for the rail sector, allowing 
for funding to expand, modernise and develop ‘missing links’ in the European rail network. CEF transport 
has  supported  ITS  corridors  for  many  years,  since  2016  strengthened  by  the  creation  of  the  C-ROADS 
platform, uniting 18 Member States in harmonized deployment of C-ITS, improving road safety and traffic 
efficiency as well as preparing for CCAM. CEF Digital (building on the 5G Strategic Deployment Agenda for 
Rail released in April 2020 and the one for Connected and Automated Mobility released in October 2020), 
will  stimulate  investments  into  the  deployment  of  pan-European  5G  Corridors  for  Connected  and 
Automated  Mobility  and  rail.  This  activity  will  be  key  to  provide  the  bandwidth  required  for  the 
digitalisation  of  the  automotive,  mobility  and  transport  sectors,  along  with  investments  in  artificial 
intelligence, cybersecurity, supercomputing and cloud computing. 

Horizon Europe (including European Partnerships) Huge R&D investments must be undertaken in 
clean  technologies  (batteries,  hydrogen)  as  well  as 
in  digitisation  (self-driving,  connectivity, 
intermodality).  Cluster  5  is  relevant  for  the  mobility  ecosystem,  providing  that  an  adequate  budget  is 
allocated to the proposed partnerships. Ongoing projects already support decarbonisation (battery and 
other  zero  emission  vehicle  technologies)  and  self-driving  (AI,  on  road  testing,  sensors).  The  three 
proposed  partnerships  ‘Towards  a  competitive  European  industrial  battery  value  chain  (Batt4EU)’, 
‘Towards zero emission road transport (2Zero)’ and ‘Connected, Cooperative and Automated Mobility ’ 

332

 https://ec.europa.eu/commission/presscorner/detail/en/IP_21_226    

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will  benefit  these  sectors.  The  two  proposed  partnerships  ‘Transforming  Europe’s  rail  system’  and  the 
‘Zero  -  Emission  Waterborne  Transport’  will  likely  benefit  the  rail  and  waterborne  sectors.333  Two  EU 
missions  under  Horizon  Europe  will  focus  on  solving  major  societal  challenges  as  adapting  to  climate 
change and living in climate-neutral cities, both closely  related to transport and mobility. In relation to 
defence related shipbuilding, the sector will also be eligible for funding from the European Defence Fund. 
Under Cluster 4, four partnerships will contribute to the digitalisation of the automotive sector, namely: 
(i) the partnership for Smart Networks and Services (SNS), (ii) the partnership for Key Digital Technologies 
(KDT); (iii) the partnership on AI, data and robotics and (iv) the partnership Made in Europe.334 

Digital Europe Programme  The  use  of B2B  digital  platforms  are  instrumental  for  the  proliferation of 
the ecosystem, which manages data flows across increasingly complex supply chains eventually leading to 
integrated Manufacturing Data Spaces. Exploiting data from connected vehicles will spur innovation for 
autonomous driving, traffic safety and mobility management. Digital Europe will enable the ecosystem to 
use cloud-to-edge based services, and a Mobility Data Space to develop new value-added data services 
is 
across 
encouraged  to  use  the  Edge-AI  testing  and  experimentation  facility  to  get  access  to  secure,  energy 
efficient and powerful AI chips that can be embedded in cars and other devices. 

infrastructure  providers.  Furthermore,  the  ecosystem 

industrial  actors  and  transport 

InvestEU  It  will  fund  major  but  also  smaller-scale  projects  in  (i)  Batteries  (more  than  EUR  1  billion  in 
2020  already  with  an  estimate  of  total  need  of  EUR  20-30  billion),  (ii)  connected  and  automated 
automotive,  (iii) charging and refuelling infrastructures (more than EUR 2.5 billion already financed); (iv) 
clean vehicle fleet renewal (leased and shared fleet); (v) Modernisation of automotive & mobility industry 
production  lines/supply  chains  (more  than  EUR  1.8  billion  in  2020);  (vi)  support  to  new  and  advanced 
technologies for export (e.g. QEV project) – Also important for the ecosystem via EFSI (R&I) and for 5G 
projects. 

Supportive regulatory environment 

Single Market Surveillance Recently adopted motor vehicles Type-Approval Regulation 2018/858 has 
introduced  market  surveillance  at  EU  level  and  reinforced  Member  State  cooperation  in  a  dedicated 
Forum.  Particularly  relevant  in  the  RRF  context,  which  aims  at  supporting  market  surveillance 
infrastructure and related investment to strengthen safety and reliability.  

Main Single  Market  barriers  within  the  ecosystem  RRF  can  support  Member  States’  enforcement 
efforts.  This  is  particularly  relevant  for  automotive  market  surveillance  that  require  dedicated 
infrastructure (laboratories), hardware (portable emission systems), software (to detect defeat devices) 
as well as training to new technologies. This will also be critical to ensure safety of embedded Artificial 
Intelligence systems, ensure security of connected vehicles and clean air in urban areas. The 4th railway 
package,  adopted  in  2016,  aims  at  reducing  the  fragmentation  of  the  internal  market  for  rail.  The 
technical  pillar  of  the  railway  package  aims  to  simplify  processes  and  reduce  costs  by  establishing  the 
European Union Agency for Railways  as a ‘one-stop-shop’ for vehicle authorisation, safety certification, 

333 The former aims at delivering technologies necessary for the railway system to become the backbone of an integrated and sustainable 
mobility in Europe; the latter to mobilise the waterborne sector to reinforce EU’s global leadership in green shipping technologies, possibly 
regaining lost markets with a green technology lead. 
334 The first one intends to empower several vertical domains including smart transportation, and connected and automated mobility; the 
second  one  focuses  on  the  development  of  electronic  and  photonic  (light  based  technologies)  components,  and  the  software  in  the 
automotive  sector;  the  third  one  will  drive  innovation,  acceptance  and  uptake  of  these  technologies,  and  their  application  to  various 
sectors including the automotive one. 

147 

 
 
                                                           
and  the  European  Rail  Traffic  Management  System  (‘ERTMS  ‘)  trackside  approval  in  Europe.  Full 
implementation now to be enforced. 

FEU  must  remain  a  major  promoter  of  international  harmonisation  to  avoid  fragmentation  of  global 
markets.  This  is  relevant  for  the  whole  ecosystem,  in  particular  for  the  maritime  and  railways 
components  as  final  products  can  be  in  service  for  30  years  or  more.  Deployment  and  further 
standardisation  in  the  field  Intelligent  Transport  Systems  services  will  also  support  the  deployment  of 
automated mobility. 

Digital transformation Regarding the automotive sector, the EU is the first jurisdiction in the world that 
has  adopted  a  legal  framework  for  the  approval  of  automated  vehicles.335  In  addition,  new  rules  to 
ensure  fair  and  safe  access  to  in-vehicle  data  will  be  proposed  in  Q4  2021  and  create  new  market 
opportunities.  The  European  global  satellite-based  navigation  system,  Galileo,  provides  improved 
positioning and timing information with significant positive implications for the mobility ecosystem. The 
data  act  will  clarify  data  sharing  and  data  governance.  In  the  automotive  sector,  access  to  repair  and 
maintenance  information  for  independent  garages  and  repairers  remains  an  issue  despite  recent 
improvements brought in by the new Type-Approval regulation336.  

In  the  rail  sector,  ERTMS,  and  its  upcoming  new  radio  transmission  subsystem  Future  Railway  Mobile 
Communication  System  (FRMCS)  is  a  European  standard  for  a  digital  command  and  control  system  for 
trains. In practice, this system will allow for major efficiency gains in the operating of trains and create 
seamless cross-border rail services. 

For  the  waterborne  sector,  investment  could  be  made  to  support  the  transition  to  automation  and 
digitalisation  in  the  ecosystem,  which  will  enable  safer  and  more  efficient  shipping  (i.e.  foster 
development  of  Autonomous  waterborne  systems).  The  development  of  digitalised  waterway 
infrastructure  and  traffic  management  systems  could  facilitate  the  take  up  of  modernised  vessels  and 
better connectivity to other modes. Digitalisation can also support more efficient logistics and planning 
(smart  shipping),  also  benefitting  the  cut  in  unnecessary  pollution.  The  deployment  of  5G  network 
infrastructure, including cross-border corridors, would be an enabler of the digitalisation of the sector.  

eGovernment  The  digitalisation  also  supports  efficient  information  exchange  and  contributes  to 
reducing  administrative  burden.  Following  the  entry  into  application  of  the  new  Type-Approval 
framework on motor vehicles337, digital processing and exchange of type approval documentation will be 
become the norm. Transparency will be enhanced through citizen access to technical information online. 
In  the  waterborne  sector,  the  Regulation  on  the  European  Maritime  Single  Window  environment 
(EMSWe)338 will introduce a fully harmonised interface for reporting by ships calling at the EU ports. For 
multimodal transport, the Regulation on electronic freight transport information (eFTI)339 will establish a 
harmonised  and  trusted  environment  for  electronic  communication  between  the  economic  operators 
and the Member States authorities in the EU continental traffic. What is more, the Digital Transport and 
Logistics  Forum  (DTLF)  is  currently  working  on  a  common  framework  to  foster  interoperability  in  data 
sharing between all types of supply chain stakeholders. 

335 Regulation (EU) 2019/2144 
336 Regulation (EU) 2018/858 
337 Regulation (EU) 2018/858 
338 Regulation (EU) 2019/1239 
339 Regulation (EU) 2020/1056 

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Green transformation New pollutant emissions (Euro 7) and CO2 targets for the automotive sector will 
be proposed in 2021, allowing the EU to have the most stringent emissions regulations worldwide in real-
driving  conditions.  These  stringent  rules  will  foster  innovation  in  clean  technologies  and  pave  the  way 
towards  zero-emission  mobility.  In  parallel,  the  recently  proposed  Battery  Regulation  aims  to  ensure 
sustainable production and consumption as well as reduced carbon footprint. 

The  renewal  of  the  long  distance  rail  could  be  a  priority  as  it  brings  the  most  EU  added-value 
(streamlined  cross  border  operations  in  particular)  and  will underpin the  objective  linked  to  the  Green 
Deal  of  modal  shift  away  from  road.  The  schemes  for  renewal  of  interurban/long  distance  and  freight 
fleet  (main  priority)  and  urban  fleet  (second  priority)  could  be  set  up  quickly  because  railway 
undertakings or transport authorities are familiar with technical aspects related to procurement of fleets. 
Renewal  of  rolling  stock  will  contribute  to  the  faster  roll-out  of  Technical  Standards  of  Interoperability 
(TSIs).340For  the  waterborne  sector,  investment  is  needed  to  support  infrastructure  for  sustainable 
alternative fuels, on-shore power supply and investments in transformative clean and digital technologies 
and new zero and low emission solutions, including for clean energy storage in the vicinity of ports and 
(2) the development of new design, technologies, systems and systems of systems prepared to operate 
on alternative fuels (such as methanol, ammonia, hydrogen) and on new energy converters (such as fuel 
cells  and batteries)  .  Within  the  European  supply  chain,  pilot  projects  could be  supported  to  build and 
operate  economically  competitive  vessels  that  substantially  reduce  air  pollution,  greenhouse  gas 
emissions,  harmful  water  emissions  and  noise.  A  holistic  approach  to  the  upgrading  of  port 
infrastructures, 
investments  to  make  ports  suitable  for  offshore  energy  assembly, 
manufacturing  and  servicing,  could  be  favoured.  341  In  this  context  a  new  FuelEU  Maritime  initiative  is 
expected to create strong demand in the maritime shipping sector for the use of alternative fuels and on-
shore electricity in ports. 

including 

Strategic Public Procurement Specific rules have been adopted to encourage the public procurement 
of clean vehicles (Clean Vehicle Directive 2019/1161) and ensure a certain proportion of procurement of 
clean vehicles. While the EU’s procurement market is in practice open, European suppliers face barriers in 
the  access  to  third  country  procurement  markets,  especially  the  rail  supply.  The  rapid  adoption  of  the 
International  Procurement  instrument  would  help  to  open  third  country  markets.  European  suppliers, 
especially in the rail and maritime sectors are also concerned by the distorting effect of foreign subsidies 
in public procurement in the EU. 

Transport infrastructure is equally important for ensuring smart and sustainable mobility. It is therefore 
essential that transport infrastructure projects are implemented in a sustainable way. Projects could take 
into  account  climate  and  environmental  impacts  and  accessibility  for  users  with  disabilities  or  reduced 
mobility  and  elderly  users  as  well  as  other  equality  related  considerations,  such  as  affordability  and 
availability  of  transport  for  long-term  comprehensive  sustainability.  The  use  of  sustainability  criteria  in 
the procurement procedure in accordance with the existing rules, can ensure that. 

Intellectual Property Standard essential patents on connectivity technologies is an issue with regard to 
the  transition  to  connected  cars.  In  November  2020,  the  Commission  adopted  an  IP  Action  Plan 

340  The  EU  funding  would  be  made  operational  by  Member  States,  which  are  planning  to  renew  or  retrofit  their  rolling  stock  fleet  or 
purchase additional rolling stock, to use RRF for introducing purchase incentivising or scrapping schemes for very old rolling stock. 
341 Sustainable and Smart Mobility Strategy COM(2020) 789 final. Other relevant forthcoming initiatives: i) Revision of ETS to internalise 
cost of CO2 emissions for maritime transport; ii) FuelEU Maritime, boosting production & uptake of renewable low-carbon maritime fuels; 
iii) Revision of the maritime legislation on flag state and port state control, accident investigation; iv) Revision of Ship Source Pollution 
Directive. 

149 

 
 
                                                           
announcing initiatives to solve such issues. In follow-up, the European Commission will inter alia organise 
a  roundtable  to  facilitate  an  industry-led  solution.  Securing  patents  is  critical  for  the  uptake  of  future 
proof  technology  and  battery  uptake  as  recently  evidenced  by  soar  in  battery-related  patent 
registrations. 

International partnerships and dialogue  

Strategic  Partnerships  (Critical  Materials  and  input)  The  pandemic  has  shown  EU’s  supply  chain 
dependence  (e.g.  specialised  engines,  semiconductors,  logistics)  on  third  countries.  Access  to  raw 
materials and their processing will be key for the development of an EU battery cell value chain. The EU 
needs to address raw materials dependencies and reinforce resilience of supply chains. 

Regulatory  dialogue/cooperation  In  the  automotive  sector,  international  harmonisation  is  already 
taking place at UN level under the impulse of the EU and could continue to be promoted. Regarding the 
shipbuilding  sector,  the  Commission  promotes  dialogues  and  cooperation  both  at  bilateral  level  with 
major trading partners and at multilateral level in international fora such as the IMO, the OECD WP6 and 
the WTO. 

Networks and governance 

Industrial  Networks  The  Battery  Alliance  has  been  successfully  engaged.  Other  industrial  alliances, 
notably on Raw materials, Clean Hydrogen, Plastics will address the raw material dependencies and will 
reinforce  resilience  of  supply  chains.  The  Clean  Hydrogen  Alliance  will  be  relevant  for  the  green 
transition  of  the  mobility  ecosystem  and  includes  stakeholders  from  automotive,  rail  supply  and 
shipbuilding. A possible alliance on Renewable and Low Carbon Fuels could also play a role.  

Pact  for  skills  An  automotive  partnership  under  the  Pact  for  Skills  (Automotive  Skills  Alliance)  was 
launched  in  November  2020.  The  Pact  is  being  developed  but  has  the  ambition  to  upskill  5%  of  the 
workforce  each  year  (around 700.000 employees)  with anticipated  investment  of  EUR  7  billion (mostly 
from industry but also EU funds as appropriate)342. The work will take account of the on-going blueprint 
sectoral skills projects underway addressing skills mismatches for automotive (DRIVES) and batteries cells 
(ALLBATS)  production.  The  Digital  Europe  Programme,  will  fund  the  design  and  delivery  of  specialised 
programmes in key capacity areas like data and AI, cybersecurity, quantum and High Power Computing 
and support the reskilling and upskilling of workers through short-term courses in advanced digital skills. 
Furthermore, the SME strategy supports the ’digital volunteers’ programme to promote the transfer of 
expertise in digitalisation from high-tech businesses to more traditional SMEs. 

Clusters cooperation There are currently 105 clusters registered at the European Cluster Collaboration 
Platform that are active in the automobiles sector.343 There are also three partnerships representing 14 
clusters  working  in  the  area  of  smart  mobility  receives  funding  under  the  Clusters  Go  International 
action.344 

Enterprise Europe Network The Enterprise Europe Network (EEN) has a ‘Mobility Sector Group’ which 
will  need  to  continue  to  evolve  to  help  relevant  SMEs  address  the  triple  transition  to  sustainability, 

342file:///C:/Users/rebailu/AppData/Local/Packages/Microsoft.MicrosoftEdge_8wekyb3d8bbwe/TempState/Downloads/Automotive%20(3
).pdf, See Pact for Skills https://ec.europa.eu/social/main.jsp?catId=1517&langId=en  
343 https://www.clustercollaboration.eu/cluster-list, https://www.clustercollaboration.eu/cluster-list, 
https://www.clustercollaboration.eu/cluster-list, https://www.clustercollaboration.eu/cluster-list    
344 https://www.clustercollaboration.eu/eu-cluster-partnerships/escp-4i/third-generation  

150 

 
 
                                                           
digitalisation  and  resilience.  The  EEN’s  ‘Maritime  Industry  and  Services  Sector  Group’  will  also  need  to 
continue to play a role. 

Digital Innovation Hubs Several of the European Digital Innovation Hubs (EDIHs) are specialised in the 
automotive  sector.  The  network  of  EDIHs  being  set  up  under  the  Digital  Europe  Programme  can  help 
ensure that every company, small or large, high-tech or not, can take advantage of digital opportunities 
to optimise their production processes, and to innovate their products and business models.  

151 

 
 
 
 
11. Proximity, Social Economy and Civil Security Ecosystem  

22.9 million people employed345  

6.54% of EU value added 
(EUR 791 billion) 

3.1 million firms                     
99.9% of SMEs 

Transformative initiatives 
Innovation capacity, access to 
effective digital solutions and 
digital skills  
All  subsets  of  the  ecosystem  need 
tailor-made  digital  training  for  its 
employees.  EU  instruments  could 
enhance  the  innovation  capacity 
of  entrepreneurs  and  help  them 
develop  solutions  that  address 
local  and 
challenges. 
societal 
Access  to  effective  technology 
solutions  adapted  to  social  and 
local  purpose  could  be  facilitated, 
e.g. ‘Tech4good’.  

A Social Economy Action Plan for 
inclusive growth and jobs 

The  Action  Plan,  planned  in 2021 
will  enhance  social  investment, 
support  social  economy  actors 
and social enterprises to start-up, 
scale-up,  innovate  create  quality 
jobs  and  enhance  labour  market 
participation.  The  objective  is  to 
boost  the  potential  of  the  social 
to 
economy 
sustainable  and  inclusive  growth 
and a fair recovery. 

contribute 

to 

Green transition, e.g. through 
upgraded social infrastructure and 
integrated local cooperation 
Many  actors  in  this  ecosystem  are 
in  delivering  on  green 
pioneers 
transition 
in  a  fair  and  affordable 
manner. Supporting social economy, in 
particular  by  promoting  enabling 
framework conditions and cooperation 
with other local actors, as well as with 
the  public  sector  and  mainstream 
business  will  encourage 
inclusive 
green growth and quality job-creation, 
e.g.  via  socio-economic  regeneration 
of  disadvantaged  areas.  Addressing 
investment 
social 
gaps 
infrastructure  and  skills  will  have  a 
carbon 
direct 
impact  on 
emissions  and  quality  of 
social 
services. 

local 

in 

Towards an EU policy toolbox fit for purpose 

Ecosystem  strategy  The  measures  which  will  be 
announced  by  the  Social  Economy  Action  Plan  will 
promote  awareness,  visibility  and  recognition  of  social 
in  building 
economy  and  support  all  stakeholders 
socially-mindful value chains. They will include targeted 
actions  to  strengthen  its  place  in  the  EU  industrial 
landscape,  improve  social  economy  access  to  finance 
and to markets, to support the greening and digitisation 
of the social economy, as well as initiatives designed to 
scale SMEs and replicate social innovations.  
Green 

 Inclusive 
Joint 
investment  models  can  boost  proximity  and  social 
economy’s 
innovative 
to 
services/products  in  the  field  of  green  and  ecological 
transition. These entail cooperation and engagement with 
public  authorities,  civil  society  and  the  wider  business 
community, e.g.  through ‘Local Green Deals’. Investments 
and partnerships to modernise social infrastructure, tackle 
investment  gaps  and  deliver  on 
renovation  and 
regeneration of (sub)urban spaces will be supported under 
the  Renovation  Wave,  Affordable  Housing  Initiative  and 
New European Bauhaus. 

Transformation 

potential 

develop 

 ERDF,  ESF+,  EAFRD,  EaSI  and  RRF  These 
funds provide opportunities to Member States 
to mobilise public-private investments to develop all 
parts of the ecosystem. This can help them to scale 
up,  build  innovation  capacity  and  upgrade  social 
infrastructure  and  services.    RRF  could  address 
investment  and  reform  needs  with  a  priority  for 
‘renovation’/affordable  housing,  ‘reskilling  and  up-
skilling’ and ‘modernising’. 

Pact  For  Skills  The  pact  for  skills  will 
leverage  public  and  private  engagement  to 
upskill/reskill the workforce within the  ecosystem, 
in  view  of  the  green  and  digital  transformation  and 
build  businesses’ 
innovation  capacity. 
Together with a blueprint for sectoral skills, this pact 
will  also  reinforce  the  social  economy’s  role  in  the 
labour market integration of vulnerable people. 

(social) 

345 Figures for employment and value added are based on Eurostat National Accounts and SME shares on Eurostat Structural Business 
Statistics. Data 2018. These figures only captures part of the ‘social economy’ and ‘proximity’ concepts, as sectoral overlaps with other 
ecosystems occur and specific data on social economy shares in NACE are not available. Therefore, this estimate covers aggregated NACE 
code analysis. 

152 

 
 
    
 
 
 
    
 
 
 
 
 
 
 
                                                           
Sectors included 
in the 
ecosystem 

The ecosystem at a glance 

The ‘social economy’ encompasses a variety of businesses, organisations and legal forms, 
including  non-profit  associations,  cooperatives,  mutual  societies,  foundations  and  social 
enterprises. They share the objective of systematically putting people first and producing 
a  positive  impact  on  local  communities.  The  social  economy  business  model  aims  at 
reinvesting  most  of  the  profits  back  into  the  organisation  and/or  a  social  cause,  and 
having a participatory/democratic form of governance346. Social economy is known to be 
anchored at local level and to foster socio-economic cohesion by promoting values such as 
solidarity, participation and cooperation. Social economy organisations operate in a large 
variety of economic sectors and are therefore linked with other industrial ecosystems. As 
a reference, an EESC study estimates there are 2,8 million social economy enterprises in 
Europe, representing 10% of all businesses in the EU. Almost 13,6 million people  – about 
6,2%  of  the  EU’s  employees  –  work  for  social  economy  enterprises.  On  top  of  the  paid 
workforce,  social  economy  also  mobilises  volunteers,  equivalent  to  5.5  million  full  time 
workers.347 
The  ‘proximity  economy348’  includes  services  and  businesses  fostering  local  and  short 
value  chains  for  mainly  local  production  and  consumption.  Proximity  businesses  include 
local  SMEs  operating  personal  and  contact  services,  small  shops,  bars  and  restaurants, 
repair,  cleaning  and  maintenance  services,  etc.  The  proximity  economy  also  acts  as  the 
‘last-mile’ delivery of goods and services of most of the ecosystems to the local businesses 
and citizens. A proximity economy is also characterised by the presence of diverse set of 
enabling ‘proximity hubs’ such as cities and local communities, community initiatives and 
businesses clusters, and public private partnerships. 

In  the  context  of  this  ecosystem,  the  Proximity  dimension  also  includes  civil  security 
services (fire fighters, police forces, emergency teams, etc.), which operate at local level 
to support and protect citizens (including emergency incidents/disaster response) and are 
performed  by  public  entities  including  an  important  share  of  volunteering  work.  Civil 
security  services  have  clear  links  with  security  industry,  which  provides  products  and 
services used by security practitioners for the protection of citizens. The economic activity 
of  these  product  and  service  providers  is  not  included  in  this  ecosystem,  but  spreads 
throughout several other ecosystems349 . 

 The numerical estimations provided for this ecosystem (6.54% of EU GDP) capture only 
part of the ‘social economy’ and ‘proximity’ concepts, as sectoral overlaps with other 
ecosystems occur and available data on sectoral shares of social economy is limited.  

346  See  the  Roadmap  published  by  the  Commission  on  the  action  plan  for  the  social  economy:  https://ec.europa.eu/info/law/better-
regulation/have-your-say/initiatives/12743-Social-Economy-Action-Plan   
347 Figures for EU-28 from the EESC study ‘Recent Evolutions of Social Economy – Study’, 2017.  
348 The “Proximity economy” has many connections with other ecosystems such as Tourism, Retail, Food, Mobility, Digital and Construction 
Industrial Ecosystems. One characteristic vision for this proximity economy is the “15-minute city”348, where everything a citizen needs is 
within a 15-minute walk  or bike  ride, and emphasises safe and inclusive  communities, and housing that is affordable, accessible, and 
adaptable. 

349 EU industries, big and small, who provide products and services that enable civil security capabilities operate under ecosystems such as 
Aerospace  and  Defence  (e.g.  C4I  systems,  earth  observation  and  satellite  communications),  Electronics  (e.g.  sensors),  Digital  (e.g. 
cybersecurity,  digital  forensics),  Health (e.g.  victims triage  systems,  biological  decontamination systems)  or  Transport  (e.g.  manned and 
unmanned vehicles). 

153 

 
 
 
                                                           
SME dimension 

Current 
challenges 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services  and  utilities;  see  Annex 4 of  the  SWD  on  Monitoring  the  Implementation  of  Industrial  Policy.  *Sector 
only  partially  attributed  to  the  ecosystem.  The  category  ‘Social  economy  –  Other  aggregated’  includes:  Retail 
trade,  except  of  motor  vehicles  and  motorcycles;  Accommodation  and  food  service  activities;  Services  to 
buildings and landscape activities and Office administrative, office support and other business support activities. 
The category ‘Proximity economy - Aggregate’ includes: Repair of computers and personal and household goods; 
Other personal service activities and Activities of households as employers; undifferentiated goods- and services-
producing activities of households for own use. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

99.9% of the Proximity & Social Economy companies are SMEs with significant part micro 
enterprises  and  starts-ups.350  However,  beyond  the  consequences  of  the  crisis,  social 
economy organisations face structural and specific difficulties that hamper their potential 
to  create  more  jobs  and  address  societal  challenges  on  a  larger  scale  while  inspiring 
systemic changes in the mainstream economy351. The survival of SMEs in this ecosystem is 
crucial  for  local  prosperity  in  (sub)urban,  rural  and  remote  communities,  as  they  offer 
essential  services  and  goods  in  proximity  of  their  clients  and  are  often  key  driver  for 
economic activity. They are an important part of the social fabric and contribute to vibrant 
city and town centres. 

Across  the  ecosystem,  heavy  disruptions  linked  to  the  COVID-19  crisis  and  subsequent 
lockdowns had serious negative effects. Many enterprises and organisations could restart 
often only partially (and had to close again). Some of them partially adjusted by offering 
take-away,  click-collect  or  redesigned  their  business  models  to  serve  different  target 
groups  online  (i.e.:  social  services  supporting  vulnerable  individuals  and  households). 
Businesses  in  the  ecosystem  are  in  most  cases  very  vulnerable  due  to  long  periods  of 
forced  inactivity  combined  with  operating  with  small  liquidity  reserves.  Beyond  the 
consequences of the crisis, social economy organisations face structural difficulties, both 
within and outside of the EU, that hamper their potential to create more jobs and address 
societal  challenges  on  a  larger  scale  while  inspiring  systemic  changes  in  the  mainstream 
economy.  The  Covid-19  crisis  highlighted  the  value  of  social  economy  actors  to  support 
vulnerable groups facing (potential) job-loss and to help upskilling and reskilling for quick 
cross-sectoral mobility of the workforce to emerging jobs within the local economy.  
Actors in this ecosystem need clear digital skills support for their staff as well as support 
for  the  digital  transition  by  access  to  affordable  and  adaptable  technology  as  well  as 
access to data. Specific capacity of social economy actors to develop fair digital business 
models based on open source protocols for data and technology could be supported and 

350 Depending on specific country’s welfare system, care and social services are performed by SME size organisations as well as large non-
profit organisations (+10.000 employees). 
351 A recent study on the impact of the Commission’s 2011 Social Business Initiative and its follow-up actions suggests that these 
initiatives did contribute to develop more favourable conditions for European social economy organisations, but that needs persist – 
although not with the same intensity across EU Member States and regions. 

154 

 
 
 
                                                           
scaled (shared solutions by tech4good development and civic tech infrastructure, shared 
and cooperative platforms352, digital commons, assistive technology, …).  
In addition, social infrastructure is a crucial element, as it is often used or offered by social 
economy  actors.  Still,  social  infrastructure  is  not  responding  the  current  standards  in 
terms of quality and energy efficiency. The 2018 ‘Report of the High-Level Task Force on 
Investing  in  Social  Infrastructure353’  calculated  an  annual  investment  gap  of  EUR  142 
billion  for  social  infrastructure,  of  which  EUR  57  billion  for  social  housing  only.  Such 
challenges  can  be  translated  in  decarbonisation  targets  for  the  ecosystem  (energy 
providers,  buildings,  industry,  and  transport),  the  deployment  of  relevant  circular 
economy activities - as well as quality and liveability interventions. 

Forward-looking 
assessment 

Social  economy  business  models  are  in  line  with  changing  preferences  in  citizen  and 
consumer behaviour towards more sustainable patterns. However, a recent study on the 
impact  of  the  Commission’s  2011  Social  Business  Initiative  and  its  follow-up  actions 
identifies a set of main challenges for social economy:  

• the lack of recognition and understanding of social economy organisations 
• the access to tailored  funding and business support (the funding needs which 
are  not  covered  by  the  market  were  estimated  at  EUR  6.7  billion  for  the  2021-
2027 programming period354). 
• the access to markets (socially responsible public procurement, relations with 
mainstream enterprises);  
• the ability to scale up social innovation;  
• limited skills development opportunities; 
• limited research focused on social economy and social enterprises.  

The  Commission  developed  with  the  OECD  and  academics  the  Better  Entrepreneurship 
Policy Tool designed for policy makers and stakeholders supporting social economy. This 
framework identifies policy dimensions relevant  for supporting social enterprises as well 
as  for  social  economy  more  broadly,  by  addressing  different  categories:  1/  Social 
Institutional  Framework;  3/  Legal  and  Regulatory 
Entrepreneurship  Culture;  2/ 
Frameworks;  4/  Access  to  Finance;  5/  Access  to  Markets;  6/  Skills  and  Business 
Development  Support;  7/  Managing,  Measuring  &  Reporting  Impact.  Further  policy 
actions on social economy will consider this policy tool. 

For Proximity and Social Economy the shift to digital and new innovative activities/services 
can  foster  local  value  loops  that  encourage  more  local  production,  sharing  and  other 
circular business models (i.e.: community initiatives and businesses, social clusters) which 
in  turn  contribute  to  create  a  local  circular  economy  system,  especially  at  urban  level, 
promote  territorial  competitiveness,  resilience, 
inclusion  and  cohesion.  Pioneering 
businesses in the ecosystem  are keen on developing open (social) digital innovation and 
are frontrunners in the green transition (i.e.: local green deals,  circular economy aspects 
such as green  manufacturing and  remanufacturing local circular  loops, regeneration and 
renovation,  eco-innovation…).  Consequently,  all  subsets  of  this  ecosystem  have  a  huge 
untapped  potential  for  the  hyper  connectivity  enabled  by  (network)  technologies  (e.g. 
social  networks,  wikis,  sensor  networks,  etc.),  to  stimulate  and  support  cooperation 
among citizens and the adoption of collective solutions355. Such initiatives can only result 
from  a  multidisciplinary  and  bottom-up  approach,  harnessing  collective  intelligence  in 
areas  such  as  collaborative  public  services,  collaborative  consumption  and  sharing 
economy,  collective  sensing  and  action,  crowd  sourcing,  collaborative  making,  open 

352 A platform cooperative is a democratically owned business that uses a website, mobile app or a protocol to sell a product or a service. 

It is owned and governed by those who depend on them most—workers, users, and other relevant stakeholders. 

353 https://ec.europa.eu/info/sites/info/files/economy-finance/dp074_en.pdf    
354 See: Social enterprise finance market Analysis and recommendations for delivery options 
https://ec.europa.eu/social/BlobServlet?docId=22516&langId=hr  
355

 See the projects funded through the H2020 initiative CAPS ‘Collective Awareness Platforms for Sustainability and Social Innovation’ 

155 

 
 
 
 
 
                                                           
Global context 

democracy and policy-making. 

This  ecosystem  contributes  directly  to  local  prosperity  and  well-being  of  citizens,  where 
they  provide  essential  production,  services  and  revenues.  They  improve  resilience  by 
reinforcing local value chains and promote citizens’ engagement within their community. 
Replication and knowledge sharing through ‘decentralised’ business models is the manner 
they  scale  in  a  ‘design  global,  produce  local’  fashion.  Generally,  they  are  less  directly 
integrated in the global economy and value chains but are rather drivers for reinvesting in 
local  prosperity  and  economy.  For  this  reason  the  ‘Global  supply  chains’  aspect  is  not 
considered  in  this  fiche.  In  addition,  social  economy  has  a  considerable  potential  for 
creating  fair  development  models  and  decent  jobs  outside  of  the  EU,  especially  in  our 
developing partner countries.  

156 

 
 
 
 
Mapping of policy tools in more detail 

Funding and budgetary programmes 

RRF The extent to which RRF investments target actors in this ecosystem varies from one  Member State to 
another. Some Member States have already flagged in their draft RRF proposals possible financial support for 
actors  such  as  social  housing  associations,  urban  planning  organisations,  renewable  energy  cooperatives, 
service providers focussing on re/up-skilling, local production framed into local level circular systems, and work 
integration  social  enterprises.  In  particular,  investment  in  renovation  and  affordable  housing  with  actors 
belonging to this ecosystem would be key to tackle climate and biodiversity challenges, improve liveability and 
ensure a  just  transition that leaves no one behind.  The RRF can support this ecosystem to help reshape the 
post-crisis economy by promoting inclusive and sustainable economic models.  

However,  many  Member  State  authorities  do  not  integrate  specific  requests  for  financial  support 
regarding this ecosystem thus hampering its potential to bring systemic change. Local public authorities 
report  often  not  being  directly  involved  in  the  National  Recovery  Plans  and  fear  not  having  access  to  the 
available resources to ‘build back better’. 

CRII+/ERDF/ESF+/CEF Generally, ESF+ (e.g. employment, social inclusion, social innovation and training) 
and ERDF (e.g. urban innovative actions, URBACT targeting housing and social infrastructure) are  key funding 
streams for many social economy organisations and proximity actors. Between 2014 and 2020, almost 1 billion 
euros  has  been  earmarked  under  the  ESF  specifically  for  social  enterprise  support.  European  Structural  and 
Investment Funds remain relevant under the current programming period, along with InvestEU. 

In  addition,  during  the  crisis,  specific  instruments  (e.g.  RRF,  CRII+)  were  created  to  support  the  economy. 
However,  namely  for  CRII+,  in  some  member  states  associations  may  be  excluded,  as  eligibility  for  such 
funding  might  be  limited  to  ‘for-profit’  legal  entities  or  explicitly  exclude  certain  actors  in  this  ecosystem. 
Temporary unemployment schemes are equally foreclosed either because the legal entity is ‘not-for-profit’ or 
because  the  employees  (such  as  for  “Work  Integration  Social  Enterprises”)  are  already  partially  subsidised. 
Finally, despite the immense increase in requests for social services, organisations are insufficiently backed by 
recovery support, which  results in a  shrinking offer and closures. The Commission invited Member States to 
ensure all social economy stakeholders could benefit equally from support and aid measures.  

Horizon  Europe  (including  European  Partnerships)  Social  economy  actors  can  benefit  from  Horizon 
Europe funding under various clusters. The first Horizon Europe Work Programme will e.g. support sustainable, 
smart  and  socially  innovative  cities  and  affordable  housing  districts  as  well  as  social  innovation,  including  in 
domains such as civil security, with a select number of dedicated calls. 

Digital Europe Programme Planned large-scale deployment of urban digital platforms, which will allow the 

management  of  large  amounts  of  data  and  stakeholders  as  well  as  the  creation  of  a  data  spaces  for  safe, 
secure, sustainable and smart communities that will foster data-driven innovation in support of the Green Deal 
and  the  digital  transition.  In  addition,  the  Programme  will  accelerate  the  adoption  of  Urban  Digital  Twins, 
enabling  cities  to  gain  greater  insights  and  new  knowledge  for  policy  development,  while  also  enhancing 
citizen participation, for example in urban planning. The Digital Europe Programme, will fund the design  and 
delivery of specialised programmes in key capacity areas like data and AI, cybersecurity, quantum and HPC and 
support the reskilling and upskilling of workers through short-term courses in advanced digital skills.  

Just Transition Fund A thriving local Proximity, Social Economy & Civil Security ecosystem is a key policy 
ambition to regenerate economic activity in areas that suffer from de-industrialisation and transition. This 
requires investment and support programmes for unemployed and people that suffer from mass lay-offs, such 
as the EGF. Such programmes can boost  local clusters/ partnerships, develop social capital in territories and 

157 

 
 
act as catalyst for industrial transformation356 with a strong emphasis on social objectives. Actors of this 
ecosystem  could  therefore  be  fully  part  and  make  the  utmost  of  the  scheme  to  help  ensure  a  fair 
transition. However, many Member State authorities do not integrate specific requests for financial support 
regarding this ecosystem thus hampering its potential to bring systemic change. Local public authorities report 
often  not  being  directly  involved  in  the  National  Recovery  Plans  and  fear  not  having  access  to  the  available 
resources to ‘build back better’. 

InvestEU  For  social  enterprises,  and  social  economy  by  extension:  the  InvestEU  Social  Window  will  de-risk  
investments and improve the institutional capacity of financial intermediaries  with the objective to improve 
access to finance via a guarantee and an equity instrument. These products will be based on the experience 
from EaSI and EFSI 2014-20 programmes that successfully boosted social finance markets in the EU. InvestEU 
will also invest in social infrastructure and services, where the huge investment gap357 would require the best 
efforts from all players involved358 

Access to Finance  Given the local activity and often small  size of actors in this ecosystem, their access to 
European  funding  is  not  easy.  Intermediaries  play  a  key  role  in  facilitating  this  access,  and  procedures  vary 
depending on the degree of  decentralisation of fund structures.  European Structural and Investment  Funds 
are the most relevant ones, and more specifically ESF+ given its social dimension.  

Supportive regulatory environment 

Main  Single  Market  barriers  within  the  ecosystem  The  European  Commission  is  currently  evaluating 
cross-border  issues  and  opportunities  for  social  economy  enterprises  and  organisations  and  may  reflect  on 
possible action in the forthcoming European Action Plan for the Social Economy scheduled in 2021.  

A  number  of  professions  involved  in  the  proximity  economy  and  specific  subsets  of  the  social  economy  are 
’regulated  professions’  in  several  Member  States  (residential  nurses,  child  care,  social  workers….),  which 
means  that  most  Member  States  also  require  a  certain  level  of  qualification  and  impose  a  range  of  other 
requirements  for  the  practice  of  these  professions.  These  professionals  can  face  obstacles  relating  to  the 
recognition/exercise  of  their  professional  qualifications  and/or  meeting  other  requirements  to  access  a 
regulated profession, which would need to be justified and proportionate. 

Digital  transformation  Actors  in  this  ecosystem  need  basic  digitisation  in  the  regular  organisational 
processes such as e-commerce, platform development, customer service software, digital (social) service tools, 
digital payments applications, etc. with tools tailored to their scale, reach and social purpose. Secondly, digital 
technologies  and  solutions,  such  as  online  collaborative  and  cooperative  platforms,  software  applications 
(apps),  distributed  ledger  technologies  (DLT),  Internet  of  Things  (IoT),  cloud  computing  and  Artificial 
Intelligence (AI) enable a wide variety of tools to support the creation of social values, and are therefore called 
‘tech  for  good’.  Openness  is  a  key  requirement  for  such  solutions,  to  ensure  the  interoperability  among 
different  platforms  (open  standards),  replication  and  adaptability  of  the  solutions  (open  source), 
independence  from  technology  manufacturers  (open  hardware)  and  portability  and  sovereignty  on  personal 
data  (open  data).  Open  and  cooperative  platforms  based  on  these  principles  will  be  crucial  to  enable  the 

356 Such experience is showcased in industrial modernisation projects, such as under the S3 platform where the potential of clusters for 

regeneration is supported https://s3platform.jrc.ec.europa.eu/social-economy.  

357 The 2018 ‘Report of the High-Level Task Force on Investing in Social Infrastructure ’ calculated an annual investment gap of EUR 142 
billion for social infrastructure, of which EUR 57 billion for social housing only 
358 EC Press release, 8 December 2020, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2344.  

158 

 
 
                                                           
digital transformation in an affordable, inclusive, effective and achievable manner359 and boost ‘digital social 
innovation’ (DSI).  

eGovernment Many actors in this Ecosystem act as service providers (social services, employment services, 
training,..)  for  public  authorities  and  suffer  from  heavy  administrative  burden,  lack  of  digital  competencies 
and knowledge of procurement procedures. Across Member States and even across regions large differences 
are notable. This significantly affects the overhead of service providers and their efficiency, which have usually 
very  little  administrative  capacity  in  comparison  with  bigger  SMEs  and  businesses.  Minimal  coordination  of 
information streams between Management Authorities of structural funds (ESIF are most accessible for these 
ecosystem  actors),  national  funds  and  direct  management  funds  results  in  even  more  burden.  In  addition, 
accelerated  efforts  are  needed  to  enact  citizens’  participation,  enable  local  production,  decarbonisation  and 
circular actions, through participative models, digital platforms for easy access to technological solutions and 
strategic advice. 

Green transformation  Social enterprises can be  champions for the green transition360 and have business 
models promoting it.  Some sectors, such as the social housing one, are a key policy target361 to deliver on the 
transition. The social housing sector however  lacks resources and needs support schemes like public/private 
investments to achieve tangible results.  The  Affordable Housing Initiative, part of the Renovation wave,  will 
mobilise  cross-sectoral  project  partnerships  to  promote  efficient  and  circular  processes,  boost  social 
engagement models to empower residents and stimulate cultural innovation.   

It  will  be  a  key  sector  to  support  the  implementation  of  leading  policies  and  new  green  innovations,  for 
example with regards to in the circular economy362 or energy provision by cooperatives and communities363.  

Strategic  Public  Procurement  Public  procurement364  is  an  important  resource  for  many  actors  in  this 
ecosystem  but  efforts  are  still  needed  to  develop  awareness,  and  promote  sustainable,  high-impact 
Procurement at local level as important driver for a smart, green and healthy future. Social considerations are 
still not fully used by public authorities to facilitate access of social enterprises to procurement market. The 
Commission is currently working to stimulate the development of socially responsible public procurement in 
the Member States. Work include the project ‘Buying for Social Impact’ or the recent organisation of seminars 
in 15 Member States to raise contracting authorities’ awareness in the scheme. 

Networks and governance  

Clusters cooperation  Social  Enterprises  and  Proximity  businesses  have  a  direct  interest  in  local  industrial 
and usually cross-sectoral cooperation. Many small local clusters (Clusters of Social and Ecological Innovation) 
start from grassroots initiatives to improve social/green impact of companies. This is crucial for local economic 
regeneration as proximity and social economy businesses have quasi zero incentives for delocalisation due to 
local  rooting.  A  clear  and  dedicated  support  at  the  EU  level  is  needed  to  support  these  clusters  in  their 
development  and  in  sharing  their  modes  of  operation  across  countries.  First  steps  were  taken  by  including 

359  For  a list  of  such open source  and  collaborative  software  and hardware  solutions,  see  https://joinup.ec.europa.eu/collection/digital-

response-covid-19/open-source-solutions. 

360  See  Hillman  et  al  (2018),  Social  enterprise  as  a  potential  niche  innovation  breakout  for  low  carbon  transition,  Energy  Policy  Review, 

Volume 117, June 2018, p. 445-456, https://doi.org/10.1016/j.enpol.2018.03.038. 

361 Heating/cooling of buildings accounts for ca. 40% of energy consumption and 36% of GHG emission; currently 75% of housing stock in 
the EU is inefficient. The renovation wave is part of the green deal and supports ambitions for social housing renovation, such as trough 
the Affordable Housing Initiative (GROW).  

362  ‘Right  to  repair’  and  access  to  repairable  products,  Extended  Producer  Responsibility,  limited  or  restricting  eco-design  obligations, 

taxation issues related to second hand.  

363 National regulation concerning energy provision hampering the development of local energy communities. 
364 A key objective of the 2014 overhaul of the European legislative framework on public procurement was to promote the strategic use of 

PP to the benefit of social and environmental goals.  

159 

 
 
                                                           
green and social clusters in the European Cluster Collaboration Platform (ECCP). Social economy stakeholders 
and civil society will also be  mobilised to collaborate with cluster organisations and cluster actors under the 
forthcoming Joint Cluster Initiatives. 

Enterprise  Europe  Network  Enterprise  Europe  Network  (EEN)  offers  support  for  SMEs  (i.e.:  innovation, 
internationalisation)  but  many  members  of  this  network  do  not  have  specific  competences/knowledge  to 
support  this  particular  ecosystem  yet  (i.e.:  knowledge  of  the  business  model).  However,  following  the 
publication  of  the  SME  Strategy,  the  EEN  is  currently  building  capacity  in  view  of  the  introduction  of  the 
Sustainability Advisors (in Q1 2022), which will offer tailored services related to sustainability, including advice 
on social sustainability and social economy business models. The European Social Economy Regions initiative 
(ESER) contributes to the active promotion and development of social economy at regional and local level. The 
Intelligent  Cities  Challenge  initiative  (ICC)  helps  cities/proximity  economy  lead  a  green,  digital  and  socially-
responsible recovery, leveraging the uptake of advanced technologies. More synergies between ESER and ICC 
networks  and  the  EEN  could  therefore  be  systematically  established  in  terms  of  communication  campaign, 
funding opportunities and partnerships possibilities. This would lead to increase the visibility of the ecosystem 
and highlight its contribution for territorial resilience.  

Pact  for  skills  The  current  development  of  a  Pact  for  skills  for  this  ecosystem365  as  well  as  the 
Blueprint  for  cooperating  on  sectoral  skills  targeting  Work  Integration  Social  Enterprises  in  2021366  
and the Guide of Reskilling for Cities367 in 2021 are crucial as many actors in this ecosystem have very little 
resources  for  training368  policies.  In  January  2021  the  Pact  for  skills  for  the  proximity  and  social  economy 
reached over 90 signatures. In this regard, cities are strategic stakeholders to organise and accelerate  cross-
sectoral  mobility  from  lost  jobs  to  emerging  jobs  (i.e.  towards  technological,  green  and  health-related  jobs) 
and prepare their economies for the skills of the future, and a network of  Cities of Excellence for Reskilling 
collaborates to anticipate future skills needs. ESIF is crucial to support these businesses in the organisation in 
the  response  to  their  VET  needs  and  in  empowering  their  training  capacity  for  staff  and  target  groups. 
Furthermore,  the  SME  strategy  supports  the  ‘digital  volunteers’  programme  to  promote  the  transfer  of 
expertise in digitalisation from high-tech businesses to more traditional SMEs. 

Digital Innovation Hubs Digital needs of actors in this ecosystem can be addressed by EDIHs with a specific 
focus  on  rural,  remote,  local,  social  enterprises  and  communities  as  well  as  projects  related  to  the  Smart 
villages  thematic  group  supporting  rural  and  remote  enterprises  in  their  digital  uptake  (Rural  Development 
Programme).  

365 More on the Pact for Skills on https://ec.europa.eu/social/main.jsp?catId=1517&langId=en.  
366  More  on  Erasmus+  Blueprint  for  Sectoral  Cooperation  on  Skills  in  Work  Integration  Social  Entreprises  (WISEs)  is  available  on 

https://ec.europa.eu/programmes/erasmus-plus/projects/eplus-project-details/#project/621509-EPP-1-2020-1-BE-EPPKA2-SSA-B. 

367 A ‘living’ hands-on-guide, built on success stories from the Intelligent Cities Challenge network, to provide cities with concrete reskilling 
practices and learning experiences. 
368 Vocational Education Training & Life Long Learning. 

160 

 
 
 
 
                                                           
12.  Retail Ecosystem 

29.8 million people employed369 

11.5% of EU value added 
(EUR 1,385 billion) 

5.5 million of firms                   

99.9% of SMEs  

Transformative initiatives  

A fairer and safer digital space 
supportive of the digital 
transformation of the ecosystem 

Continuation of the COVID-19 
related financial support will 
help companies maintain 
employment and adjust their 
business models 

Development of solutions 
supporting the greening of the 
ecosystem 

have 

sales 

COVID-19 has sped up the digital 
transformation of the ecosystem. 
Online 
sharply 
increased  during  the  pandemic.  
Digital  solutions  would  need  to 
be accessible to help companies, 
in  particular  SMEs,  embrace  the 
transformation. 
digital 
Implementation  of  the  proposed 
regulations  for  digital  services 
and  markets 
(DSA/DMA)  will 
provide  for  a  fairer  and  safer 
digital  space  and  a  supportive 
regulatory environment for all. 

measures 

Support 
could 
minimise  the  ongoing  disruption 
in  the  ecosystem  caused  by 
COVID-19  lockdowns,  ,  increase 
retailers’ 
resilience  and  help 
them  recover.  Help  and  rapid 
investment will assist retailers in 
online 
their 
presence  and  sales.  Retail 
is 
important  for  the  cohesion  of 
in 
rural  and  urban  areas, 
the 
particular 
vitality of city centres. 

in  preserving 

transition 

to 

of 

transition 

Swift development of sustainable 
solutions  will  contribute  to  the 
green 
the 
ecosystem  and  a  stronger  and 
more  resilient  Single  Market.  To 
improve  the  green  performance 
of the ecosystem attention could 
be  paid  to  the  uptake  of  the 
circular  economy  and  the  use  of 
green technologies. 

Towards an EU policy toolbox fit for purpose 

Funding  and  budgetary  programmes 
in 
The  EU  provides  support  measures, 
particular for retail and wholesale SMEs and start-
ups,  for  their  digital  and green infrastructure  and 
skills’  development,  mainly  through  funding 
programmes  (e.g.  RRF,  Digital  Europe)  used  for 
investment in technologies and trainings, access to 
network, cloud and data, Digital Innovation Hubs, 
etc. 

Enforcement  of  Single  Market  Rules 
Enforcement of existing Single Market rules, 
in  particular  on  the  free  movement  of  goods  and 
services and on the freedom of establishment, and 
adoption  of  the  DSA/DMA  are  important  for  the 
recovery and resilience of the ecosystem. 

 Industrial Networks Retail and wholesale companies are part of cooperation networks (existing 
industrial  alliances370,  Enterprise  Europe  Network,  Pact  for  skills  roundtables)  and  stakeholder 
platforms  (the  European  Circular  Economy  Stakeholder  Platform  Coordination  Group)  and  there  is 
potential in their presence in industrial clusters. 

369 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics.  
370 e.g. industrial alliances such as the Circular Plastics Alliance and the European Clean Hydrogen Alliance 

161 

 
 
    
 
      
 
 
 
 
 
 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the ecosystem 

Retail (large companies, SMEs, online and offline), relevant wholesale, online platforms. 371 
E-commerce  represents  10-15%  of  total  retail  sales  (much  less  for  grocery  retail)372. 
Market concentration differs across EU. The largest are mainly grocery chains, cosmetics, 
textiles and furniture sellers.  Most  important  e-commerce players come from outside the 
EU.373 The performance of the ecosystem is key for household budgets and suppliers. 

SME 
dimension 

Current 
challenges 

Note:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy.  
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

99.9%  of  the  5.5  million  companies  are  SMEs.  In  2019  only  20.5%  of  EU  companies  (<10 
employees, not only retailers) sold online. Fewer than one in twenty SMEs sell goods online 
to  buyers  in  other  EU  countries  (4%),  which  compares  to  11%  of  large  enterprises  (all 
companies, beyond retail).374 Unlike larger firms, the ability of SMEs to develop internal digital 
infrastructures  that  can  capitalise  on  the  benefits  of  digitalisation,  is  limited  by  a  lack  of 
financial  resources  and/or  skills.  Greater  uptake  of  online  platforms  is  therefore  especially 
important  for  SMEs.  The  survival  of  retail  SMEs  is  crucial  for  urban  and  rural  local 
communities,  as  they  offer  proximity,  are  an  important  part  of  the  social  fabric  and 
contribute to vibrant city and town centres. 

Challenges  and  opportunities  stem  from  the  increase  in  digitalisation  and  changing 
consumer needs and shopping habits. Restrictive regulatory requirements in some Member 
States  may  hinder  companies’  cross-border  expansion.  During  the  COVID-19  crisis,  shops 
were either closed or bound by stringent  precautionary measures. The turnover of  grocery 
retail  has  increased,  but  so  have  the  costs  of  operations  due  to  safety  measures.  Sales  of 
many  non-grocery  shops  have  fallen  dramatically.375  Online  sales  of  some  categories 
increased, but dropped for many other (mainly non-essential goods).  

In the context of the crisis, developing online sales was often decisive for the survival of 
physical retailers. Indications of excessive surge in prices of essential items or the reduction 
of sales for non-essential ones by big online platforms as well as their self-preferencing of 
own  services  affect  smaller  platform  users.  Wholesale  turnover  is  also  impacted,  due  to 
hotels  and  restaurants  closures.376  In  some  cases,  the  free  movement  of  goods  and 

371 Also consumers, manufacturers, importers, packaging, transportation and logistics services (postal and couriers), fulfilment centres, 
marketing, financial and payment services, researchers and owners of retail surfaces. Overlaps with the agri-food, textiles, proximity and 
social economy ecosystems. 
372 Euromonitor, 2020 
373 Amazon, Alibaba (mainly in CEE) and eBay; but there are also important national and regional operators; Euromonitor, 2019. 
374 Flash Eurobarometer 486 
375 The largest losses in sales were recorded in April 2020 vs April 2019 (-17.9 % for total turnover); Eurostat, STS data. 
376 Stakeholders estimate that 100,000 of jobs are at risk in France alone; EuroCommerce. 

162 

 
 
 
 
 
 
 
 
                                                           
Forward-
looking 
assessment 

employees  was  hindered,  which  disrupted  supply  chains  and  operations.  EU  consumer 
confidence in the end of 2020 still remained low. 

The entry and operational conditions for the  omni-channel sales model would need to be 
fair  for  all  players.  Local  online  platforms  and  other  measures  for  a  fair,  open  and  safe 
online environment are important in particular for SMEs. Large online platforms could help 
SMEs digitalise.  
Data  protection, sharing and analytics deserve attention. Turning to greener logistics and 
products,  and  the  accessibility  of  small  retailers  in  towns  and  rural  areas  could  be  further 
supported. All this needs investment in digital and sustainable infrastructure and skills, in 
particular  for  SMEs,  innovative  solutions  for  rural  areas,  DIHs,  higher  energy  efficiency, 
green  transportation,  sustainable  products,  etc.,  as  well  as  fair  conditions  on  online 
platforms and partnerships with local authorities.  A resilient  Single Market is essential for 
the optimisation of supply chains and for the adoption of sustainable solutions. 

Global context  Out of global top 250 retail companies, 88 are based in Europe.377 E-commerce is the main 
driver and the main online players are non-EU, this poses a challenge for future growth of 
EU retail industry. 

377 Global Powers of Retailing 2020; https://www2.deloitte.com/uk/en/pages/consumer-business/articles/global-powers-of-retailing.html  

163 

 
 
 
 
 
 
                                                           
Mapping of policy tools in more detail  

Funding and budgetary programmes378 
RRF  Member  States  should  focus  at  least  20%  of  their  investments  on  the  digital  transition.  These 

investments  can  include  digital  infrastructure,  local  online  marketplaces  or  platforms  for  small  businesses 
(e.g.  through  public-private  partnerships  with  local  authorities  to  improve  the  online  presence  of  retail  and 
wholesale SMEs), digital skills (from basic digital skills of SMEs owners and employees to more advanced ICT 
specialist  skills  for  larger  retailers).  The  RRF  can  also  support  investments  in  infrastructure  for  commercial 
vehicles  and  future-proof  clean  technologies  for  transport  (e.g.  electric  vehicles  for  deliveries,  hydrogen 
technology for long haul), renovation of commercial buildings, circular economy infrastructure (e.g. recycling 
centres), public administration digitalisation for better business environment, etc. It is crucial to support also 
R&I  and  the  transformation  of  business  models.  Urgent  intervention  at  EU  and  national  level  is  needed  to 
ensure that retail and wholesale companies, in particular SMEs, can benefit from the support measures, also 
for sustainable solutions and companies’ resilience. 

CRII+/ERDF/ESF/CEF ESF can boost  opening of shops, or improving digitalisation  and digital skills,  e.g. 
though trainings. CEF investment in transport, digital and energy can improve goods transportation, and help 
diversify supply chains. It will also deliver improved broadband services everywhere in Europe. CRII+ supports 
SMEs  and  start-ups  (working  capital,  cash  flow  issue)  and  job  creation,  including  in  retail.  ERDF  is  indirectly 
highly  relevant  through  support  for  local  shops,  their  digital  skills  and  low-carbon  economy  solutions,  or 
through cities revitalisation (as far as they also benefit small retailers). 

Horizon  Europe  (including  European  Partnerships)  Ongoing  projects  under  the  Climate,  Energy  and 
Mobility  cluster  already  support  decarbonisation  (battery  and  hydrogen  technology  relevant  to  goods 
transportation in the ecosystem). Research and innovation in products and processes, e.g. under the Digital, 
Industry  and  Space  cluster  foster  the  development  of  digital  technologies  such  as  sensors,  data  analytics, 
artificial  intelligence  and  robotics  relevant  to  retailers,  for  improved  personalised  customer  experience  and 
efficient delivery logistics.  

Digital  Europe  Programme  The  programme  could  be  used  for  building  strategic  digital  capacities  of 

retailers and wholesalers such as Artificial Intelligence, cybersecurity and the development of manufacturing 
data  space  across  supply  chains,  accessible  data  infrastructure,  the  digitalisation  of  retail  operations,  the 
delivery  and  fulfilment  (click-and-collect  models,  etc.),  as  well  as  data  analytics  services  for  retail  and 
wholesale  SMEs  and  other  digital  technologies  and  skills,  including  through  Digital  Innovation  Hubs  (DIHs). 
The programme is particularly important  for EU SMEs and start-ups to enable them to  recover and increase 
their competitiveness.  

InvestEU Financing under the SME window is available to improve the retail SMEs competitiveness, but also 
to  help  them  digitalise,  innovate  and  become  more  sustainable.  Investment  in  areas  such  as  batteries  and 
clean technologies for transport, energy efficiency, sustainable infrastructure (e.g. in-store equipment, waste 
management,  renewable  energy  sources,  packaging,  transportation  means,  etc.),  research,  innovation  and 
digitisation, could also be supported under the SME window.  

Access to Finance  Online  or  contactless  payments  are  increasingly  significant  for  retail  and  should  not  be 
distorted  by  disproportionate  fees.  Improving  accessibility  and  affordability  of  payment  infrastructure,  in 
particular based on instant payments, as set out in the Retail Payment Strategy is crucial. 379 

378 Companies in the retail ecosystem do not seem to have experience in applying for support measures. Information on opportunities and 
facilitation of the application process would be useful. 

164 

 
 
                                                           
EU  Space  Programme  and  European  Defence  Fund  Relevant  through  the  development  of  satellite 

navigation (improved logistics) and route optimisation for deliveries in e-commerce. 

Supportive regulatory environment 
Single Market Surveillance Important to ensure that products being sold by retailers and wholesalers have 

been designed and manufactured in accordance with EU requirements and are safe for consumers.  

Main Single Market barriers within the ecosystem Enforcement of EU law, mainly the Services Directive 
and Article 49 TFEU, i.e. national and local rules should be, non-discriminatory, justified and proportionate, 
support  companies  in  their  expanding  cross-border.  Improving  the  business  environment,  e.g.  in  the 
proportionality  assessment  of  local  rules  on  retail  establishment  is  important  for  the  ecosystem  to  remain 
competitive. On the free movement of goods and the freedom of establishment,  the Commission is looking 
into cases where Member States have put in force measures requiring retailers to source or promote national 
food  products  to  the  detriment  of  food  products  originating  from  other  Member  States.    This  is  raising 
compatibility  issues  with  Single  Market  freedoms.  In  the  COVID-19  crisis  context,  the  Commission  is  also 
paying  attention  to  the  free  movement  of  goods  and  employees  across  borders.  The  Ecommerce  Directive 
enforcement can be improved and the use of cooperation mechanisms by Member States could be updated. 
Enforcement  of  the  2018  rules  on  online  cross-border  parcel  delivery  services  is  necessary  to  allow  cross-
border  services  to  increase.  Enforcement  of  the  Platform  to  Business  Regulation  will  also  be  important  to 
encourage and ensure retailers are treated fairly when using online platforms. A more robust enforcement by 
Member  States  of  the  Geoblocking  Regulation  is  needed  to  ensure  that  consumers  are  not  discriminated 
when they purchase online cross-border.  

Standardisation  In  the  context  of  the  green  transition  of  retailers  and  wholesalers,  harmonisation  of 

standards across the EU would help in the circular economy, green products, waste reduction, etc. 

Digital transformation The Platform to Business regulation and the ranking guidelines for platforms 380 have 
put  in  place  a  harmonised  framework  for  minimum  transparency  and  redress  rights.  The  Commission 
proposals  on  the  Digital  Services  Act  (DSA)  defined  clearer  responsibilities  and  accountability  for  online 
platforms and big players, which serve as intermediaries to many SMEs, in particular during the crisis381. The 
DSA will also ensure better cooperation for the supervision of platforms and guarantee effective enforcement, 
also to fight fraud in online sales, and to remove illegal or dangerous goods from websites. The Digital Markets 
Act  (DMA) will ensure that markets characterised by large platforms acting as gatekeepers remain fair for 
innovators,  businesses  including  online  retailers,  and  new  market  entrants382.  It  also  foresees  data  related 
unfair practices that need to be banned, as well as certain data obligations383. The new rules would allow SMEs 
(including retail business users) to grow throughout the internal market. The  Regulation on data governance 
will  facilitate  data  sharing  across  the  EU  and  between  sectors  to  increase  control  and  trust  of  companies. 
Retailers and wholesalers generate large amounts of data on products, sales and transactions, which is then 
used  by  manufacturers,  service  providers,  and  for  business  intelligence  in  general.  But  businesses  have  a 

379 EuroCommerce position paper on the adoption of the EU Interchange Fee Regulation, 07.12.2020; 
https://www.eurocommerce.eu/resource-centre.aspx#PressRelease/13565  
380 Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for 
business users of online intermediation services, OJ L 186, 11.7.2019, p. 57. Commission Notice Guidelines on ranking transparency 
pursuant to Regulation (EU) 2019/1150 of the European Parliament and of the Council 2020/C 424/01, OJ C 424, 8.12.2020, p. 1–26. 
381  The  DSA  proposed  i.e.  new  measures  to  counter  illegal  goods,  services  or  content  online,  such  as  “trusted  flaggers”  mechanism, 
traceability, transparency measures and address some concerns of retailers and brands. 
382  The  DMA  proposed  i.e.  obligations  for  gatekeepers  to  prevent  unfairly  benefitting  from  dual  role  or  using  data,  self-preferencing, 
preventing consumers from linking up to businesses outside their platforms or prevent users from un-installing any pre-installed software 
or app, and imposing interoperability and access to data obligation. 
383 

In particular, platforms should refrain from the use of non-publicly available data which is generated through activities of businesses.   

Platforms will also have clear obligations for gatekeepers including to provide effective portability of data. 

165 

 
 
                                                                                                                                                                                     
limited  choice  of  cloud  solutions  that  meet  their  needs  and  expectations384.  In  the  ecommerce  sector, 
excessive  surge  in  prices  of  essential  items  and  deprioritisation  of  smaller  sellers  have  been  reported.  
Platforms put in place support actions to help their business users. This and the collaboration in detecting illicit 
practices could be made more structural. Calling on large platforms in general, not only gatekeepers, to help 
smaller  businesses  survive  and  to  share data,  and  to  maintain  a  fair,  open  and  safe  digital  space  are  to  be 
promoted,  complementing  the  DMA/DSA  proposals.  This  could  be  complemented  by  a  good  practices 
exchange  among  Member  States  and  business  operators.  Digital  product  passports  can  facilitate  access  to 
supply chain sustainability data as well as consumer sustainability information. 

eGovernment  One-stop  shops  with  relevant  information  and  access  to  online  procedures  to  obtain 

permits  and  fulfil  other  requirements,  as  well  as  eGovernment  enable  retailers  to  carry  out  their  business 
with government more easily, more quickly and at lower cost, e.g. using Digital Identity. 

Green transformation The uptake of circular economy solutions (e.g. in the areas of packaging and waste), 
sustainable  transport  (e.g.  electric  vehicles),  eco-design  of  products,  EU  Ecolabel,  Product  Environmental 
Footprint, environmental claims, Extended Producer Responsibility schemes or sustainable building and EMAS 
are important for the green performance of the ecosystem and the resilience of the supply chains.  Companies 
in the ecosystem emphasise that requirements relating to the green transformation should not increase red-
tape.  Balanced  conditions  and  support  for  national  or  local  online  platforms  that  would  bring  together 
suppliers and buyers, help improve efficiency and sustainability of deliveries, help reduce waste, etc. Circular 
economy  solutions  for  retailers  and  consumers  are  addressed  in  the  Coordination  Group  of  the  European 
Circular Economy Stakeholder Platform and through the platform’s EU Circular Talks.  

Intellectual Property Better enforcement of IP rules would prove useful to fight against counterfeited and 
unsafe products being sold in the EU.  

International partnerships and dialogue 
Regulatory dialogue / cooperation   Regulatory  dialogue  within  the  EU  is  welcomed  by  stakeholders  in 

the ecosystem. Apart from retail regulatory restrictions, further dialogue is needed on Single Market issues 
(territorial supply constraints, TSCs), Single Market barriers to the green transition, etc. 

Networks and governance 

Clusters  cooperation  An  important  potential  for  cooperation  between  retailers  and  wholesalers  and 
clusters, in particular in ICT solutions and skills, transport and logistics, etc. First contacts between European 
Clusters  Alliance  and  retail  associations  look  promising.  Currently,  24  clusters  at  the  European  Cluster 
Collaboration Platform are active in this.  

Enterprise Europe Network Retail and wholesale SMEs can benefit from EEN innovation support, expert 
advice  on  growth  and  expansion 
contacts 
into  European  and 
with international partners. The EEN has a dedicated Retail sector group. 

international  markets  and 

Pact for skills385 It is estimated that COVID and automation combined are putting more than 5 million jobs at 
risk  in retail and wholesale386.  Targeted up-skilling, in particular as regards the use of digital technologies, 

384 The Study on the economic detriment to SMEs from unfair and unbalanced cloud computing contracts | Shaping Europe’s digital 
future (europa.eu) has shown issues encountered by SMEs with cloud service providers. Furthermore, the Impact Assessment for the 
Digital Markets Act (https://digital-strategy.ec.europa.eu/en/library/impact-assessment-digital-markets-act) has shown that obstacles to 
interoperability and data portability and lock- in of cloud service providers’ customers, due to high switching costs, are the common 
practices in the cloud space. 
385 More on the Pact for Skills on https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

166 

 
 
                                                           
would enable businesses to retain part of the workforce.  Education of retail employees is important also on 
the sustainability in food supply chain or reduction of the carbon footprint. The ecosystem pleads for tailored-
made apprenticeships and continuous up- and reskilling workers in e-commerce, data science, digital contents 
creation, as well as in green technology and tackling sustainability challenges. There is no skills blueprint  for 
the  ecosystem,  but  the  social  partners  have  recently  agreed  on  a  joint  statement  on  skills  as  part  of  the 
‘European Pact for Commerce’. 

Digital Innovation Hubs The participation and involvement  of SMEs could be facilitated and promoted. 
Through  tailor-made  advice  and  trainings,  the  network  of  local  DIHs  can  help  retailers  and  wholesalers  gain 
knowledge, know-how and skills to digitalise, independent of their skills level. They also offer opportunities to 
test and experiment with digital solutions. 

386 McKinsey The future of work in Europe; for total wholesale and retail sectors; at risk means facing reduction of hours or pay, or 
temporary or permanent layoffs; https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-in-
europe#nga_section_header_main_0_universal_1 

167 

 
 
 
 
                                                                                                                                                                                     
13. 

Textile Ecosystem 

4 million people employed387 

0,70% of EU value added  
(EUR 85 billion) 

267,000 firms                        
99.5% of SMEs 

Transformative initiatives 

Boosting EU market for 
sustainable & circular products 

R&I funding to support  
innovation pathways 

Investments to support textile 
recycling 

The  Commission  will  adopt  a 
comprehensive EU Strategy for 
Sustainable Textiles388  in 2021. 
It  will  strengthen 
industrial 
innovation  and  boost  the  EU 
market 
for  sustainable  and 
circular  textiles,  including  the 
market  for  textile  reuse  and 
drive new business models. The 
the 
Strategy  will  encompass 
whole value chain. 

research 

EU/national 
and 
innovation funding is crucial to 
future  market 
to 
respond 
such  as  material 
demands 
innovation, 
and 
sustainable  product  design, 
new business models, as well as 
recycling. This is relevant for the 
competitiveness  of  all  segments 
of the ecosystem. 

safe 

the 

Member  States  will  need  to 
implement  new  mandatory 
collection  of  textile  waste  set 
by 
revised  EU  Waste 
Framework  Directive  as  of 
2025.  In  this  context,  and  to 
for 
boost 
sustainable 
circular 
textiles,  support  is  needed  for 
collection, 
in 
investments 
sorting and recycling plants.   

the  EU  market 
and 

Towards an EU policy toolbox fit for purpose 

Pact  for  skills  A  pact  on  skills  aims  to 
develop  the  skills  needed  for  the  green 
and  digital  transition.  Skills  needs  are  identified 
for  design,  product  development, 
technical 
textiles  production,  digitalisation,  sustainability 
and  the  circular  economy.  The  aim  is  to  mobilise 
in 
relevant  stakeholders  to  address  challenges 
terms of up/reskilling the workforce. 

Green  transformation  The  EU  strategy  for 
sustainable textiles is expected to set out a 
direction  for  the  green  transformation  of  the 
ecosystem, in terms of environmental footprint, 
circularity  and  sustainable  lifestyles.  In  parallel, 
the  Commission  has 
impact 
assessment  to  identify  potential  policy  measures 
regarding 
of 
microplastics  in  the  aquatic  environment  during 
washing of synthetic textiles. 

launched  an 

unintentional 

release 

the 

Single market surveillance  To  ensure  that imported clothes  comply with  EU legislation,  under 
the  Intellectual  Property  Action  Plan389,  the  Commission  will  support  Member  States’  customs 
authorities in improving customs control by reinforcing customs risk management. With regard to market 
surveillance,  the  European  Chemicals  Agency  announced  that  inspectors  in  Member  States  will  check 
textile products for compliance with restrictions for hazardous substances390.  

387 

 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 

Structural Business Statistics.   
388 As announced in the  Circular Economy Action Plan - https://ec.europa.eu/environment/circular-
economy/pdf/new_circular_economy_action_plan.pdf   
389  https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0760&from=EN  
390 https://echa.europa.eu/-/eu-inspectors-to-check-consumer-products-for-hazardous-substances  

168 

 
 
    
 
            
 
 
 
            
 
 
 
                                                           
The ecosystem at a glance 

Sectors 
included in 
the 
ecosystem 

The textile ecosystem includes transformation of natural (e.g. cotton, flax, wool), man-
made  and  artificial  (synthetic  polyester  and  viscose)  fibres  into  yarns  and  fabrics, 
production  of  yarns,  home  textiles,  industrial  filters,  technical  textiles,  carpets  and 
clothing.  The  ecosystem  also  includes  production  of  footwear  and  leather.  The 
ecosystem  is  particularly  competitive  in  high-end  clothing  and  technical  textile  for 
automotive  applications,  medical  textile,  agro  textile  and  protective  clothing.  Most 
companies  operate  in  complex  value  chains,  making  them  dependent  on  external 
supplies, which can easily be disrupted.  

SME 
dimension 

Current 
challenges 

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services and utilities; see Annex 4 of the SWD on Monitoring the Implementation of Industrial Policy.  
Source: Eurostat, National Accounts. Data from 2018 (or latest year available 
Small and medium sized enterprises are at the core of the industry representing 99.5% of 
the  companies.  Women  represent  more  than  70%  of  all  employees  in  the  sector. 
Companies with less than 50 employees account for more than 90% of the workforce and 
produce  almost 60%  of  the value  added. The ecosystem  is  considered vulnerable given 
the high share of SMEs. 

The  ecosystem  has  been  hard  hit  by  the  shutdown  of  retail  outlets.  In  2020  textile  & 
clothing,  footwear  and  leather  goods  retail  sales  decreased  by  24.4%.  EU  turnover  for 
textiles decreased by 9.3% and the decline in the clothing industry was 17.7%391. Demand 
for leather is weak and only very special market segments are doing better (luxury sector, 
automotive  and  furniture).  Turnover  in  the  tanning  sector  declined  by  close  to  25%392. 
The  footwear  sector  has  seen  a  further  decrease  in  sales  as  a  result  of  the  second 
lockdown  in  many  Member  States.  Turnover  for  the  footwear  sector  is  estimated  to 
decline by 30%393. The manufacture of nonwovens, which is a key raw material for face 
masks and medical gowns, has been more resilient. In particular,  demand for materials 
used to fight the pandemic had strong growth rates. The most significant growth rate for 
nonwovens in 2020 was observed in nonwovens for medical use (+118.0%). In contrast, 
major  declines  were  recorded  in  the  sales  of  nonwovens  materials  to  the  construction 
and automotive markets394. 

Competitiveness challenges are also linked to a strong environmental footprint. A key 
investments  to  accelerate 
challenge for the  green  transformation 
sustainability and circularity.  

is  to  boost 

391 Eurostat 
392 The Confederation of National Associations of Tanners and Dressers of the European Community (COTANCE) 
393 European Footwear Confederation; CEC 
394 https://www.edana.org/about-us/news/2020-nonwovens-market-insights 

169 

 
 
 
 
 
 
 
                                                           
Forward-
looking 
assessment 

Global 
context 

During the coronavirus pandemic, e-commerce sales have grown even further. However, 
many SMEs struggle to market their products online. In this context, companies need to 
diversify their sales channels.  Investments could be provided to help companies access 
online marketplaces and to present their collections digitally at virtual market places.  
SMEs in the textile ecosystem are being held back by a lack of skilled employees. Recent 
trends in terms of skills and occupational profile developments have led to the baseline 
assumption of a gradual shift from lower towards medium and higher skilled employees. 

Pursuing  the  goals  set  by  the  Green  Deal  should  guide  the  actions  for  recovery  and 
create  new  opportunities  for  growth.  Priority  is  for  sustainable  investments  for 
sustainable product design, production processes, investments to develop recycled fibres 
and  higher  performing  sustainable  textiles,  business  models  focused  on  resource 
efficiency  and  circularity.  In  addition,  investments  in  material  and  product  innovation 
are needed to sustain Europe’s leadership in technical and smart textiles. The EU could 
drive  the  international  standard  setting  process  for  smart  textiles  to  ensure  a  pole 
position in future markets. In this context, there are opportunities to boost sustainable 
and circular textiles, including textile reuse, and drive innovation in technical and smart 
textiles and high-end fashion.  

The ecosystem is integrated in global value chains and depend on export markets at 
the  same  time  as  it  faces  strong  international  competition.  Over  60%  in  value  of 
clothes  sold  in  the  EU  are  manufactured  in  third  countries.  To  guarantee  a  level 
playing  field,  it  is  particularly  important  to  ensure  that  imports  comply  with  EU 
legislation.  
EU  exports  of  textile  and  clothing  decreased  by  14%  in  2020.  The  pandemic  has 
shown EU’s supply chain dependence especially for fibres and yarns from South East 
Asia.  

170 

 
 
 
 
 
 
 
Mapping of policy tools in more detail  

Funding and budgetary programmes 

CRII+/ERDF/ESF/CEF  ERDF and ESF can support the adaptation of skills and innovation by enhancing 
research  for  innovative  materials  and  innovation  capacities,  the  uptake  of  advanced  technologies  and 
industrial transition. Building cross-border infrastructure links is important for the industry's transition 
to  circularity,  collaboration  between  textile  companies  and  creative  professionals.  REACT-  EU  could  in 
addition fund the prolongation of temporary unemployment schemes. Ongoing efforts will be needed to 
direct investments into priority areas and to secure adequate budget allocation for sustainability, digital 
and innovation projects. 

Horizon  Europe  (including  European  Partnerships)  While  EU  wide  collaboration  and  strategy 
development  has  been  effectively  coordinated  by  the  European  Textile  Technology  Platform  for  more 
than 10 years, the implementation of the Strategic Innovation & Research Roadmaps have been hindered 
by the absence of a dedicated funding programme at EU level. Horizon Europe draft work programmes 
envisage projects which include the support to innovative, safe and sustainable textiles as well as to the 
broad  manufacturing  sector.  Importance  is  given  as  well  to  the  substitution  of  substances  of  concern 
during  the  production  of  textiles  and  to  the  minimisation  of  the  release  of  certain  substances  and 
materials  during  the  production  and  consumption  phases  (e.g.  microplastics).  The  Made  in  Europe 
Partnership under Horizon Europe aims at transforming the manufacturing sectors, including the textile 
sector, towards reducing waste generation, circular and digital manufacturing. 
Digital Europe Programme The digital transformation of companies range from integrating digital in 
textiles  (smart  textiles),  to  smart  production,  digital  marketplaces,  design  and  to  present  textile, 
clothing and footwear collections at virtual Trade Fairs as well as enabling more circularity and sharing 
of value creation in textile value chains. An important challenge for the companies, and notably SMEs, in 
the ecosystem is value creation out of industrial data, notably through the proposed manufacturing data 
spaces  and  testing  and  experimentation  facilities,  and  the  uptake  of  digital  technologies  at  industrial 
level, enabled by the network of Digital Innovation Hubs under Digital Europe. Under the Digital Europe 
Programme,  the  Commission  is  also  supporting  the  reskilling  and  upskilling  of  workers  through  short-
term courses in advanced digital skills. 

InvestEU  Relevant  to  invest  in  innovative  SMEs’  but  also  to  develop  innovative  products  and 
materials, including sustainable product design, manufacturing processes and circular business models, 
and  to  facilitate  energy  efficiency  investments  in  manufacturing.  Under  the  SME  window,  debt  and 
equity  financing  will  be  available  not  only  to  sustain  SMEs’  competitiveness,  but  also  to  help  SMEs 
digitalise, innovate and become more sustainable.  

Space  and  Defence  programmes  The  textile  sector  has  been  involved  in  the  Action  for  Defence 
Research and in particular with regard to lightweight and bulletproof garments. Big potential to benefit 
from public spending in this area both as a source for product innovation and as an important market. 

Supportive regulatory environment 

Single Market Surveillance Sometimes imported products are not compliant with EU requirements. 
The problem has become more pronounced with the development of e-commerce. It is estimated that 

171 

 
 
governments  across  the  EU  lose  up  to  EUR  7  billion  per  year  due  to  the  presence  on  the  market  of 
counterfeit  clothing,  footwear  and  accessories395.  With  regard  to  market  surveillance  for  the  textile 
ecosystem, on 1 July 2020, the European Chemicals Agency announced that inspectors in Member States 
will  check  textile  products  for  compliance  with  restrictions  for  hazardous  substances.  According  to  the 
rapid alert system for dangerous non-food products, RAPEX, in 2017, out of 2000 alerts, clothing was the 
third most important class of materials. In 22% of the cases the risk was associated to chemicals.  

Main Single Market barriers within the ecosystem From a free movement of goods perspective, the 
ecosystem is characterised by few barriers. The EU legislative framework requires compulsory labelling 
only for textile fibres composition and for non-textile parts of animal origin (EU Regulation 1007/2011 
on  Textile  Fibre  Names).  All  other  labelling  requirements  are  voluntary  at  EU  level.    The  Textile 
Regulation  allows  the  use  of  schemes/labels  such  as  OEKOTex  100,  GOTS  or  the  EU  EcoLabel,  which 
provide additional information on the environmental characteristics of textile products. REACH addresses 
chemicals in textiles as it covers all consumer products sold in the EU, including clothing. In cases where 
there  is  no  harmonised  regulation  e.g.  flammability  for  textile  products,  the  General  Product  Safety 
Directive applies. With regard to the Waste Framework Directive, Member States will need to implement 
new  requirements  on  mandatory  collection  of  textile  waste  as  of  2025.  Concerning  free  movement  of 
goods,  industry  has  not  raised  any  specific  concerns  recently  and  since  2018  the  Commission  has 
received only  7  notifications  on  textiles  in  the  framework  of  Directive  (EU)  2015/1535  (laying  down  a 
procedure  for  the  provision  of  information  in  the  field  of  technical  regulations  and  of  rules  on 
Information  Society  services).  Hence,  there  seems  to  be,  as  such,  no  specific  barriers  today  that  could 
have an impact on the textile ecosystem. With regard to footwear, Directive 94/11/EC lays down rules on 
labelling materials used in footwear sold in the EU. 

Standardisation  Several  European  standards  exist  to  ensure  conformity  (e.g.  personal  protective 
equipment  or  wall-to-wall  carpets),  as  well  as  on  testing  and  measurement  of  performance  of 
products. With regard to care labelling, EU producers are free to use the care labelling ISO standards and 
the icons related to this or use other standards.  For companies to participate in a data economy, data 
standards (for production, product design and on-textile data generation) and data sharing governance 
will  have  to  be  agreed  among  the  various  stakeholders.    The  ecosystem  is  pro-active  in  developing 
voluntary  standards  (e.g.  test  methods,  technical  definitions)  within  the  European  standardisation 
organisations for the assessment of properties and performance of textile products to ensure coherence 
(e.g.  standards  on  microplastics  emission  and  standards  on  smart  textiles).  It  is  important  that  EU 
(together with likeminded partners) lead in setting international standards for smart textiles. 

Digital  transformation  Digitalisation  needs  have  accelerated  with  COVID  (i.e.  digital  market  places, 
virtual  trade  shows),  notably  for  the  development  of  high-value  smart  textile  and  digitalised 
manufacturing, including mass customisation, efficiently using robotics and AI. It requires further support 
and training to be provided to digital transformation, including in the pre-production creativity phase of 
the manufacturing processes, such as design, prototypes and styling.  

Green transformation While the green transition represents a substantial opportunity, the ecosystem 
mainly consists of SMEs, which need support to comply with sustainability requirements. The European 
Green  Deal  identified  textiles  as  a  resource-intensive  sector  requiring  focused  action.  The  Industrial 
Strategy  of  2020  and  the  Circular  Economy  Action  Plan  announced  that  the  Commission  will  adopt  a 
comprehensive EU Strategy for Sustainable Textiles in 2021. The EU Strategy for Sustainable Textiles will 

395 According to the 2020 Status Report on IPR Infringement 

172 

 
 
                                                           
aim to support the  industrial competitiveness, sustainability and innovation of the ecosystem and to 
boost  the  EU  market  for  sustainable  and  circular  textiles.  The  strategy  will  include  the  whole  value 
chain,  addressing  sustainable  product  design,  production  processes  and  circular  business  models. 
Preparatory research for the textile strategy is carried out in order to gather quantitative information on 
material  streams,  business  models  and  recycling  technologies.  This  information  will  help  to  develop 
targeted actions in the textile strategy to increase circularity, promote sustainable lifestyles and reduce 
waste and material use.  

Strategic  Public  Procurement  Public  buyers  are  increasingly  aware  of  the  complexity  of  the  supply 
chain  of  textile  products.  Sustainability  criteria  in  tenders  can  be  used  to  require  more  transparency 
from  suppliers  and  more  attention  to  compliance  with  environmental,  labour  and  human  rights 
standards. Existing Green Public Procurement criteria for textiles396 offer a good starting point for public 
buyers  to  implement  Strategic  Public  Procurement.  The  guidance  on  socially  responsible  public 
procurement will help public buyers to improve transparency and due diligence in their supply chains. 

Intellectual Property  Main concern  for the  sector  is Intellectual  Property Rights  (IPR)  infringements 
due to the presence on the market of counterfeit clothing and footwear. The IPR Action Plan397 includes 
many elements of importance for the ecosystem, e.g. Intellectual Property assistance to SMEs and fight 
against counterfeiting. 

International partnerships and dialogue 

Strategic  Partnerships  (Critical  Materials  and  input)  The  ecosystem  depends  on  global  supply 
chains especially for fibres and yarns from South East Asia. Lack of supply of dyeing stuff has long been a 
concern  due  to  supply  constraints  in  South  East  Asia.  Diversification  and  undistorted  access  to  raw 
materials is of paramount importance to EU Textile Industry 

Networks and governance 

Clusters cooperation According to the European Cluster Collaboration Platform, 24 European clusters 
are registered in the Textile Manufacturing sector, 20 European clusters are registered in the Apparel 
sector and 17 European clusters are registered in the Advanced Textile material. In addition, 7 textile 
clusters from 5 Member States are members of European Cluster Partnerships going international (incl. 
TEXGLOBAL  and  FASCINATE  projects).  These  Textile  Cluster  Internationalisation  projects  support 
European clusters to develop joint international strategies and common actions strengthening European 
SMEs’ access to third markets.  

Enterprise Europe Network Active Enterprise Europe Network (EEN) Textile & Fashion Sector Group 
organising matchmaking events, supporting young entrepreneurs in fashion, sharing of best practices 
for innovation and sustainability. In addition, the Sector Group has close contacts with the industry and 
can be used as a tool to transmit information about EU programmes. 

Pact  for  skills    Since  2018,  the  project  ‘Skills4Smart  textile,  clothing,  leather  and  footwear  Industries 
2030’ was among the first-wave Blueprints for Sectoral Skills Strategies to identify skills gaps and develop 
job profiles for vocational training based on market intelligence.398 Skills needs are identified in the areas 

396SWD(2017)231 
397 COM/2020/760 final 
398 More on the Pact for Skills on https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 

173 

 
 
                                                           
of  design,  product  development,  technical  textiles  production,  digitalisation,  sustainability  and  the 
circular  economy.  The  sectors  in  the  ecosystem  have  expressed  their  interest  to  engage  on  a  Pact  for 
Skills initiative. The aim is to mobilise relevant stakeholders to address challenges in terms of up/reskilling 
of the workforce. Furthermore, the SME strategy supports the ‘digital volunteers’ programme to promote 
the transfer of expertise in digitalisation from high-tech businesses to more traditional SMEs. 

Digital Innovation Hubs The Digital Innovation Hubs could help companies in the textile ecosystem to 
improve  their  processes,  products  and  services  through  the  use  of  innovative  technologies.  Textile 
Innovation Hubs could provide access to the latest knowledge, expertise and technology to support and 
implement  innovations  across  the  value  chain.  As  an  example,  they  could  provide  services  to  SMEs  to 
create digitally virtual collections. 

Thematic  Smart  Specialisation  Interregional  Partnerships  The  S3  Partnership  for  Smart  Regional 
Investments  on  Textile  Innovation  has  the  objective  of  strengthening  regional  textile  innovation 
ecosystems across Europe and enabling Textile & Clothing SMEs to invest more in innovation. 

174 

 
 
 
 
 
14. 

Tourism Ecosystem 

20.3 million people employed399 

7% of EU value added 
(EUR 850 billion) 

3.2 million firms                     
99.8% of SMEs 

Transformative initiatives 

Ensuring better tourism data 
sharing to make the ecosystem 
more resilient and sustainable 

As  data 
is  spread  across  the 
ecosystem  (tourism  destinations, 
businesses  and  public  authorities), 
clear rules on tourism data access 
facilitate 
and 
stakeholder 
interoperability, 
cooperation  and 
in 
digital skills. 

investment 

sharing 

could 

Leveraging EU funds to enable a 
sustained recovery and meet 
tourism investment needs 
The  COVID-19  crisis  reduced 
investment 
the 
drastically 
capacity 
tourism 
ecosystem.  EU  funds  could  be 
leveraged 
in 
to 
sustainable, safe and seamless 
travel,  as  well  as  technologies 
enhancing tourist experiences. 

invest 

the 

of 

Carbon-neutral destinations to 
contribute to EU climate goals 

Delivering  on 
carbon-neutral 
destinations  requires  incentives 
for  public  and  private  green 
investments,  better  knowledge-
sharing  between  regions/cities, 
improve 
as  well  as  tools  to 
transparency, such as monitoring 
tools,  carbon  footprint  trackers, 
auditing  schemes  (e.g.  EMAS) 
and the use of labels (Ecolabel). 

Towards an EU policy toolbox fit for purpose 

Ecosystem  strategy  Setting  a  long-term 
vision  for  the  ecosystem 
in  a  ‘European 
Agenda for Tourism 2050’400, underpinned by 
shared  priorities  and  agreed  milestones  between 
Commission, Member States and stakeholders. 

CRII+/ERDF/ESF/CEF 
private 

Increasing  public-
investment  to  help  the  ecosystem 
meeting  its  investment  needs  for  greener  business 
models  and  access  to  digital  market  places,  starting 
with  CRII+/ERDF/ESF/CEF  and  investments  mobilised 
under RRF. 

for  skills  Upskill/reskill 
Pact 
the 
workforce  for  the  green  and  digital 
  and  evolving  market 
transformation 
trends  through  a  tourism-specific  ‘Pact  for  skills’ 
between  industry,  Vocational  Education  &  Training 
providers and employment agencies401. 

Intellectual  Property  Assess 
the 
feasibility  of  protecting  Geographical 
Indications (GI) for non-agricultural goods 
as  these  are  a  way 
lesser-visited 
for  some 
destinations to market themselves402. 

Standardisation 
EU 
deliverable  on  health  protocols  for  tourism 
establishments  and  services  to  rebuild 

Develop 

an 

consumer confidence. 

399 Figures for employment and value added are based on Eurostat National Accounts and number of firms and SME shares on Eurostat 
Structural Business Statistics  
400 as announced in COM(2020)550, Tourism and transport in 2020 and beyond. 
401 More on the Pact for Skills on https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 
402 COM/2020/760 final  

175 

 
 
    
 
      
 
 
 
 
 
 
                                                           
Sectors 
included in 
the 
ecosystem 

The ecosystem at a glance 

In  the  EU,  services  providers  at  destination  level  (hospitality,  attractions)  are,  in  their 
majority,  small  local  owners.  Part  of  them  are  franchisees  of  a  few  multinational 
companies providing branding, marketing, management and selling services.  The sector 
of cross-border passenger transporters is consolidating around a large operators (airlines 
and  cruises  in  particular)  but  to  a  lesser  extent  than  in  the  US  or  China.  They  distribute 
their  services  directly  or  through  travel  agencies.  The  market  share  of  traditional  travel 
agencies  has  been  decreasing  steadily  with  the  development  of  online  entrants  which 
emerged in the mid-1990s. In 2019, 80% of the European online market was controlled by 
two international companies incorporated in the USA403. The tour operators sector started 
its consolidation earlier, with 5 companies taking 70% of the European market in 2009.404 
This concentration continued through vertical and horizontal integration, notably around 
the 2 largest European tour operators, respectively incorporated in Germany and the UK. 
The  collapse  of  a  UK  company  in  September  2019  and  the  COVID  crisis  are  expected  to 
lead to further concentration.  

Notes:  The  bar  labelled  Horizontal  refers  to  activities  which  contribute  to  all  ecosystems  such as  professional 
services  and  utilities;  see  Annex of  the  SWD  on  Monitoring  the  Implementation  of  Industrial  Policy.  *Sector  only 
partially attributed to the ecosystem. 
Source: Eurostat, National Accounts. Data from 2018 (or latest year available). 

SME 
dimension 

Current 
challenges 

SMEs  represent 99.9%  of  the  ecosystem’s  companies.  They  generate 63.66%  of  its value 
added and employ 83.63% of its workers. The proportion of micro and small companies is 
particularly  high  in  hospitality  (hotels,  bars,  restaurants),  with  many  owners  operating 
independently or under franchise from large groups. It is also true but to a lesser extent 
for travel agencies and coaches. 

Over  the  last  10  years,  the  EU  tourism  ecosystem  lost  world  market  shares405.  Europe 
being a mature travel market, it progressed in absolute terms but less than other regions 
(i.e. emerging markets). With drops of up to 80% in revenues in the last three quarters of 
2020406 for some sub-sectorsand up to 11 million jobs at risk407, tourism services are at the 
bottom of the business confidence indicator (2020-21 winter season lost). Worst affected 
Member States are those highly dependent on tourism and unable to compensate loss of 

403 Statista, 24 March 2021.  
404 Ecorys (2009), ‘Study on the Competitiveness of the EU tourism industry’, p.76. 
405 UNWTO (2018), ‘European Union Tourism Trends’, Madrid, p.63. 
406 Travel agencies and tour operators faced turnover losses of roughly 80% in the last three quarters of 2020. In the same period, air 
transport also lost between 60% and 70% of their revenues.  
407 European Commission Joint Research Centre (2020), ‘Behavioural changes in tourism in times of Covid-19: Employment scenarios and 
policy options’, JRC Science for Policy Report 

176 

 
 
 
 
 
 
                                                           
foreign  travellers  with  domestic  tourism.  The  estimated  investment  gap  for  2020-21  is 
EUR  161  billion (highest  of  all  ecosystems)408.  High  level  of  indebtedness  is  reducing  the 
capacity  of  most  tourism  sectors  to  invest  in  the  development  of  more  resilient  supply 
chains and new services (e.g. decarbonised, slow tourism). ‘Revenge tourism’ is expected 
for Summer 2021 but the reduction in disposable incomes could delay recovery to 2022-
23409. Business travel (generating up to 35% of the ecosystem revenues, e.g. through trade 
fairs) is expected to recover last. 

Forward-
looking 
assessment 

Pre-COVID EU tourism was among top high-growth ecosystems, hiring many new workers 
particularly among the young, women and lesser skilled people. With temporary support 
to new tourism services, it could contribute massively to EU recovery. Accounting for 30% 
of  EU  exports  in  services410,  it  could  generate  again  surpluses  helping  the  EU  Balance  of 
Payments with key countries like China. 

The  ‘European  Tourism  Convention’411  identified  a  number  of  challenges  for  the  future, 
including: the need to retrofit travel and tourism infrastructure to make it more resilient 
to  future  pandemics  (avoiding  closures);  the  need  to  better  coordinate  risk  assessment 
and risk management (travel restrictions, vaccines, testing and quarantines); the need to 
support the development of new tourism services in line with evolving consumer patterns 
and  post-COVID  demand  (safe  and  seamless  travel;  richer  cultural  experience  at 
destination,  …);  the  need  to  promote  and  develop  sustainable  tourism  contributing 
further  to  regional  development;  the  need  to  improve  the  regulatory  framework  to 
minimise relocation risks (tour operators / travel agencies headquarters, …) or the need to 
analyse whether the current regulatory framework for package travel, including as regards 
insolvency  protection,  is  still  fully  up  to  the  task  of  ensuring  robust  and  comprehensive 
consumer protection at all times. 

Global 
context 

Other key regions are recovering faster and/or suffering a smaller reduction in domestic 
business and leisure travel (e.g. U.S. air traffic; China domestic tourism back to pre-COVID 
level  since  Oct  2020).  Their  companies  are  therefore  in  a  better  financial  position.  This 
increases EU vulnerability to acquisitions by extra-EU actors, with possible relocation of 
decision-making centres and online services as well as bigger transfer pricing problems. EU 
actors  would lose  part  of  their  market  share  in  the EU  but  also  on other  markets  where 
they are active. 

408 SWD(2020) 98 final, ‘Identifying Europe's recovery needs’, p. 41 
409 OECD (2020), ‘Mitigating the impact of COVID-19 on tourism and supporting recovery’, OECD Tourism Papers, 2020/03, OECD 
Publishing, Paris, 16 Dec 2020. 
410 Eurostat (addition of passenger transport and travel services).  
411 In October 2020, at the invitation of the European Commission, the ‘European Tourism Convention’ brought together members of the 
European Parliament, Member States, tourism industry and stakeholders to discuss the way forward. This section summarises the main 
findings of the Convention.  

177 

 
 
 
 
 
 
 
 
                                                           
Mapping of policy tools in more detail  

Funding and budgetary programmes 

RRF  National  Recovery  and  Resilience  Plans  (RRP)  can  support  the  tourism  ecosystem,  in  particular  in 
terms  of  improving  sustainability,  energy  efficiency,  decarbonisation  and  clean  mobility,  connectivity 
and  digitalisation  (including  for  museums,  galleries  and  cultural  heritage  sites),  up-  and  re-skilling  and 
modernisation  of  public  tourism  administration.  Because  of  indebtedness  level,  Member  States  could 
consider prioritising grants over loans.  

CRII+/ERDF/ESF/CEF  A  new  guide  to  EU  funding  for  tourism  under  preparation.  CRII+ 
supports  tourism  SMEs.  REACT-EU  could  fund  the  prolongation  of  temporary  unemployment 
schemes for tourism workers. Tourism can get support from ERDF under various thematic Policy 
Objectives and ESF (Pact for Skills in tourism). CEF (transport) relevant for decarbonisation of passenger 
transport,  for  improving  connectivity  of  lesser-known  destinations  and  for  innovative  projects  in 
sustainable multimodal passenger travel. Single Market Programme to develop SMEs capacities to carry 
out  green  and  digital  transition.  The  5G  Strategic  Deployment  Agenda  in  CEF  (digital)  could  support 
seamless and safer travel, as well as a digitally enhanced experience for tourists at destination. 

Horizon Europe (including European Partnerships) Horizon Europe supports innovative solutions to 
promote  and  diversify  cultural  and  sustainable  tourism  for  the  development  of  European  regions  and 
urban areas. 
Digital  Europe  Programme  Digital  Europe  Programmes  supports  measures  for  the  uptake  of 
technology by tourism SMEs and start-ups which could be exploited urgently.  

InvestEU  Tourism  SMEs  can  benefit  from  funding  through  the  dedicated  SME  window  of  InvestEU. 
There  is  a  need  to  explore  the  possibility  for  ‘short  term  car  rental’  to  benefit  from  funding  for  clean 
vehicle  fleet  and  the  possibility  for  the  accommodation  sector  to  benefit  from  special  conditions  (e.g. 
loan duration) under the ‘Sustainable Infrastructure window’ to facilitate for instance  energy efficiency 
investments. 

Supportive regulatory environment 

Main  Single  Market  barriers  within  the  ecosystem  Barriers  to  the  Single  Market  for  tourism 
services  remain,  in  particular  regarding  the  short-term  accommodation  rental  and  car  rental 
sectors.  

Standardisation Current proliferation of COVID-19 safety protocols for tourism services is costly 
for  companies  and  possibly  not  reassuring  travellers.  At  the  invitation  of  the  Commission,  the 
European Standardisation body CEN is preparing a European tourism safety seal, which it plans to release 
mid-May 2020412. The Commission will work with Member States and the industry to ensure the rollout 
of this seal before the summer413. 

Digital transformation Digital technologies and data will not only enhance the tourism offer and enable 
new business models based on market intelligence, but also improve the sustainability and resilience of 

412 COM(2021)129 
413 COM(2021)129 

178 

 
 
                                                           
the ecosystem through smart management of tourist flows and better resource management. However, 
their  adoption  is  uneven  across  Member  States  (e.g.  the  number  of  hospitality  businesses  with  online 
sales  and  reservations  varies  from  15%  in  Latvia  to  68%  in  Denmark).  Among  the  elements  that  could 
facilitate  the  digital  transformation  are: (i) Secure  data-sharing  with  clear  rules  on  interoperability  and 
data governance, (ii) better access of tourism businesses to online platforms and implementation of the 
2019 Regulation on platform-to-business relations414, (iii) adequate rules for packages sold online under 
the Package Travel Directive as well as a robust and comprehensive consumer protection at all times415, 
(iv) fit  for  purpose  2017  Delegated  Regulation  on  Multimodal Travel  Information services  in  particular 
for multimodal ticketing416, (v) role of the EU tourism statistics Regulation417 and (vi) potential Tourism 
Dashboard. 

eGovernment  The  Commission  is  preparing  a  proposal  on  the  digitalisation  of    (short-term)  visa 
procedures418  in  order  to  attract  more  long  haul  travellers  which  are  critical  for  tourism  recovery 
(resilience issue). It is looking at options for swift deployment of visa digitalisation (already in place in 
the UK, Turkey, Australia, …).  

Green  transformation  Sustainable  destinations  will  help  the  tourism  ecosystem  meet  the  EU’s 
environment and climate goals. This requires knowledge-sharing between regions/cities, transparent and 
comparable tools for monitoring tourism evolution, as well as public and private financial incentives for 
green investments  (e.g.  in  infrastructure,  mobility,  beaches and ski  resorts,  skills).  Greening  of  tourism 
services  may  be  enabled  by  investments  in  renewable  energy,  sustainable  water  management  and 
nature-based  solutions;  by  ecosystem-specific  tools  providing  transparency  among  businesses  and 
consumers, such as sustainability measurement frameworks (e.g. environmental footprint tracker, eco-
management  and  Sustainable  Destination  passport),  auditing  schemes  (EMAS)  or  labels  (Ecolabel);  but 
also by the creation of a dedicated forum for stakeholder cooperation (European Tourism Sustainability 
Platform).  In  addition, the  Renovation Wave  offers  opportunities  to  make  tourism  infrastructure  more 
energy  efficient. The ‘Green  Infrastructure Strategy’  linked  to  Nature 2000  is  a  key  tool  for  supporting 
ecotourism.  

Intellectual Property In November 2020, the Commission adopted an IP Action Plan announcing that it 
will  be  assessing  the  feasibility  of  protecting  geographical  indications  (GI)  for  non-agricultural  goods. 
Such  initiative  could  contribute  to  the  promotion  efforts  of  some  lesser-visited  destinations  and  help 
boosting the economic recovery particularly in the most affected EU Member States. 

Networks and governance 

Pact for skills Need to pursue the work started with the ‘Alliance for sectoral cooperation for skills’ 
with  a  dedicated  ‘Pact  for  skills’419  between  industry,  Vocational  Education  &  Training  providers  and 
employment agencies (up to 25% of jobs in the tourism ecosystem in need of up- and re-skilling). 420  

414 For points 1 and 2, COM(2020) 842, COM(2020) 825.  
415 COM(2021)90. 
416 Directive (EU) N°40/2010, article 17 Reporting. 
417 Regulation (EU) N° 692/2011, article 7 Evaluation report. 
418 COM(2020) 690. 
419 More on the Pact for Skills on https://ec.europa.eu/social/main.jsp?catId=1517&langId=en 
420 WALQING study 2012. Employees from 18 to 64 years by educational attainment level in 2019 for EU 27 (Eurostat): ‘Less than primary, 
primary and lower secondary education’: 15,9% for all NACE activities v. 28,6% for Accommodation and food service activities; ‘Tertiary 
education’ (i.e. Bachelor and above level): 34,8% for all NACE activities v. 15,6% for Accommodation and food service activities. 

179 

 
 
                                                           
Clusters  cooperation  Need  for  further  cooperation  between  tourism  clusters  and  building  closer 
partnerships with other clusters (i.e. technology, cultural and creative industries, construction).421 

Enterprise  Europe  Network  Need  for  Enterprise  Europe  Networks  Sector  Group  on  tourism  and 
cultural heritage to further promote of new (green / digital) technologies with the support of the 
new EEN Sustainability Advisors.  

Digital  Innovation  Hubs  Digital  Innovation  Hubs  are  key  to  support  tourism  SMEs  in  their  digital 
transformation and foster the move to data management and data sharing. 

Thematic Smart Specialisation Interregional Partnerships Need to forge more partnerships under 
the  ‘S3  Thematic  Partnership  on  Digitalisation  and  Safety  for  Tourism’  focusing  on  the  use  of 
emerging technologies providing innovative and attractive experiences for tourists.  

421 99 clusters linked to tourism and hospitality focus have created a profile on the European Cluster Collaboration Platform. One of the 24 
‘European Strategic Cluster Partnerships for Going International’ relates to tourism (Welliance HOSPITALITY). 

180 

 
 
                                                           
Annex 4: Monitoring the implementation of Industrial Policy 
Key Performance Indicators 

The Council Conclusions “A recovery advancing the transition towards a more dynamic, resilient and 
competitive  European  industry”,  adopted  on  16  November  2020,  “CALLS  on  the  Commission  to 
define  key  performance  indicators  for  monitoring  the  industrial  strategy  and  competitiveness  […], 
including taking into account investment trends, and comparing those to other world regions”. The 
conclusions  also  calls  “for  the  objectives  of  the  EU's  industrial  policy  to  be  reflected  in  sound 
indicators, in particular concerning industrial competitiveness, industry's contribution to the green 
and  digital  transition  and  the  Union's  resilience  and  strategic  autonomy  while  preserving  an  open 
economy.”422 

The  set  of  KPIs  presented  below  presents  the  analytical  approach  to  address  this  request.  The 
selection  of  KPIs  also  benefitted  from  previous  work,  notably  under  the  Austrian  Presidency,  as 
summarised in the “Indicator Framework regarding Industrial Competitiveness”.423  

All the indicators are based on publicly available data. Hence, no additional reporting obligations for 
Member States is necessary to calculate them. The set of indicators presented below complements 
other  existing  monitoring  tools  used  by  the  Commission  and  does  not  aim  at  replacing  them.  Its 
main  purpose  and  benefit  is  to  report  in  a  synthetic  manner  and  in  a  single  document  on  the 
different areas identified as priorities for the European industrial policy.  Regular reporting based on 
reliable  data  sources  could  support  the  Commission  and  the  Member  States  in  providing  timely 
policy response in case of identified challenges. 

The scope of this set of indicator is very wide, as wide is the scope of industrial policy. In particular, 
thanks  to  an  approach  based  on  ecosystems,  this  set  of  KPIs  expand  the  scope  of  monitoring  to 
economic  activities  beyond  a  narrow  definition  of  industry,  and  includes  business  services,  retail, 
cultural activities and the social economy. 

The list of indicators put forward in this document is not rigid. As new data becomes available and 
policy priorities evolve, the KPIs could also evolve. 

Structure of the document 
The KPIs are clustered along four broad topics: 

1.  Headline indicators, providing a synthetic overview of the main trends of the EU economy and 

benchmarking against other countries; 

2.  Short-term  indicators,  to  describe  the  evolution  of  the  COVID  crisis  and  provide  a  forward-

looking analysis; 

3.  Thematic indicators, which proxy the following dimensions: 

a.  Economic Resilience 
b.  Digital transition 

422 https://data.consilium.europa.eu/doc/document/ST-13004-2020-INIT/en/pdf 
423 https://data.consilium.europa.eu/doc/document/ST-11244-2018-INIT/en/pdf 

181 

 
 
 
                                                           
c.  Climate neutrality and circular economy 
d.  Single Market integration 
e.  SMEs 
f. 

International dimension 

4. 

Indicators  by  ecosystem,  which  describe  the  main  features  of  the  ecosystems  and  their 
performance.  

The tables below summarises the selection of indicators by thematic area. 

Table 1: List of KPIs horizontal and thematic KPIs 

Thematic area 

Indicator 

Measure 

Source 

Headline indicators 

Gross value added  

annual % change 

Headline indicators 

GDP per person employed  

Headline indicators 
Headline indicators 
Short-term indicators 

Number of employees 
EU global market share 
Turnover 

Short-term indicators 

Industrial production 

Short-term indicators 

Declaration of bankruptcies 

constant prices, annual 
% change  
annual % change 
% 
% of the same month in 
previous year 
% of the same month in 
previous year 
Index 

Short-term indicators 

Registration of businesses 

Index 

Short-term indicators 

Permanent, temporary and self-
employment 

Short-term indicators 

Gross Fixed capital formation 

Short-term indicators 
Economic Resilience 
Economic Resilience 
Economic Resilience 
Economic Resilience 

Digital transition 

Digital transition 
Digital transition 
Digital transition 
Digital transition 
Digital transition 

Green transition 
Green transition 

Green transition 

Green transition 
Single Market integration 
Single Market integration 
Single Market integration 

Economic confidence Indicator 
Net public investments 
Net private investments 
R&D expenditures 
STEM graduates 

Integration of digital 
technologies 
Use of internet 
Connectivity 
Digital public services 
Human capital 
Population with basic or above 
basic digital skills 
GHG emission intensity 
Electricity prices for non-
household consumers 
Recycling rate of Municipal 
waste 
Circular material use rate 
Intra-EU trade 
Intra-EU trade 
Price convergence 

SMEs 
SMEs 
International dimension 

Persons employed in SMEs 
Value added in SMEs 
Extra-EU export 

Change with respect to 
same period in previous 
year 
% of same period in 
previous year 
Level 
% of GDP 
% of GDP 
% of GDP 
per 1,000 population 
aged 20-29 
Index 

Index 
Index 
Index 
Index 
% of total population 

tCO2e/GDP 
EUR/MWh 

% of total 

% of total material use 
Import + Exports, bn EUR 
Nominal growth rate y/y 
Coefficient of variation 
of PPP for GDP 
Index 2008=100 
Index 2008=100 
Bn EUR and nominal 

World Bank, National 
Accounts, Eurostat 
AMECO 

AMECO 
Eurostat 
Eurostat, STS 

OECD, Eurostat 

Eurostat, Experimental 
Statistics 
Eurostat, Experimental 
Statistics 
Eurostat, Labour Force 
Survey 

Eurostat, National 
Accounts 
ECFIN 
AMECO 
AMECO 
World Bank, Eurostat 
Eurostat and OECD 

DESI, Eurostat 

DESI, Eurostat 
DESI, Eurostat 
DESI, Eurostat 
DESI, Eurostat 
Eurostat 

UNFCCC and World Bank 
Eurostat 

Eurostat 

Eurostat 
Eurostat 
Eurostat 
Eurostat 

Eurostat and DIW Econ 
Eurostat and DIW Econ 
Eurostat 

182 

 
 
 
International dimension 

Extra-EU import 

growth rate 
Bn EUR and nominal 
growth rate 

Eurostat 

The majority of the indicators presented are calculated for the whole EU economy. In some cases, 
the most relevant macro components of the economy (e.g. industry, manufacturing and/or services) 
are also presented and, where possible and meaningful, international comparisons are included.   

A selection of KPIs is also presented for the 14 industrial ecosystems, allowing for a more granular 
view of the main trends characterizing specific parts of the economy. The table below summarises 
these indicators. 

Table 2: list of KPIs calculated by ecosystem 

Thematic area 

Indicator 

Measure 

Source 

Headline indicators 

Gross value added 

Headline indicators 

Employment 

Headline indicators 
Green transition 

Number of firms 
Greenhouse gas intensity 

Short-term indicators 
International dimension 
Single Market integration 
Economic Resilience 
Economic Resilience 

Confidence indicator 
Export intensity 
Intra-EU trade 
Churn rate of business 
Investments in tangibles 

Million EUR and % change 
2015-2018 
Million EUR and % change 
2015-2018 
Number 
Level and % Change 2015-
2018 
Level 
Extra EU Export/VA 
% of total ecosystem trade 
% change 2015-2018 
Level and % change 2015-
2018 

Eurostat 

Eurostat 

Eurostat 
Eurostat 

ECFIN 
Eurostat 
Eurostat 
Eurostat 
Eurostat 

This set of KPIs takes into account, and in some cases partially overlaps, other thematic scoreboards 
that monitor specific policy areas. These initiatives complement the present, by analysing in greater 
detail and precision the impact and the performance of specific policie areas. Among them we can 
list the Single Market Scoreboard, The European Innovation Scoreboard, DESI, the Circular Economy 
Monitoring framework424, the Eco-innovation Scoreboard425, the Resilience Dashboards426.  

The main technical criteria driving the selection of KPIs can be summarised as follows: 

1.  Availability of data from public sources, to ensure reliability, transparency and replicability; 
2.  Availability of data for international comparisons; 
3.  Length of the time series, to follow the evolution over a sufficiently long time horizon; 
4.  Timeliness of the data; 
5.  Clarity and ease of interpretation.  

424 https://ec.europa.eu/eurostat/web/circular-economy/indicators/monitoring-framework 
425 https://ec.europa.eu/environment/ecoap/indicators/index_en 
426 Proposed in the Commission’s 2020 Strategic Foresight Report COM(2020) 493 final. 

183 

 
 
 
 
                                                           
Headline indicators 
Value added in industry and services 

Value added in Industry (including construction): 
annual % growth 
Source: World Bank national accounts data 

Value added in Services: annual % growth 
 Source: World Bank national accounts data 

The  overall  composition  of  our  economy  has 
changed  over  time,  with  industry  shrinking 
relative  to  services.427  This  is  a  global  trend, 
influenced  by  many 
including 
servitisation  of  industry.  Changes  in  relative 
prices,  driven  by  the  broad  decrease  of  prices 
of  many  manufacturing  products, 
also 
contribute to this trend.  

factors, 

industry,  growth  has  been 

In 
lower  than 
international  competitors,  except  for  Japan  in 
2018.  Services,  grew  faster,  but  not  as  fast  as 
China  and  the United  States.  In  particular,  the 
performance  of  China  signals  its  increasing 
importance also in service provision.  

Nevertheless,  Europe  maintains  a  very  strong 
industrial  basis.  The  increasing  importance  of 
services is possible also thanks to the existence 
of a strong and dynamic industry.  

427 Industry corresponds to ISIC divisions 10-45 and includes in mining, manufacturing, construction, electricity, water, and 
gas. Services correspond to ISIC divisions 50-99 and include wholesale and retail trade (including hotels and restaurants), 
transport, and government, financial, professional, and personal services such as education, health care, and real estate 
services. 

184 

 
 
 
 
 
 
 
 
                                                           
 
 
GDP per person employed 

Another  trend  common  to  most  advanced 
economies 
in 
productivity  growth,  something  the  EU  is  not 
immune from.  

the  secular  slowdown 

is 

In  particular,  the  EU  has  been  experiencing  a 
significant  slowdown  in  labour  productivity, 
matched  by  a  similar  trend  in  total  factor 
productivity growth.  

In  2020,  a  productivity  drop  is  visible  in  all 
countries,  but  appears  more  severe  in  the  EU 
and in the UK. For the EU, estimates suggest a 
significant  rebound  in  2021,  but  not  sufficient 
to compensate for the drop in 2020. 

The pandemic has triggered the deepest shock 
in the history of the EU. Such economic shock 
has  caused  also  big  employment 
losses. 
However, the international comparison shows 
how  social  safety  nets  in  the  EU  played  a 
major  role  in  mitigating  them,  limiting  the 
drop to -1.5% for the EU vs. -6.2% in the USA 
and  -5%  in  Japan.  In  particular,  the  USA  and 
the  EU  suffered  a  similar  drop  of  hours 
worked.  However,  the  drop  in  the  number  of 
persons employed sharply differed, most likely 
due  to  market  regulation  and  heterogeneous 
measures  to  protect  employment  during  the 
crisis.  

GDP  per  person  employed:  constant  prices,  total 
economy, %  annual growth 
Source: AMECO Source: AMECO 

Employment 

Number  of  Employees:  Total  employment,  domestic, 
annual % growth. Data for 2020 based on estimates. 
Source: AMECO 

185 

 
 
 
 
 
 
EU global market share 

Share of world export: % 
Source: Eurostat [xt_lt_introle]  

Short-term indicators 
Turnover 

Turnover: % change with respect to the same month in the 
previous year 
Source: Eurostat Short-term Statistics 

Industrial production 

Industrial production: relative to January 2015 
Source: OECD 

The  EU  share  of  world  exports  remained 
stable  at  about  16%  in  the  last  ten  years, 
amid  a  very  challenging  environment  in 
which  the  raise  of  China  has  been 
remarkable.  However,  in  2020,  the  EU 
recorded a significant increase, from 15.9% 
in 2019 to 17.3% in 2020. 

Turnover  losses  have  also  been  dramatic, 
during  the  pandemic-induced  lockdown, 
with a huge drop in April and May 2020 (-
33%  for  industry,  -23%  for  wholesale  and 
retail  trade,  -24%  for  services).  The  shock 
has hit all sectors, but divergences start to 
emerge  in  the  recovery  phase,  with  retail 
and  manufacturing  recovering  faster  than 
services.  In  January  2021,  turnover 
in 
industry had recovered to pre-Covid levels 
but it remains to be seen if the recovery is 
sustained.  

The  fall  in  industrial  production  has  also 
been  remarkable,  and  deeper  than  other 
large  economies  at  the  beginning  of  the 
COVID-19  crisis.  Nonetheless,  its  recovery 
was  quick,  also  compared  to  international 
competitors.  Data  suggests  that  industrial 
production  was  back  to  pre-lockdown 
levels at the end of 2020. 

186 

 
 
 
 
 
 
 
 
 
 
 
 
Declarations of bankruptcies and Registration of businesses 

The number of declaration of bankruptcies has 
dropped with the inception of the COVID crisis 
(2nd quarter 2020). This is due  to the  support 
policies  put  in  place  by  Member  States  to 
shelter  business  in  response  to  the  lockdown 
measures. However, the increase visible in the 
the  crisis 
third  quarter  signals 
continues,  firms  may  be  driven  out  of  the 
market despite the public support. 

that,  as 

Declaration of bankruptcies and registrations of 
businesses: index 2015=100. Seasonally adjusted data. 
Source: Eurostat, experimental statistics, incomplete 
coverage of EU  

The number of new registration of business has 
dropped  very  significantly 
in  the  second 
quarter  of  2020.  This  is  most  likely  due  two 
effects:  lockdown  measures  and  the  lack  of 
confidence  given  the  extreme  uncertainty  related  to  the  evolution  of  the  pandemic.  In  the  3rd 
quarter of 2020, when COVID-19 containment measures were somewhat relaxed in many Member 
States, the number of registrations of new businesses in the EU saw a significant increase compared 
with the previous quarter. 

Permanent, temporary and self-employment 

Permanent, temporary and self-employment: 
change with respect to same quarter in the previous year. 
Age 15-64. 
Source: Eurostat, LFS [lfsq_egaps,lfsq_etgaed]. Data not 
seasonally adjusted 

Data  by  employment  type  provides  a  clearer 
picture  of  the  impact  of  the  crisis  in  terms  of 
social  and  economic  aspects.  The  most 
significant  drop 
is  by  far 
amongst  temporary  employees,  followed  by 
self-employed.  These  types  of  workers  were 
generally less protected by the public measures 
to cushion the effects of the crisis.  

in  employments 

This  picture  of  the  employment  drop  matches 
the  divergences  of  the  impact  of  the  crisis 
across  economic  activities,  as  temporary  and 
self-employment  are  relatively  more  common 
in  ecosystems  as  Tourism  or  Cultural  and 
Creative activities.  

187 

 
 
 
 
 
 
 
 
 
Gross fixed capital formation 

Quarterly Gross Fixed Capital Formation: Growth 
rate compared to the same quarter of previous year, 
seasonally adjusted. 
Source: OECD 

Economic confidence indicator 

is  reflected 

The lack of confidence related to the uncertain 
evolution  of  the  pandemic 
in 
investments, as measured by gross fixed capital 
formation.  This  indicator  touched  its  lowest 
level  in  the  second  quarter  of  2020,  falling  by 
20%  compared  to  the  previous  year.  While  in 
the  3rd  quarter  there  was  a  positive  rebound, 
the  last  quarter  was  again  trending  down. 
Comparing    internationally,  the  fall  during  the 
2nd quarter of 2020 was much bigger in the EU 
than in the USA or Japan, and that the new dip 
at the end of the year is specific to the EU.  

The  economic  sentiment  dropped  dramatically 
to historical lows during the lockdown in spring. 
Since  then,  it  recovered  ground  and      clearly 
improved  in  March  2021.  The  analysis  of  the 
economic  sentiment  signals  a  decoupling 
between services, where it remains significantly 
negative,  and  industry,  where  instead  it  has 
recovered  the  pre-crisis  level  and  has  even 
turned positive in March.  

Economic confidence indicators 
Source:  Joint  Harmonised  EU  Programme  of  Business  and 
Consumer Surveys 

188 

 
 
 
 
 
 
 
 
 
Economic Resilience 
Net public investments 

it  with 

Resilience  is  a  concept  encompassing  several 
dimensions.  As  such,  it  is  difficult  to  fully 
describe 
limited  set  of 
it  with  a 
economic  indicators.  Investments  are  a  good 
industry 
proxy  to  monitor  how  European 
renews  and  upgrades 
its  products  and 
processes.  As  such,  investments  signals  the 
extent  to  which  industry  prepares  for  the 
economic and societal challenges of the future.

Public Investments: Net Fixed Capital Formation as a 
share of GDP.  Data for 2020 based on estimates. 
Source: own calculations based on AMECO data 

Public  investment  between  2013  and  2018,  in 
the EU and in the  Euro Area in particular, was 
not  even  sufficient  to  compensate  for  the 
depreciation  of  the  existing  stock  of  capital,  let  alone  to  increase  it.  In  2019  and  2020,  public 
investment has increased, and is likely to keep increasing in 2021, also thanks to the interventions at 
European  and  Member  State  level  to  support  the  economy  during  the  recovery.  This  will  bring  a 
positive contribution, although remaining  relatively low.  

Net private investments 

Private  investment,  on  the  other  side,  was  on 
an increasing trend before the Covid crisis, also 
in  line  with  international  levels.  The  Covid 
shock,  nevertheless,  has  caused  a  dramatic 
drop  in  the  level  of  net  private  investment,  in 
the EU as in the UK, while in the US such drop 
is less pronounced. 

Private investments: Net Fixed Capital Formation as a 
share of GDP.  Data for 2020 based on estimates. 
Source: own calculations based on AMECO data 

189 

 
 
 
 
 
 
 
 
 
 
 
R&D expenditures 

In  terms  of  R&D  expenditures,  the  EU  is 
lagging  behind  other  major  economies,  such 
as  the  US  and  Japan.  China  is  also  rapidly 
increasing its level of investment in R&D. 

R&D expenditure: % of GDP 
Source: UNESCO institute for Statistics through World Bank 
API 

STEM graduates 

Graduates in STEM and related fields: per 1,000 
population aged 20-29 
Source: Eurostat [EDUC_UOE_GRAD02] and OECD 
[Distribution of graduates and entrants by Field]. Tertiary 
graduates (levels5-8), in natural sciences, mathematics, 
statistics, ICT, engineering, manufacturing and construction. 
Eurostat and OECD data not fully comparable 

Skills  in  Science,  Technology,  Engineering  and 
Mathematics 
to 
essential 
accompany the digital and green transition. 

(STEM) 

are 

The share in the EU has been roughly constant 
in the last five years, while the USA and the UK 
both experienced an increasing trend.  

Part of the differences in trend may be  due  to 
the  international  reputation  of  some  USA  and 
British universities in these field. 

190 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Digital Transition 
 Digital Economic and Society Index and its sub components 

In the last six years, the Digital Economic and 
Society  Index  (DESI)  has  grown  at  a  stable 
rate  of  around  6%  annually.  All  components 
kept  improving  with  some  disparity  among 
them.  Human  capital  shows  the  smallest 
growth.  The  digital  public  services  and  the 
integration  of  digital  technology  and  have 
grown  by  43%  and  42%  in  the  last  six  years, 
levels, 
latter  starting  from 
with  the 
especially in some  European Member States. 
The  growth  in  connectivity  has  increased 
significantly,  achieving  a  61%  growth  since 
2015  and  with  a  strong  increase  in  the  last 
two  years.  The  growth  in use  of  the  internet 
was of 28% since 2015. 

low 

Skills  encompass  many  dimensions,  but  one 
area  where  they  are  particularly  important 
today is the digital world. The sudden increase 
in  remote  working  and    learning  has  shown 
the  importance  of  digital  skills.  In  2019,  the 
majority  of  the  EU  population  had  basic  or 
above  basic  digital  skills,  although  there  is  a 
wide dispersion across  age groups. The share 
of  total  population  with  basic  or  above  basic 
digital  skills  had  increased  in  the  last  five 
years, by 2 percentage points. 

DESI: Annual weighted % growth  
DESI components: % growth (2015-2020) 
Source: Digital Economy and Society Index, European 
Commission 

Digital skills 

Share of population with basic or above basic 
digital skills: % of total population, by age group 
 Source: Eurostat [isoc_sk_dskl_i] 

191 

 
 
 
 
 
 
Climate neutrality and Circular Economy 
GHG emission intensity 

GHG emission intensity: GHG/GDP (tCO2eq/GDP 
constant)  
Source: UNFCCC, World Bank 

Electricity prices 

Greenhouse gas emission intensity is one of 
the  most  important  factors  in  pursuing  the 
European  Green  Deal  and  also  one  of  the 
clearest  indicators  to  measure  its  success. 
The  GHG  emission  intensity  of  the  EU  is 
close to Japan, lower than the United States 
and  significantly  lower  than  China.  In  the 
last  decade,  the  GHG  emission  intensity  of 
the  EU  economy  has  decreased  by  20%, 
comparable  to  the  United  States.  China’s 
emission  intensity  has  decreased  by  30%, 
but remains much higher. 

increases 

The  green  transition  will  require  access  to 
abundant,  decarbonised  and  competitively 
priced  electricity.  While 
in 
electricity  prices  can  trigger  improvements 
in  energy  efficiency,  electricity  prices  are 
also 
the 
competitiveness  of  some  industries.  It  is 
important  to  monitor  the  evolution  of 
electricity  prices  to  evaluate  the  industry’s 
incentives to decarbonise.  

component 

key 

of 

a 

Industry Electricity Prices: International Comparison, 
EUR/MWh 
Source: EC/SWD(2020)951 final, Trinomics (2020) Study on 
energy prices, costs and their impact on industry and 
households and  Eurostat [NRG_PC_205].  EU data based on 
medium size industrial consumers (annual consumption of 
2000-20000 MWh). From 2017 onwards, data is for non-
household consumers, not only industry. 

Despite  the  reduction 
in  emissions,  EU 
industry  electricity  prices  have  been 
relatively stable for the last decade. They are 
around  twice  as  high  as  the  US  prices. 
intensity,  
Despite  comparable  emission 
prices in the EU are below the prices in Japan. Industrial electricity prices in China declined below EU 
prices  in  2011  and  have  increased  divergence  with  EU  prices  since  2018.  EU  industrial  (non-
household)  electricity  prices  have  fluctuated  around  120  MWh  in  the  last  decade.  An  increasing 
trend can be observed in the last two years. There is a significant variation across Member States. 

192 

 
 
 
 
 
 
Circular material use rate 

Circular material use rate: % of overall material use 
 Source: Eurostat [cei_srm030] 

Scaling up the circular economy will play a 
key  contribution 
to  achieve  climate 
neutrality  by  2050.  Increasing  recycling 
rates  offer  a  partial  picture  of  the  circular 
economy,  as  they  do  not  capture  the 
extend  to  which  recycled  materials  find 
their  way  back  into  the  economy.  The 
circular  economy  aims  at  increasing  the 
amount  of  material  recovered  and  fed 
back into the economy, therefore reducing 
the  generation  of  waste  and  limiting  the 
extraction of primary raw materials.  

The circular material use  rate measures the contribution of recycled materials to overall materials 
demand. A high circularity rate value indicates that more secondary materials substitute for primary 
raw materials, thus reducing the environmental impacts of extracting primary material. In the last 10 
years,  the  rate  of  re-use  of  materials  in  the  EU  has  increased  to  11.9%  in  2019,  a  1.2  percentage 
point increase since 2010. There is significant variation across Member States.428 

Recycling rate of municipal waste 

recycling 

Nonetheless, 
is 
increasing 
fundamental  for  the  circular  economy,  as 
the  demand  and  the  supply  of  recycled 
evolve 
material 
together.429 
Framework 
The  Waste 
Directive  sets  a  target  of  50%  recycling  of 
municipal waste in 2020.430  

naturally 

should 

Recycling rate of municipal waste: % and variation across 
Member States 
 Source: Eurostat [CEI_WM011] 

In  the  last  decade,  the  recycling  rates  for 
municipal waste have increased by around 
10  percentage  points  for  the  whole  EU. 
Despite  an  increase  for  Member  States 
rates,heterogeneity 
with 

recycling 

low 

428 The new Circular Economy Action Plan for a cleaner and more competitive Europe announced that the Commission will 
revise  the  Monitoring  Framework.  New  indicators  will  take  account  of  the  focus  areas  in  this  action  plan  and  of  the 
interlinkages between circularity, climate neutrality and the zero pollution ambition. Indicators on resource use, including 
consumption  and  material  footprints  to  account  for  material  consumption  and  environmental  impacts  associated  to  our 
production and consumption patterns will also be further developed. 
429  The  indicators  presented  here  describe  only  partially  the  complexity  of  the  industrial  transition  towards  a  circular 
economy. The Commission in 2018 adopted a comprehensive framework of indicators to measure the transition towards a 
circular economy. The indicators of the framework follow the lifecycle of products and offer a snapshot on how well we 
save our resources. As such, the framework will continue being a fundamental element of industrial policy strategy. 
https://ec.europa.eu/eurostat/web/circular-economy/indicators/monitoring-framework 
430  Directive  2008/98/EC  of  the  European  Parliament  and  of  the  Council  of  19  November  2008  on  waste  and  repealing 
certain  directives;  Directive  (EU)  2018/851  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  amending 
Directive 2008/98/EC on waste (OJ L 150, 14.06.2018, p. 109-140). 

193 

 
 
                                                           
 
 
remains high. 

Single Market Integration 
Intra-EU trade 

Intra and Extra EU trade: EUR bn nominal values 
Source : EU trade by CPA 2.1 [DS-1062396]   

Intra-EU exports: % nominal growth over the same period 
of previous year 
 Source : EU trade by CPA 2.1 [DS-1062396]   

The  single  market 
is  one  of  the  most 
important  assets  of  the  EU  and  its  further 
deepening is one of the goals of the EU. Intra-
EU  trade  is  a  good  proxy  for  single  market 
integration. In December 2020, intra-EU trade 
was  50%  higher  than  extra  EU  trade.  The 
effect  of  the  COVID-19  crisis  was  larger  on 
intra-EU  trade,  but  the  recovery  was  also 
faster.  Both  intra  and  extra-EU  trade  grew  in 
2018 and 2019. 

The  COVID-19  crisis  resulted  in  a  significant 
downturn  in  intra-EU  exports  with  a  drop  of 
over  30%  in  April  2020  as  compared  to  April 
2019. In December 2020, intra-EU exports was 
however, 4.1% higher than in December 2019. 
Year-on-year  export  grew  for  all  months  of 
2018 and during ten months of 2019. 

194 

 
 
 
 
 
 
 
 
 
 
 
 
  
Price convergence 

it 

To  assess  the  integration  of  the  European 
economy, 
is  useful  to  consider  the 
differences  in  price  level  among  different 
Member  State  economies.  In  the  years 
running  up  to  2008  the  dispersion  in  price 
levels  in  the  EU  drastically  decreased,  but 
increased  again  with  the  financial  crisis.  In 
the 
last  five  years,  we  could  observe 
another, slower decrease. The movement of 
price  dispersion  within  the  Euro-zone  in 
interesting, as a first approximation, to take 
into  account 
the  potential  effect  of 
exchange  rates  in  the  evolution  of  price 
convergence. While the trend is overall very similar, the comparison shows that most of the increase 
in  the  period  2008-2019  is  due  to  variations  outside  the  Euro  area.  This  might  be  influenced  by 
exchange rates fluctuations.  

Price dispersion across Member States: coefficient of 
variation of price level indices, (PPP for GDP)  
Source: Eurostat, [prc_ppp_conv] 

SMEs 
Employment in SMEs 

Number of persons employed: by size class, index: 
2008=100 
Source :  Eurostat [sbs_sc_sca_r2]. Estimates for 2020 
produced by DIW Econ, based on 2008-18 figures from 
Eurostat Structural Business Statistics Database and 
provisional data for 2019-2020 from the National Accounts 
database and the Short Term Business Statistics Database. 

increase 

in  employment 

While  SMEs  represent  the  vast  majority  of  EU 
is 
companies,  the 
more concentrated in large enterprises. Indeed, 
the  number of  people  employed  in  large  firms 
has  increased  significantly,  in  particular  since 
2016 while the number of people employed in 
medium-sized firms has reduced by a small but 
significant  amount.  This  could 
signal  a 
polarisation trend in the EU industrial fabric.  

195 

 
 
 
 
 
 
 
 
 
Value added in SMEs 

In  terms  of  value-added,  all  companies  have 
increased  their  contribution.  However,  the 
difference  across  size  class  is  striking,  with 
large  companies  increasing  their  value  added 
significantly  more  than  micro,  small  and 
medium companies, in particular since 2016. 

Value-added: by size class, index: 2008=100 
Source :  Eurostat [sbs_sc_sca_r2]. Estimates for 2020 
produced by DIW Econ, based on 2008-18 figures from 
Eurostat Structural Business Statistics Database and 
provisional data for 2019-2020 from the National Accounts 
database and the Short Term Business Statistics Database.  

196 

 
 
 
 
 
 
 
 
 
 
 
 
International dimension 
Extra-EU trade 

Extra-EU trade : EUR bn nominal values 
Source : EU trade by CPA 2.1 [DS-1062396] 

Extra-EU trade: % nominal growth over the same period of 
previous year 
 Source : EU trade by CPA 2.1 [DS-1062396]  

Extra-EU  exports  and  imports  have  followed 
similar  patterns  in  the  last  three  years,  with 
the  net  trade  balance  being  always  positive. 
The  COVID-19  crisis  resulted  in  a  significant 
drop,  in  exports  in  particular,  with  a  rapid 
recovery to pre COVID-19 levels.  

in  the 

The  year  on  year  growth  rate  of  Extra-EU 
exports  and  imports  have  followed  a  similar 
last  three  years.  Extra-EU 
pattern 
exports  were  more  severely  affected  by  the 
COVID-19  crisis  but  also  recovered  faster.  In 
December  2020,  extra  EU  annual  exports 
growth  became  positive  again  and  was  1.7% 
higher  than  in  December  2019.  The  strength 
of the recovery is visible in comparison to the 
situation in April 2020, when both exports and 
imports  were  almost  30%  down  on  their 
values of the previous year. 

197 

 
 
 
 
 
 
 
 
 
 
 
Key Performance Indicators for EU Industrial Ecosystems 
The KPIs presented in this section, describes the ecosystems in more details. The granularity of the 
sectoral classification for the data sources available is not ideal to describe the ecosystems precisely. 
Hence, the indicators below should be interpreted with caution. The methodology followed for the 
calculation of these indicators is explained at the end of this annex. Due to data availability, most of 
the indicators presented below do not capture the COVID-19 crisis period.  

Headline indicators: the size and performance of ecosystems  
The 14 industrial ecosystems, as defined in this document, represent roughly 80% of the European 
business economy in terms of value added and employment.431 They differ significantly in terms of 
size  (Table and  Chart  1).  Their  size  is  influenced  by  several  factors.  For  instance,  Retail,  by  far  the 
largest ecosystem, serves virtually all ecosystems, ensuring the contacts to final consumers. Energy 
Intensive  Industries  or  Aerospace  and  Defence,  are  instead  very  “upstream”  ecosystems.  For  this 
reason, although based on indicators as value added and employment they may look less relevant, 
their strategic value is fundamental, as their output is relevant for all other ecosystems. 

Value Added and Employment, 2018 
Source: European Commission analysis based on Eurostat [nama_10_a64] and [nama_10_a64_e]. Data refer to 
2018, most recent year available. 

All ecosystems have grown in gross value added between 2015 and 2018, with Digital, Construction 
and  Tourism  showing  the  largest  growth  rates.  Looking  at  employment  dynamics,  the  Digital, 
Tourism  and  Mobility-Transport-Automotive  ecosystems  show  the  largest  increase  while  Textiles 
and Agri-food have marginally reduced total employment between 2015 and 2018.  

431  In  this  document,  business  economy  is  defined  as  total  economy  excluding  financial  services  and  public 
administration. While both financial services and public administration are clearly of great importance for the 
functioning  of  all  industrial  ecosystems,  given  their  special  nature,  their  inclusion  in  the  calculation  of  the 
indicators would make some results more difficult to interpret.  

198 

 
 
 
 
                                                           
Change in Value Added and Employment, 2015-2018 
Source: European Commission analysis based on Eurostat [nama_10_a64] and [nama_10_a64_e]. 

Table 1 

Aerospace & Defence 
Agri-food 

Construction 

Gross Value Added 
(million EUR) 
                              240,891  
                              584,628  

Total Employment 
(thousands) 
                                   3,920  
                                16,303  

                          1,158,192  

                                24,893  

Cultural and Creative Industries 

                              461,274  

                                   8,016  

Digital 

Electronics 

Energy - Renewables 

Energy Intensive Industries 

Health 

                              625,013  

                                   6,779  

                              127,990  

                                   1,787  

                              122,203  

                                   1,168  

                              549,428  

                                   7,760  

                          1,183,869  

                                24,805  

Mobility - Transport - Automotive 

                              906,127  

                                14,615  

Proximity, Social Economy and Civil Security  

                              790,734  

                                22,876  

Retail 

Textile 

Tourism 

                          1,385,011  

                                29,774  

                                84,930  

                                   2,388  

                              849,630  

                                20,345  

The number of firms varies significantly across ecosystems, signalling differences not only of size, but 
also of market structure. For instance, Retail and Proximity, Social Economy and Civil Security count 
also a very large number of small and labour intensive firms, while in other ecosystems more capital-
intensive activities can lead to relatively more concentration (e.g. Energy-Renewables). 

199 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
Number of Firms, 2015-2018 
Source: European Commission analysis based on Eurostat, Structural Business Statistics 

200 

 
 
 
 
 
 
 
Green transition: GHG emissions  
Reducing  Greenhouse  gas  emission  is  a  top  priority  of  the  Commission.  The  recently  increased 
ambition of the decarbonisation target (-55% by 2030) will require an effort from all ecosystems.  

GHG  emission  intensity  (2018),  change  in  GHG  emissions  and  changes  Value  Added  (2015-
2018) 
Source: European Commission analysis based on Eurostat [nama_10_a64] and [env_ac_ainah_r2]. The size of the 
bubble represents GHG emission intensity in 2018. The ecosystem Energy-renewables does not include emissions 
from energy generation, as they are assumed to be zero. The grey bubble represents the full energy sector (NACE 
D35), included for the sake of comparison. 

In the graph above, GHG emissions are assumed to be nil for the generation of renewable energy, 
which is included in the Energy-Renewables ecosystem.432 Nonetheless, the corresponding share of 
value added attributable to renewables is still included in the Energy-Renewables ecosystem. For the 
sake  of  comparison,  the  NACE  sector  “Electricity,  gas,  steam  and  air  conditioning  supply”  (D35)  is 
presented in the figure under a different colour to distinguish it from the industrial ecosystems. The 
sector  D35  includes  emissions  and  value  added  for  both  renewable  and  non-renewable  energy 
supply. As shown by the size of the bubbles, “Energy Intensive Industries” and “Agri-food” have the 
highest level of GHG emissions intensity in 2018. Most ecosystems have reduced their GHG emission 
intensity between 2015 and 2018, as the positive change in Value Added is larger than the change in 
GHG emissions. For completeness, the next figure shows the latest available figures on emissions per 
ecosystem. 

432 This is of course an imprecise assumption, as even the generation of renewable energy requires a minimum 
of emissions.  

201 

 
 
 
 
                                                           
GHG emissions, 2015-2019, million tonnes. 
Source: European Commission analysis based on Eurostat [env_ac_ainah_r2]. 

Short-term indicators: Economic confidence 

Confidence Indicator by Ecosystem – 2020-2021, monthly. 
Source:  European  Commission  analysis  based  on  data  by  the  Joint  Harmonised  EU  Programme  of  Business  and 
Consumer  Surveys.  Note:  For  “Retail”,  “Agri-food”,  “Proximity,  Social  Economy  and  Civil  Security”,  “Energy-
Renewables”, and “Health”, data coverage is partial, so they are depicted using dotted lines and the related values 
have to be interpreted with caution. Data for Cultural and Creative Industries may underestimate the impact of 
the crisis, as data for some relevant sectors are not available. 

Survey  data  helps  complement  the  analysis  by  providing  very  timely  information  before  the 
publication of official statistics. In particular, data on turnover or industrial production do not cover 
the  most  recent  months,  but  data  from  the  Joint  Harmonised  EU  Programme  of  Business  and 

202 

 
 
 
 
 
 
Consumer Surveys can provide useful insights when used to build an economic sentiment indicator 
for each ecosystem.433 The evolution of the economic confidence indicators in most recent months 
signals that a second dip has hit the European economy in autumn 2020. However, there have been 
visible improvements in 2021. Services sectors are clearly the most affected, as well as retail, while 
manufacturing  and  construction  seem  to  have  better  absorbed  the  second  round  of  containment 
measures.  

 In April 2021, the economic confidence turned positive for most ecosystems, but remains negative 
in  Textiles  and  Tourism,  despite  a  significant  improvement.  The  improvement  is  visible  across  all 
ecosystems.   

International dimension: Trade  

Export Intensity: extra EU exports as percentage of value added 
Source:  European Commission analysis based on Eurostat, EU trade since 1988 by CPA 2.1 [DS-1062396], last update 
18 March 2021. 

The fourteen industrial ecosystems, taken together are responsible for most of extra EU exports in 
goods.  

However, Ecosystems differ significantly in their export intensity, with “Electronics”, “Textiles” and 
“Energy Intensive Industries” showing the highest values. Given the profoundly different nature of 
the  ecosystems  analysed  here,  this  divergence  should  not  be  interpreted  as  a  signal  of  dismal 
performance by some of them. Indeed, export of goods is clearly not a core activity for ecosystems 
as Proximity, Social Economy and Civil Security, or for a service ecosystem as Retail. The change in 

433 We build a profile of the economic sentiment for each ecosystem, by aggregating the data for the different sectors. We 
calculate a weighted average of the values of those sectors included in the definition of each ecosystem; the weights are 
based on the share of value added that each sector has in the total value added of the ecosystem, as a measure of the 
relevance of that sector to that ecosystem. This surveys-based indicator is highly correlated (80%) with the data on actual 
changes in turnover, for each ecosystems in each month. We can therefore use it to forecast the economic impact on each 
ecosystem in the most recent months. 

203 

 
 
 
                                                           
export intensity across ecosystems between 2015 and 2018 has been relatively small. “Textile” is a 
notable exception, with an increase of export intensity of 9 percentage points. 

All ecosystems rely more on intra EU trade than on extra EU trade. The changes since 2015 across 
ecosystems  are  small,  with  a  maximum  of  2  percentage  points  increase  in  favour  of  the  intra  EU 
trade.  

Intra EU Trade: share of total ecosystem trade 
Source:  European Commission analysis based on Eurostat EU trade since 1988 by CPA 2.1 [DS-1062396], last 
update 18 March 2021. 

Around two thirds of trade  of “Agri-food”, “Mobility-Transport-Automotive” and “Energy Intensive 
Industries” takes place within the EU. 

Resilience: the dynamism of ecosystems 
The ecosystems differ less significantly in their level of dynamism, as measured by entry and exit of 
firms and by the churn rate, defined as the sum of birth and death rate of firms.  These indicators 
proxy  the  degree  of  “creative  destruction”  of  the  ecosystems,  which  contribute  to  aggregate 
productivity growth of business (see Chart 2, left panel)434. The separate analysis of birth and death 
rates shows that for most ecosystems the birth rate is higher than the death rate, with the exception 
of Retail, for which the births and deaths are very similar. 

434 See, for instance, Calvino, F., C. Criscuolo and R. Verlhac (2020), "Declining business dynamism: Structural 
and  policy  determinants",  OECD  Science,  Technology  and  Industry  Policy  Papers,  No.  94,  OECD  Publishing, 
Paris, https://doi.org/10.1787/77b92072-en. 

204 

 
 
 
 
                                                           
Churn rate of businesses of EU ecosystems, 2015-2018 
Source: European Commission analysis based on Eurostat [bd_9bd_sz_cl_r2]. Data refer to 2018, most recent year 
available. Data is not fully available for some ecosystems. In particular, the values for Agri-food, Creative & Cultural 
Industries, and Proximity and Social economy are under-represented in these indicators. 
The  data  used  to  calculate  this  indicator  do  not  cover  the  whole  economy.  The  ecosystems  Agri-
food, Health, Cultural and creative industries as well as Proximity, Social economy and Civil security 
are only partially covered, hence result should be interpreted with caution. 

Resilience: Investments in tangibles 
The  table  below  shows  a  measure  of  investment  intensity,  given  by  the  ratio  of  investment  in 
tangibles to Value Added. The Energy-Renewable ecosystem shows the highest investment intensity, 
which is not surprising given the capital-intensive nature of energy generation.  

Most  ecosystems  increased  their  investment  intensity  from  2015,  with  the  only  exceptions  for 
Aerospace & Defence and Energy – Renewables, for which the ratio has been stable, mostly due to a 
strong  increase  of  value  added  creation.  However,  this  measure  does  not  take  into  account 
investments in non-tangible goods, whose importance is rapidly increasing.  

Investment in tangibles as a share of Value Added: 2015 and 2018 (%) 
Source: European Commission analysis based on Eurostat, Structural Business Statistics [partial data coverage of some 
ecosystems notably Agri-food; Cultural and Creative Industries; Health; Proximity, Social Economy and Civil Security and 

205 

 
 
 
 
 
Tourism].  
The  data  used  to  calculate  this  indicator  do  not  cover  the  whole  economy.  The  ecosystems  Agri-
food, Health, Cultural and creative industries as well as Proximity, Social economy and Civil security 
are only partially covered, hence result should be interpreted with caution. 

206 

 
 
 
 
Methodology for constructing the data used for the analysis of industrial 
ecosystems 
The  industrial  ecosystems  in  this  report  are  composed  of  a  number  of  related  industries  and 
competences  that  show  strong  inter-industry  interdependencies.  The  industries  are  identified 
according to their main activities. The data used to compile indicators on the ecosystems are derived 
from  official  statistics,  including  national  accounts,  Structural  Business  Statistics,  and  Short-term 
business statistics. These statistical sources use the NACE rev.2 classification to identify enterprises 
according to their main activity.  

The NACE rev.2 classification has also been used to define the 14 industrial ecosystems, as reported 
in the table below. The mapping provided in this list is based on 2-digits classification. This level of 
granularity  is  not  optimal  to  identify  all  the  elements  of  the  ecosystems,  but  most  of  the  data 
sources we used to calculate indicators in this edition of the Annual Single Market Economy Report 
are only available at the 2-digits level. This affects the precision of the indicators. The most relevant 
issues were alleviated by defining weighs for those 2-digits sectors that include activities relevant for 
different  ecosystems.  Weights  have  been  calculated  based  on  more  granular  datasets  when 
available,  or  based  on  existing  studies.  They  are  reported  in  the  column  "Share".  As  ecosystems 
naturally overlap, some sectors are attributed to more than one ecosystem.   

Ecosystem 

NACE_R2 

Aerospace & Defence 

Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Aerospace & Defence 
Agri-food 
Agri-food 
Agri-food 
Agri-food 
Construction 
Construction 

Construction 

Construction 
Cultural and Creative Industries 
Cultural and Creative Industries 
Cultural and Creative Industries 
Cultural and Creative Industries 

Cultural and Creative Industries 

C25 

C26 
C27 
C30 
C33 
H51 
H52 
J61 
N80 
A 
C10 
C11 
C12 
C31 
F 

M71 

N81 
C18 
C32 
G47 
J58 

J59  

Cultural and Creative Industries 
Cultural and Creative Industries 

J60 
J62_63 

Cultural and Creative Industries 

Cultural and Creative Industries 

M71 

M73 

Cultural and Creative Industries 

M74_M75 

Share* 

0.03^ 

0.44 
0.23 
0.68 
0.09^ 
0.09 
0.18 
0.07 
1 
1 
1 
1 
1 
1 
1 

Description 
Manufacture of fabricated metal products, except 
machinery and equipment 
Manufacture of computer, electronic and optical products 
Manufacture of electrical equipment 
Manufacture of other transport equipment 
Repair and installation of machinery and equipment 
Air transport 
Warehousing and support activities for transportation 
Telecommunications 
Security and investigation activities  
Agriculture, forestry and fishing 
Manufacture of food products  
Manufacture of beverages 
Manufacture of tobacco products   
Manufacture of furniture 
Construction 
Architectural and engineering activities; technical testing 
and analysis 
Services to buildings and landscape activities 
Printing and reproduction of recorded media 
Other manufacturing 
Retail trade, except of motor vehicles and motorcycles 
Publishing activities 
Motion picture, video and television programme 
production, sound recording and music publishing activities 
Programming and broadcasting activities 
Computer programming, consultancy and related activities;   0.004 
Architectural and engineering activities; technical testing 
and analysis 
Advertising and market research 
Other professional, scientific and technical activities and 
veterinary activities  

1 
1 
0.08 
0.01 
1 

0.15^ 

0.64 

1^ 

1 

1 

1 

207 

 
 
 
Cultural and Creative Industries 
Cultural and Creative Industries 

N77 
P85 

Cultural and Creative Industries 

R90-R92 

Cultural and Creative Industries 
Cultural and Creative Industries 
Digital 
Digital 
Digital 
Digital 
Digital 
Digital 
Electronics 
Electronics 
Energy - Renewables 
Energy - Renewables 

Energy Intensive Industries 

Energy Intensive Industries 
Energy Intensive Industries 
Energy Intensive Industries 
Energy Intensive Industries 
Energy Intensive Industries 
Energy Intensive Industries 

Health 

Health 
Health 

Health 

S94 
S95 
C26 
J58 
J61 
J62  
J63  
S95 
C26 
C28 
C27 
D35 

C16 

C17 
C19 
C20 
C22 
C23 
C24 

C21 

C32 
Q86 

Q87_Q88 

Mobility - Transport - Automotive 
Mobility - Transport - Automotive 
Mobility - Transport - Automotive 

C27 
C29 
C30 

Mobility - Transport - Automotive 

G45 

Mobility - Transport - Automotive 
Mobility - Transport - Automotive 
Mobility - Transport - Automotive 
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  
Proximity, Social Economy and 
Civil Security  

Proximity, Social Economy and 
Civil Security  

Retail 
Retail 

H49 
H50 
H52 

G47 

I 

L 

N81 

N82 

Q87_Q88 

S95 

S96 

T 

G46 
G47 

Rental and leasing activities 
Education 
Creative, arts and entertainment activities; libraries, 
archives, museums and other cultural activities; gambling 
and betting activities 
Activities of membership organisations 
Repair of computers and personal and household goods 
Manufacture of computer, electronic and optical products 
Publishing activities 
Telecommunications 
Computer programming, consultancy and related activities 
Information service activities   
Repair of computers and personal and household goods 
Manufacture of computer, electronic and optical products 
Manufacture of machinery and equipment n.e.c. 
Manufacture of electrical equipment 
Electricity, gas, steam and air conditioning supply 
Manufacture of wood and of products of wood and cork, 
except furniture; manufacture of articles of straw and 
plaiting materials 
Manufacture of paper and paper products 
Manufacture of coke and refined petroleum products 
Manufacture of chemicals and chemical products 
Manufacture of rubber and plastic products 
Manufacture of other non-metallic mineral products 
Manufacture of basic metals 
Manufacture of basic pharmaceutical products and 
pharmaceutical preparations 
Other manufacturing 
Human health activities 
Residential care activities and social work activities without 
accommodation 
Manufacture of electrical equipment 
Manufacture of motor vehicles, trailers and semi-trailers 
Manufacture of other transport equipment 
Wholesale and retail trade and repair of motor vehicles 
and motorcycles 
Land transport and transport via pipelines 
Water transport 
Warehousing and support activities for transportation 

Retail trade, except of motor vehicles and motorcycles 

Accommodation and food service activities 

Real estate activities 

Services to buildings and landscape activities 

Office administrative, office support and other business 
support activities   
Residential care activities and social work activities without 
accommodation 

Repair of computers and personal and household goods 

Other personal service activities 

Activities of households as employers; undifferentiated 
goods- and services-producing activities of households for 
own use 
Wholesale trade, except of motor vehicles and motorcycles 
Retail trade, except of motor vehicles and motorcycles 

0.0006^ 
0.1 

0.8 

0.02 
0.26 
0.22 
1 
0.97 
1 
1 
0.48 
1 
0.10^ 
0.38 
0.29 

1 

1 
1 
1 
1 
1 
1 

1 

1 
1 

1 

0.03 
1 
0.32 

1 

0.52 
0.78 
0.39 

0.16 

0.14 

0.08 

0.28 

0.11 

1 

1 

1 

1 

1 
1 

208 

 
 
Retail 
Textile 
Textile 
Textile 
Tourism 
Tourism 
Tourism 
Tourism 

Tourism 

Tourism 

Tourism 

H53 
C13 
C14 
C15 
H49 
H50 
H51 
I 

N79 

N82 

R90-R92 

Postal and courier activities 
Manufacture of textiles 
Manufacture of wearing apparel   
Manufacture of leather and related products  
Land transport and transport via pipelines 
Water transport 
Air transport 
Accommodation and food service activities 
Travel agency, tour operator and other reservation service 
and related activities 
Office administrative, office support and other business 
support activities   
Creative, arts and entertainment activities; libraries, 
archives, museums and other cultural activities; gambling 
and betting activities 
Sports activities and amusement and recreation activities 

1 
1 
1 
1 
0.45 
0.22 
0.91 
1 

1 

1 

0.66 

Tourism 
*Shares shown in the table are computed based on value-added. Shares computed based on employment data are also 
used for the analysis but not shown. 
^ Additional share on top of horizontal component (cfr. below). 

R93 

1 

Some sectors are horizontal in nature and, as such, they contribute to the well-functioning of all the 
ecosystems.  These  are  marked  as  “Horizontal”  in  the  table  above.  To  take  into  account  their 
contribution,  these  sectors  have  been  distributed  across  ecosystems  using  Input-Output  tables,.  
which allows to calculate how much each horizontal sector is used by the rest of the ecosystems. In 
particular,    it  is  possible  to  calculate  the  share  of  value  added  of  the  horizontal  sector  which  is 
embodied  in  the  output  of  other  sectors  in  the  ecosystem.  In  general  terms,  these  weights 
(𝑾𝒆𝒊𝒈𝒉𝒕𝑖𝑠

𝑘𝑧) are defined as follows: 

𝑾𝒆𝒊𝒈𝒉𝒕𝑖𝑠

𝑘𝑧 =

𝑣𝑘𝑧𝜦𝑖𝑠

𝑘𝑧 ∑
𝑁
𝑗=1
𝑣𝑎𝑘𝑧

𝑖𝑠
𝑓𝑗

𝑁
𝑗=1

where 𝜦 measures the total euro worth of country-sector kz goods required to meet 1 euro worth of 
𝑖𝑠
country-sector is’ final demand, defined as (∑
). Note that the final demand of country-sector 
𝑓𝑗
is  is consumed by different  countries  j.  The value  created by country-sector kz is captured by 𝑣𝑘𝑧. 
The total value-added generated by country-sector kz is denoted as 𝑣𝑎𝑘𝑧. In this setting, kz  is the 
EU’s  horizontal  sector  and  is  captures  the  different  non-horizontal  sectors  of  the  EU.  Once  these 
weights  are  defined  at  a  NACE  rev.  2  level,  the  second  step  uses  the  definition  of  different 
ecosystems  in  order  to  capture  to  what  extend  horizontal  sectors  are  important  for  the  different 
ecosystems. The weights are summarised in the table below: 

Aerospace & Defence 

Agri-food 

Construction 

Cultural and Creative 
Industries 
Digital 

Electronics 

Energy - Renewables 

Energy Intensive 
Industries 

C25 

6.74% 

6.62% 

C28 

C33 

E36 

E37-E39  M69_M70 

M71 

M72 

N77_N78 

6.79% 

7.76% 

1.74% 

7.82% 

11.85% 

12.18% 

2.74% 

9.48% 

2.50% 

7.72% 

3.37% 

6.02% 

5.65% 

7.21% 

2.71% 

8.21% 

30.52% 

19.84% 

15.54% 

10.25% 

13.67% 

11.51% 

25.68% 

10.41% 

12.92% 

0.90% 

1.26% 

1.32% 

2.47% 

1.89% 

2.77% 

2.03% 

2.72% 

2.85% 

2.09% 

1.96% 

1.56% 

3.63% 

3.05% 

2.26% 

1.60% 

4.01% 

3.29% 

1.53% 

1.64% 

4.74% 

2.22% 

0.69% 

1.13% 

4.01% 

2.78% 

1.02% 

1.43% 

8.62% 

5.13% 

1.17% 

0.97% 

4.91% 

4.42% 

1.46% 

1.17% 

3.68% 

6.90% 

5.07% 

0.83% 

3.06% 

5.17% 

1.30% 

0.85% 

3.13% 

209 

 
 
 
 
 
Health 

5.16% 

5.62% 

6.86% 

11.10% 

23.55% 

27.76% 

16.53% 

5.82% 

8.53% 

9.82% 

8.76% 

8.62% 

7.61% 

14.22% 

10.00% 

9.29% 

13.00% 

8.55% 

Mobility - Transport - 
Automotive 
Proximity, Social 
Economy and Civil 
Security  
Retail 

Textile 

Tourism 

2.35% 

3.00% 

3.57% 

7.65% 

5.37% 

5.72% 

4.42% 

4.65% 

6.12% 

4.42% 

0.85% 

3.68% 

5.73% 

1.00% 

5.01% 

6.47% 

0.97% 

7.41% 

1.29% 

7.17% 

10.46% 

7.76% 

1.44% 

7.12% 

13.45% 

1.15% 

6.76% 

8.00% 

1.12% 

5.49% 

8.14% 

12.69% 

1.15% 

4.85% 

0.99% 

8.28% 

All weights refer to 2014, i.e. the latest year for which Input-Output tables are available. It should be 
noted that the list of “Horizontal” sectors does not include financial services. Financial services are 
obviously  of  primary  importance  for  industrial  ecosystems,  as  without  those  most  of  the  daily 
operations  and  investments  would  be  impossible.  Insurance  services  are  also  of  the  essence. 
However, the relevance of these services is also reflected in the impact their inclusion would have on 
several  indicators.  Since  in  the  analysis  of  KPIs  we  want  to  focus  on  the  industrial  component  of 
ecosystems, we opted for excluding financial activities.   

210