COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Long-term competitiveness of the EU: looking beyond 2030
Date: 2023-03-16
Institutions: European Commission, Secretariat-General
Subjects: EU energy policy, EU growth strategy, circular economy, common commercial policy, competitiveness, digitisation, education, innovation, investment, productivity, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.3.2023  COM(2023) 168 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS  Long-term competitiveness of the EU: looking beyond 2030  
 
 
Long-term competitiveness of the EU: looking beyond 2030 

European  businesses  are  engines  of  our  society,  creating  employment,  innovation  and 
prosperity.  Competitiveness  and  productivity  are  essential  conditions  for  businesses  to 
flourish; they have been at the heart of EU policy for decades. 

In  the  face  of  recent  successive  crises,  the  EU  has  quickly  put  in  place  a  common  and 
coordinated response, demonstrating that our common strength is greater than the sum of all 
Member States’ efforts. The supply chains disruptions caused by the COVID pandemic and 
the spiralling energy prices after Russia’s weaponization of gas, have put the European model 
to the test. These challenges forced us to adjust well-proven economic and industrial policies 
to continue delivering prosperity and stability to our citizens and businesses and be a major 
player  on  a  global  scene.  Yet,  crisis  management  does  not  build  a  robust  and  future-proof 
economy  that  secures  our  prosperity  and  global  leverage.  Economic  productivity  cannot  be 
built on the basis of reactive measures alone.  

Now is the moment to focus on the longer-term competitiveness of the EU in an increasingly 
challenging  geopolitical  context.  It  is  time  to  look  beyond  2030,  the  year  for  which  the 
majority of EU policy goals have been set.  

This Communication aims to inform  Leaders’ discussions on the long-term competitiveness 
and  productivity  of  Europe's  economy.  European  businesses  have  to  decide  on  their 
investments for the future, in the face of uncertainties, supply constraints and not always fair 
competition.  

The  EU  can  build  on  its  strengths  and  achieve  more  than  merely  trying  to  catch  up  and 
bridge  the  growth  and  innovation  gap.  A  forward-looking,  well-defined  and  coordinated 
EU  framework  will  foster  thriving  businesses,  able  to  compete  on  the  global  market, 
with attractive jobs and setting global standards. To set the EU economy on a sustainable 
growth path  beyond 2030, the EU and its Member States  need to actively  ensure structural 
improvements,  well  focused  investment  and  regulatory  measures  along  the  lines  set  out  in 
this communication. The time is now to work differently, at a make or break moment for the 
EU’s long term competitiveness.  

I.  The EU’s competitiveness today 

The European Union has a lot to be proud of. It is one of the three major economic regions of 
the world, with the trade in goods and services with the rest of the world representing 16.2%1 
of  world  trade,  higher  than  the  EU27  share  of  world  GDP:  nearly15%2.  However,  a  closer 
look shows that since the mid-1990s, the average productivity growth in the EU has been 
weaker than in other major economies, leading to an increasing gap in productivity levels. 
Demographic change adds further strains. Analyses show that the EU is also not at par with 
other parts of the world in some transversal technologies, trailing in all three dimensions of 
innovation, production and adoption3 and losing out on the latest technological developments 
that enable future growth.  

1 Own calculations on WB-WDI ( https://databank.worldbank.org/source/world-development-indicators) 
2  DG Trade Statistical Guide - August 2022 (europa.eu) 
3  These  are  the  next-level  automation,  future  of  connectivity,  distributed  infrastructure,  next-generation 
computing, applied AI, future of programming, trust architecture, bio revolution. The EU leads in the production 

1 

 
 
 
 
 
                                                 
 
The twin transitions anchored in the European Grean Deal4 and the Digital Decade5, spurs 
growth and the modernisation of the EU economy, opening up new business opportunities 
and helping gain a competitive advantage on the global markets. In the period 1990 to 2021, 
the  EU  economy  has  grown  by  over  61%  with  emissions  falling  by  28%,  thus  clearly 
decoupling  growth  from  CO2  emissions.  A  highly  digitalised  industry  will  be  capable  of 
producing in a smarter, more efficient, safer and cleaner way. The productivity of companies 
already investing in data-driven innovation and data analytics grows approximately 5% - 10% 
faster than those not investing.6 

To  foster  the  post-pandemic  recovery,  the  Commission  has  set  up  a  path  to  promote 
investments  and  reforms.  In  addition  to  the  Recovery  and  Resilience  Facility,  many  EU 
programmes  contribute  to  the  twin  transitions  with,  for  example  35%  of  overall  spending 
from all EU programmes dedicated to reaching the climate objectives. With the recent Green 
Deal  Industrial  Plan7,  the  Commission  outlined  what  it  takes  for  the  net-zero  sector  to 
remain  competitive  in  the  medium-term  and  it  underlined  the  need  for  faster  and  simpler 
procedures  for  business  to  thrive.  Administrative  simplification  and  streamlined  permitting 
were developed for renewables deployment, critical raw materials and net-zero technologies 
manufacturing, and will be examined for broader implementation over time. This was done in 
a targeted manner, and without compromising on high sustainability standards.  

II.  Boosting competitiveness beyond 2030 

Today, there is a broad consensus on the European model for inclusive economic growth, 
based  on  sustainable  competitiveness,  economic  security,  trade  and  open  strategic 
autonomy and fair competition, as a source of prosperity.  

Sustainable  competitiveness  builds  on  productivity  growth,  environmental  sustainability, 
macroeconomic stability and fairness. Economic security is the ability of the EU economy to 
withstand shocks and protect own interests, thanks to resilient and diversified supply chains 
and its well performing businesses. By pursuing an open strategic autonomy, the EU commits 
to open trade, while taking its responsibility in shaping a more sustainable and fairer world, 
building  its  own  capacities  to  increase  resilience  and  asserting  itself  against  coercive  and 
unfair practices.   

There  are  lessons  to  learn  from  the  European  Union’s  history.  Broad  community-level 
programmes  and  reforms  with  a  clear  competitiveness  dimension  such  as  the  Common 
Commercial  Policy  in  the  1950s,  and  the  Single  Market  Programme  in  the  1980s,  boosted 
economic activity and productivity. Stronger common EU-level action can spur prosperity 
and productivity again today.  

It is our European system of rights and values that attracts individuals and businesses to the 
EU, based on a strong European social model with equal opportunities for all and a market 

and  adoption  of  next-generation  materials  and  in  clean  tech.  Source:  McKinsey  securing-europes-
competitiveness-addressing-its-technology-gap-september-2022.pdf (mckinsey.com) 
4 COM(2019) 640 final 
5 COM(2021) 118 final 
6 OECD (2015). Data-driven innovation: big data for growth and well-being, OECD Publishing, Paris.   
7 COM(2023) 62 final 

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economy,  leaving  no  one  behind.  The  EU  leads  on  most  dimensions  of  social  inclusion8, 
supported  by  the  European  Pillar  of  Social  Rights.  Robust  institutions,  a  stable  macro-
economic  framework  including  a  well-functioning  labour  market,  sustainable  debt  situation 
and  a  policy  geared  to  stable  prices  will  continue  to  be  the  success  factors  of  the  EU’s 
competitiveness.  The  rule  of  law  guarantees  fundamental  rights  and  supports  a  stable, 
predictable and investment-friendly business environment with a guaranteed right of redress. 
In  the  same  vein,  high  quality  infrastructure  and  human  capital  with  a  well-educated  and 
trained workforce are among the EU’s assets.  

Within  the  European  Semester,  the  Commission  will  continue  to  provide  analysis  and 
propose  country-specific  recommendations  to  address  key  bottlenecks  for  sustainable  and 
inclusive growth in Member States, ensuring an effective reform momentum to put in place 
the right conditions to boost competitiveness and productivity, including as regards fiscal 
policies and macroeconomic stability.  

To  foster  the  future  of  Europe’s  competitiveness,  the  Commission  proposes  to  work 
along nine mutually reinforcing drivers. Accompanying these nine drivers and as a second 
leg of action, the Commission will work actively towards a growth enhancing regulatory 
framework.  

8  Income  inequality  as  measured  by  the  Gini  index  is  30,  compared  to  41  in  the  US  and  39.7  in  China.  The 
trends on overall income inequality are showing a steady decrease Social scoreboard indicators - European Pillar 
of Social Rights - Eurostat (europa.eu) 

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1.  A Functioning Single Market 

The Single Market accounts for 23 million businesses employing nearly 128 million people 
and  contributes  to  a  structural  increase  in  EU  GDP  by  around  9%9.  It  gives  businesses 
access to a customer base of more than 440 million people and is the basis to grow across 
borders and make economies of scale. 

The  Communication  ‘Single  Market  at  30’10  looks  at  its  achievements  and  potential, 
indicating where more can be done to bring down barriers and deepen the Single Market. 

Uncontestably, the Single Market is the core of the EU’s competitiveness and will remain so 
in the future. The Single Market is what makes the four fundamental freedoms of the Treaty a 
reality.  

the  Single  Market 

A  level  playing  field  in  the  Single  Market  and  globally  remains  a  priority.  For 
businesses, 
the  main  engine  of  growth,  productivity  and 
competitiveness. For consumers worldwide, it is a source of trust that the products purchased 
in  the  Union  are  safe  and  of  high  quality  and  produced  with  respect  of  high  labour  and 
environmental  protection  standards.  As  outlined  in  the  “Single  Market  at  30”,  correct  and 
timely  transposition  of  EU  law  is  of  critical  importance  to  ensure  that  Single  Market 
legislation achieves its intended effects. 

is 

A robust competition policy must remain at the heart of our efforts.  It is key to delivering 
innovation and lowering prices for EU consumers11. The Commission is currently conducting 
a  review  covering  more  than  20  sets  of  competition  rules  and  guidelines  across  all  its 
instruments, taking into account the significant developments of the past years, in particular 
digitalisation  and  new  ways  of  offering  goods  and  services,  and  to  reflect  the  increasingly 
interconnected  and  globalised  nature  of  commercial  exchanges.  It  has  also  introduced  new 
tools  to  counter  novel  threats  to  competition.  The  Digital  Markets  Act  ensures  that  large 
platform  companies  do  not  distort  fair  competition.  The  Foreign  Subsidies  Regulation 
protects  the  level  playing  field  for  all  companies  in  the  Single  Market  by  addressing 
distortions  caused  by  foreign  subsidies.  In  parallel,  the  Commission  will  continue  to  make 
full use of trade defence instruments and rules-based international trade against unfair trade 
practices like dumping and distortive subsidies. 

Further  integration  of  the  Single  Market,  as  outlined  in  the  ’Single  Market  at  30’ 
communication,  requires  bringing  down  barriers  and  concentrate  on  some  sectors.  For 
example, the Commission will work to further implement the ‘once only’ principle, including 
by means of one-stop-shops, in areas such as taxation, customs, and regulatory reporting12.  
Looking ahead, there is significant potential for enhancing and completing the Single Market 
for services.  

9  Legal  obstacles  in  Member  States  to  Single  market  rules,  Policy  Department  for  Economic,  Scientific  and 
Quality of Life Policies, Directorate-General for Internal Policies, European Parliament, November 2020 
10 Communication: The Single Market at 30, COM(2023)162 final. 
11 COM(2021) 713 final 
12 Initiatives such as the VAT one-stop-shop for e-commerce, which applies since July 2021; the proposal for a 
European  Single  Access  Point  (ESAP)  to  improve  public  access  to  entities’  financial  and  sustainability 
information,  under  negotiation  (COM(2021)  723  final)  or  the  once-only  technical  system  (OOTS)  accessible 
through the EU’s Single Digital Gateway. 

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Further broadening and deepening of the Single Market is the single most cost-effective 
measure to secure EU’s productivity. The level of integration for trade in both goods and 
services  has  doubled  in  the  last  30  years,  but  integration  in  the  area  of  services,  which 
account for around 70% of the EU’s GDP remains well below that for goods.  

To monitor this driver, the following KPI is proposed: 

KPI 

Source 

Target 

1  Integration in the Single Market 

(trade vs GDP) 

Single Market 
Scoreboard 

Up 

2  Conformity deficit 

Single Market 
Scoreboard 

0.5% 

2.  Access to private capital and investment  

Latest 
available data 
23.5% for 
goods (2021) 
6.75% for 
services 
(2021) 
1.3% (2021) 

Private investment represents more than 85% of total investment in the EU13. Investments 
needed  to  accelerate  the  green  and  digital  transitions,  enhance  resilience  and  boost  the 
Union’s  competitiveness  will  have 
the  private  sector.  
The current  size and depth  of  the EU capital  markets  is  inadequate to  support the  EU’s 
future growth. The EU’s stock market capitalisation is less than half of the United States, 
in percentage of GDP, and lower than that of Japan, China and the UK. Yet, Europeans 
save much more than Americans.    
The EU venture capital industry is 20 times smaller than that of the US14and most venture 
capital investments are concentrated in few EU Member States. 

to  primarily  come 

from 

A  competitive  economy  needs  an  efficient  access  to  funding.  While  public  support  plays  a 
crucial role as an enabler to mobilise investment, significant private financing is essential in 
view of the sheer scale of needs. Although access to finance has improved significantly in the 
EU  over  the  recent  years,  risk  capital  (in  particular  for  growing  and  scaling  up  businesses) 
continues to be scarce.  

Deepening the Capital Markets Union is  essential  to  unlock private investment,  diversify 
sources of funding and allocate capital efficiently across the EU. Growing the capital markets 
and  their  cross-border  integration  will  enable  companies  to  access  different  sources  of 
funding  and  investment  opportunities  when  they  are  starting  up  and  scaling  up  in  Europe. 
Moreover,  the  EU  must  overcome  fragmentation  to  ease  cross-border  investments.  This 
requires more aligned insolvency laws, simplified access to capital markets, particularly for 
smaller  companies,  deeper  engagement  of  retail  investors  in  capital  markets,  robust  market 
infrastructure, easy access to financial information and more integrated supervision.  

The  Commission  stands  ready  to  give  its  full  support  to  the  European  Parliament  and  the 
Council  to  adopt  its  proposals  quickly  and  step  up  the  level  of  ambition,  now  and  in  the 

13 General government investment as % of total gross fixed capital formation. GDP and spending-Investment by 
sector – OECD Data. 
14 If assessed based on flows (2021; Source: InvestEurope for the EU; the National Venture Capital Association 
for the US). 

5 

 
 
 
 
 
                                                 
future. All proposals under the Capital Markets Union Action Plan should be adopted before 
the end of this Commission’s mandate. The time to act is now. 

Completing  the  Banking  Union  is  also  crucial  for  the  competitiveness  of  the  EU 
economy. With 75% of corporate borrowing provided by EU banks, a strong Banking Union 
is  key  for  financial  stability.  The  Commission  will  follow  up  on  the  statement  of  the 
Eurogroup to review the bank crisis management and deposit insurance framework.15  

The  Capital  Markets  Union  and  the  Banking  Union  are  not  a  sectoral  policy  –  they 
underpin the health of the entire European economy.   

The  EU  tax  framework  is  also  key  in  supporting  growth  and  private  investment,  in 
particular  by  removing  tax  barriers  to  cross-border  investment.  As  announced,  the 
Commission  will  put  forward  proposals  for  an  EU-wide  system  for  withholding  tax  and  a 
new framework for income taxation for businesses in Europe (BEFIT).   

The regulatory framework for financial services has undergone substantial changes since 
the financial crisis to ensure stability and foster capital markets. While a stable framework is 
conducive to a business-friendly environment and legal certainty for the market participants, 
financial  services  legislation  should  harness  the opportunities  of  innovation  and  technology 
changes while addressing emerging risks, in line with the digital finance and retail payments 
strategies16.   

The EU has  established  itself as  a leader in sustainable finance internationally.  It  works 
towards the convergence of sustainability reporting standards at global level, notably through 
the  International  Platform  on Sustainable Finance.  The Commission  will seek to  streamline 
the implementation of disclosure obligations to the extent possible, while maintaining the EU 
ambition  in  terms  of  green  transition  and  providing  guidance  to  companies17.  Work  is 
ongoing  on  a  comprehensive  assessment  of  the  implementation  of  the  Sustainable  Finance 
Disclosure Regulation.  

Seed  public  funds  can  leverage  and  mobilise  private  investment.  The  European 
Innovation  Council  established  under  the  EU  Horizon  Europe  Programme  has  so  far 
delivered more than 112 ’centaurs’18 and more than 12 ’unicorns’ through facilitating access 
to finance and advisory services. The InvestEU Programme aims at mobilising over EUR 372 
billion  of  financing,  mainly  private,  focusing  on  priority  areas  and  the  Commission  has 
worked with the EIB and other implementing partners to design a product mix that responds 
to the current needs including through dedicated products in venture capital in early to growth 
stage  companies.  But  this  would  not  be  sufficient  to  cater  for  the  needs  of  the  future. 
Therefore,  the  Commission  is  assessing  how  the  overall  funding  for  InvestEU  could  be 
increased,  in  particular  for  the  period  covering  2024  until  2027.  In  addition,  a  future 
European Sovereignty Fund would have a major role to play to crowd in private investment 
in critical and emerging technologies for the green and digital transitions.    

15 Eurogroup statement on the future of the Banking Union of 16 June 2022 - Consilium (europa.eu) Eurogroup 
statement on the future of the Banking Union of 16 June 2022 - Consilium (europa.eu) 
16 COM/2020/591 final and COM/2020/592 final. For example, the Commission will propose an enabling 
framework for the potential issuance of a digital euro by the European Central Bank. 
17  The  Commission  has  already  provided  guidance  on  disclosure  obligations,  for  instance  in  relation  to 
Taxonomy,  and  will  provide  further  guidance  in  relation  to  the  Sustainable  Finance  Disclosure  Regulation 
before mid-2023 
18 Centaur or aspiring unicorns are designations for start-ups that have reached valuations of more than EUR 100 
million. Unicorns are start-ups that reached a valuation of more than EUR 1 billion. 

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Strong  private  investment  is  proof  of  faith  in  Europe’s  competitiveness.  Venture  capital 
complements  bank  financing  with  more  diversified  financing  models  for  businesses,  in 
particular young innovative companies. The EU must step up its efforts to offer opportunities 
at par with the other leading economies.  

To monitor this driver, the following KPIs are proposed: 

KPI 

Source 

Target 

3  Net private investment as a share 

of GDP 

4  Venture capital investment 

Single Market 
Scoreboard 
Single Market 
Scoreboard 

Up 

Up 

Latest 
available data 
3.2% (2021) 
2.6% (2020) 
0.48% (2021) 
0.03% (2018) 

3.  Public investment and infrastructure 

Public  investment  is  essential  for  promoting  competitiveness  through  investment  in  areas 
such as research and development, education and healthcare, for fostering a well-connected 
and seamless Single Market through investment in infrastructure, and for crowding in private 
investment. In 2022, public investment in the EU amounted to 3.2% of GDP. In 2021, public 
spending on education amounted to 4.8% of GDP. 

The public budgets of the EU together with its Member States provide citizens with a high 
level  of  public  services  and  infrastructure.  Quality  health  systems  and  an  educated  society 
prepared for the challenges of tomorrow are fundamental to the resilience of our economies. 

Cohesion  Policy  is  a  major  contributor  to  public  investment  at  EU  level  delivering  on 
commonly  agreed European priorities, driving economic convergence and resilience. Going 
forward, cohesion funds will continue to be relevant for the Union’s competitiveness, tapping 
into all regions’ potential and addressing their specific needs. 

The European economic governance framework needs to be urgently reformed to have a 
set of EU fiscal rules that fully takes into account the new economic and geopolitical reality. 
The  Commission’s  reform  orientations  aim  to  bring  together  the  fiscal,  reform  and 
investment commitments of each Member State within a common EU framework. Country-
specific  fiscal  trajectories  as  well  as  priority  public  investment  and  reform  commitments 
together  will  guarantee  sustainable  and  inclusive  growth  while  ensuring  sustained  and 
gradual debt reduction.   

Going  forward,  continued  and  increasing  public  investment  in  providing  large  scale 
decarbonised  infrastructure  is  key.  Increased  capacity  and  modernisation  of  the  energy, 
transport and connectivity infrastructure throughout the EU are necessary to support the 
growth of the industry and to benefit fully from the opportunities of the Single Market.  

Modernising  the  European  transport  infrastructure  will  enable  climate-resilient,  smart, 
safer  and  more  efficient  mobility  and  logistics  services  for  citizens  and  enterprises. 
Connectivity is crucial for cohesion, and even more so for Member States at the periphery of 
the Single Market. The EU should also continue playing a leading role to foster a global level 
playing field in aviation and the maritime sectors. 

For  these  infrastructures,  as  well  as  for  energy,  cross-border  and  multi-country  projects 
are of the essence. EU and Member States alike  need to simplify, accelerate and harmonise 

7 

 
 
 
 
 
 
digitalisation  and  the  regulatory  process  for  infrastructure  projects,  especially  for  cross-
border interconnections and bottlenecks. 

Space is increasingly becoming a critical enabler for the well-functioning of our economies, 
and  for  security  and  defence.  Space  has  multiple  synergies  with  the  defence  sector19. 
Exploiting them and further consolidating EU space flagships (Galileo, Copernicus and IRIS) 
will  allow  the  EU  to  achieve  its  geopolitical  and  strategic  objectives  (e.g.  border  defence, 
security, emergency management, reduction of dependencies), boost innovation, and enhance 
European economic growth. 

Public  procurement  can  stimulate  supply  chains  through  increasing  demand.  Used 
strategically,  focusing  not  only  on  price,  it  can  foster  security  of  supply,  sustainability  and 
increase  resilience  of  industrial  ecosystems.  The  Net-Zero  Industry  Act20  is  a  step  in  this 
direction.  It  should  also  become  easier  for  innovative,  sustainable  SMEs  or  for  consortia 
including  such  SMEs  to  participate  in  procurement.  When  possible,  tenders  should  be 
designed in a way that allows for SME participation, including in projects under the Global 
Gateway strategy. 

To  provide  high  quality  public  goods,  as  well  as  to  incentivise  crowding-in  of  private 
investments,  appropriate  levels  of  public  investment  is  needed.  Sustainable  public  finances 
and growth can ensure the required fiscal space. 

To monitor this driver, the following KPI is proposed: 

  KPI 
5  Public investment as share 

of GDP  

Source 
AMECO 
database 

Target  Latest available data 
Up 

3.2% (2022) 

4.  Research and Innovation 

The  EU  represents  about  one  fifth  of  the  world  highly  cited  publications,  patents,  and 
research and innovation, with less than 7% of the world’s population.  
The  EU  currently  invests  about  EUR  330  billion  per  year  in  research  and  innovation, 
corresponding to 2.26% of its GDP.  
In  2021,  three  key  sectors  accounted  for  73.6%  of  corporate  R&D  investment  in  the  EU: 
Automotive (31.3%), ICT producers and services (22,6%), and health industries (19.9%).21 
In 2021, the EU counted 69 unicorns against 169 in China and 470 in the US22. 
EU  R&D  investment  intensity  increased  from  1.8%  of  GDP  to  2.3%  of  GDP  over  2000-
202023, yet remains below the US (3.5%), Japan (3.37%), and South Korea (4.8%) in  
202124. 

Europe  remains  a  scientific  powerhouse  and  coordination  of  research  along  common 
priorities in the EU has improved. Yet, compared to its competitors, Europe underinvests in 
research  and  innovation.  Investing  in  innovation  today  translates  into  enhanced 
competitiveness  of  tomorrow.  For  the  EU  industry  to  remain  competitive,  it  needs  to 

19 EU Space Strategy for Security and Defence JOIN(2023)9 
20 COM(2023)161 final 
21 Data from the Industrial R&D investment Scoreboard.  
22 Science, research and innovation performance of the EU 2022. 
23 Data from ESTAT. 
24 Data from OECD. 

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accelerate the pace of innovation, notably for the green and digital transitions and the sectors 
that  are  also  shaping  the  economy  and  society  of  the  future.  The  EU  and  Member  States 
budgets  make  available  significant  funds.  However,  private  expenditures  on  R&D  are 
relatively  low  in  comparison  with  the  EU’s  global  peers.  Private  funding  on  a  bigger  scale 
need  to  flow  in  as  well.  In  addition  to  accelerating  funding,  business  conditions  should  be 
right  for  innovative  start-ups  and  SMEs  to  be  able  to  scale-up  and  remain  in  the  EU.  The 
European Innovation Council combines grants and equity and aims precisely at providing the 
right conditions to enable start-ups to scale-up without relocating in search of funding.   

In  order  to  increase  investment  in  research  and  innovation,  the  Commission  encourages 
Member  States  to  provide  general  tax-based  incentives  for  research  and  innovation 
activities.  Public-private  partnerships,  R&D&I  support  measures  including  under 
IPCEIs are key to de-risk innovation.  

While cohesion policy supports the convergence of less developed regions through support to 
research,  innovation  and  smart  specialisation,  the  EU  needs  all  its  regions  to  excel  in 
innovation. The  new  European  Innovation  Agenda  aims  at  accelerating  and  strengthening 
innovation  across the EU. This  is  particularly important  for  the areas of the future in clean 
technology,  biotechnology  and  digital,  marked  by  higher  labour  productivity  than  the 
traditional sectors25. The EU needs to tap into the potential of these technologies preparing its 
industry to be competitive beyond 2030  in order to lead, and not just follow, in these areas 
with high-growth-potential.  

Clean  technologies  are  the  center  of  the  green  transition  today  and  are  one  of  the  most 
promising areas where the EU can and should further develop its comparative advantage. The 
EU  remains  a  leader  in  clean  and  smart  production  technologies  and  should  particularly 
capitalise on its leadership in circularity and green high-value patents. It could build also on 
its strong position in the fields of advanced materials, technologies for climate neutrality in 
energy-intensive  industries,  and  transform  and  develop  the  automotive  and  transport 
industries. 

Next  to  clean  technologies,  biotechnology  can  offer  high-value  bio-based  solutions  for  a 
broad  range  of  uses  and  sectors,  such  as  health,  and  can  substitute  renewable  home-grown 
materials for fossil or extracted and imported materials. Concerning the blue biotechnology, 
collecting, processing and using data on the ocean and related human activity has potential to 
conquer global markets. A circular bioeconomy offers huge potential to explore substitution 
possibilities where natural resources are scarce.   

As the EU’s financing arm, the EIB Group boosts public investment to support research and 
development  of  innovative  projects  and  technologies  in  line  with  EU  priorities.  It  helps  to 
crowd  in  private  investors  by  providing  risk  finance  as  well  as  technical  and  financial 
expertise to innovative projects including under InvestEU.  

The  EU  has  made  too  little  progress  towards  the  target  of  spending  on  Research  and 
Development  as  percentage of GDP,  and based  on current  trends will  fall well short of  the 
3%  target  by  2030.  Even  greater  efforts  will  be  necessary  to  remain  competitive  beyond 
2030. While a high number of patents is proof of the creativity and innovation in the EU, the 
bringing to market can be helped with regulatory testbeds and funding support.  

25  For  example,  the  productivity  of  companies  investing  in  data-driven  innovation  and  data  analytics  grows 
approximately 5-10% faster than that of companies not investing (OECD: Data driven innovation: big data for 
growth and well-being, 2015).  

9 

 
 
 
                                                 
To monitor this driver, the following KPIs are proposed: 

KPI 

6  R&D intensity % GDP 

7  Number of patent 
applications 

5.  Energy 

Source 

Single Market 
Scoreboard 

Eurostat 

Target 

>3% 
beyond 
2030 
Up 

Latest available 
data 
2.26% (2021) 

67 713 (2021)  
65 925 (2020) 

From the peak of the gas price spike last August, gas prices have been trending downwards 
and  are  now  around  50  EUR/MWh,  comparable  to  those  observed  before  the  war  in 
January  2022.  However,  electricity  prices  for  business  and  consumers  in  the  EU  remain 
higher than in other parts of the world, being for instance twice as high as in the US26.  
In 2021, 21.8 % of EU’s gross final energy consumption was from renewable sources. In 
2022,  installed  capacity  (353  GW)  increased  by  16%  saving  around  11  bcm  of  gas 
equivalent in a year. 

To  maintain  its  competitiveness,  the  EU  requires  reliable  and  secure  supply  of  affordable 
energy and a well-integrated market for energy able to withstand disruptions. Energy prices 
are historically higher in the EU than in other regions of the world, and this gap has recently 
increased due to the Russian war of aggression against Ukraine. Higher energy prices than for 
some  of  the  global  competitors  will  persist  in  the  EU  for  a  certain  number  of  years.  The 
REPowerEU plan27 aims at increasing the energy independence of the EU and at accelerating 
the decarbonisation objectives of the European Green Deal. Several pieces of legislation are 
under  negotiation  or  have  been  recently  approved  to  increase  ambition  in  the  fields  of 
renewables  and  energy  efficiency  and  to  stabilise  markets  and  shield  consumers  from  the 
high energy prices. 

The  faster  roll-out  of  renewables  and  energy  efficiency  are  key  to  improve  our  economic 
fundamentals, lowering the energy prices, while securing our energy independence. This will 
require significant investment in energy generation, networks as well as industrial capacity in 
these sectors. The revision of the Electricity Market Design28 will enhance the incentives for 
private investments  in  renewables.  Following the Green  Deal  Industrial  Plan and subject  to 
approval  from  its  governing  bodies,  the  EIB  has  expressed  willingness  to  increase  its 
contribution  to  the REPowerEU Plan  from  EUR  30 billion  to  EUR  45 billion, which could 
leverage  over  EUR  150  billion  overall  of  investment  for  net-zero  industry  capacity  and 
deployment. 

In addition, the electrification of the economy requires the upgrade of the grid to support the 
integration of renewables and the digitalisation of the energy system. Energy storage will 
also  play  a  significant  role  in  ensuring  flexibility  and  security  of  supply  by  facilitating  the 

26 Energy prices, International Energy Agency (2022). In Q3 2022, electricity prices for industrial consumers 
were 192.59 USD/MWh compared to 94.22 USD/MWh in the US.  
27 COM(2022) 230 final 
28 COM(2023) 148 final and COM(2023) 147 final 

10 

 
 
 
 
 
 
 
 
                                                 
integration of renewable generation, supporting the grid, and shifting energy to the time when 
it is most needed.  

The EU has set ambitious targets for renewable energy generation and now has to meet them 
to  increase  energy  independence  and  progressively  reduce  the  cost  differential  with  other 
parts of the globe.  

To monitor this driver, the following KPIs are proposed: 

KPI 

8  Share of energy from 
renewable sources 

9  Electricity prices for non-
household consumers 

Source 
Eurostat 

Eurostat 

Target 
45% in 2030   21.77% (2021) 

Latest available data 

Down and 
then steady 

EUR 0.1604 per kWh  
(Semester 1 2022) 

6.  Circularity 

A circular economy, enabled by the technology revolution, is crucial for decoupling the EU’s 
economic growth  from  primary resource use. It  would also allow  Europe to  grow  resource 
productivity by up to 3% annually. This would translate into a GDP increase of 7% relative 
to business as usual, with additional positive impacts on employment and environment.29  

In 2021, the rate of circularity of material use in the EU was 11.7 %30. According to Eurostat 
estimates, the circular economy sectors accounted for almost 4,3 million jobs31 and a value 
added of around EUR 299 million in 202132. 

A  circular  economy  offers  a  major  opportunity  to  decrease  resource  dependence  and 
waste,  and  increase  resource  productivity,  employment  and  growth.  It  also  has  the 
potential to create a new range of services, circular business models with product-as-service, 
peer-to-peer  sharing,  on-demand  manufacturing  and  digital  solutions.  EU  policies  on  the 
circular  economy  support  the  EU’s  goal  to  reduce  its  trade  dependencies.  Products  that  are 
designed for repair, reuse and recycling and getting more value from material will be key to 
the  circular  economy.  Industrial  symbiosis,  when  the  waste  and  by-products  on  an  industry 
become raw materials for other, is another area of sustainable industrial growth.  

A well-functioning market for secondary material will be crucial in times of scarce resources. 
To  this  end,  the  Critical  Raw  Materials  Act33  will  incentivise  recycling  with  the  policy 
objective  to  supply  15%  of  the  EU  demand  from  recycled  critical  raw  materials.  This  will 
help strengthen the waste and circularity framework for such materials and promote material-
efficient recycling to secure a strong secondary market.  

29 Growth Within: A Circular Economy Vision For a Competitive Europe; McKinsey Centre for Business and 
Environment & Ellen Macarthur Foundation; June 2015 
30 Circular economy - material flows - Statistics Explained (europa.eu); https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Circular_economy_-_material_flows 
31 Data from Eurostat. 
32 Data from Eurostat. 
33 COM(2023)160. 

11 

 
 
 
 
 
 
 
                                                 
Common  rules  applicable  throughout  the  EU  make  it  easier  for  businesses  to  rise  to  the 
challenge. Once adopted, eco-design rules for sustainable products will boost resource and 
energy efficiency increasing the recuperation and recycling of materials from products at the 
end  of  their  life  cycle  and  avoiding  and  minimising  waste  production.  The  accompanying 
digital  product  passport  will  allow  consumers  and  businesses  to  easily  access  key 
information  on  energy  use,  recycled  content  durability,  reparability  and  recyclability  of 
products  in  the  EU.  The  materials  and  resource  intensive  sectors  identified  in  the  Circular 
Economy  Action  Plan34  will  be  prioritised  in  setting  future-proof  eco-design  rules  and 
upcoming rules promoting a right to repair will support competition in the repair sector. 

With  increasing  quantities  of  products  and  materials  recycled,  repaired  and  re-used, 
circularity  will  improve  sustainability,  spur  innovation,  support  job  creation,  lead  to  lower 
input  costs  for  EU  industry  and  reduce  dependencies  for  raw  materials,  including  critical 
ones.   
To monitor this driver, the following KPI is proposed: 

KPI 

Source 

Target 

10  Circular material use rate  Eurostat 

Double by 2030 
compared to 2020  
(Circular Economy 
Action Plan) 

Latest 
available data 

11.7 (2021) 

7.  Digitalisation 

Ranking as one of the largest industries, the ICT global market is forecasted to reach a size 
of EUR 6 trillion in 202335. The total value added of the EU’s ICT sector was over EUR 604 
billion in 2021, representing 4.9% of EU’s GDP.  
Despite the essential nature of the ICT industry for the competitiveness of many sectors, the 
EU share in the global ICT market has fallen from 21.8% in 2013 to 11.3% in 2022. In 2022, 
only  69%  of  SME  reached  a  basic  level  of  digital  intensity  and  8%  of  companies  used  AI 
technologies (2021)36. 

Digital technologies have a profound impact on the competitiveness of the EU economy 
as a whole, boosting efficiency and innovation.  Their adoption  and integration across the 
economy will be vital to  the overall competitiveness and productivity. At  the same time, to 
retain  industrial  leadership,  the  EU  needs  to  attain  a  leading  role  in  key  digital  technology 
‘verticals’,  from  artificial  intelligence  to  quantum  computing,  microelectronics  and  virtual 
reality, and to deploy digital infrastructures, from cybersecurity, 5G to cloud computing and 
data. 

Safe, secure and sustainable digital infrastructures are being set up across borders, in areas 
such  as  5G  networks,  satellite  connectivity  and  cloud  computing.  The  future  connectivity 

34 COM(2020) 98 final . The Commission is engaging with stakeholders34 to define the priorities for defining 
such market-shaping rules which will be reviewed regularly to keep pace with technological evolution. Public 
consultation on New product priorities for Eco-design for Sustainable Products 
35 ICT global market share by country 2022 | Statista 
36 Data from Eurostat. 

12 

 
 
 
 
 
 
 
                                                 
network will be a blend of transmission and computer data storage linked across all corners 
of the planet thanks to submarine cables and to our satellite networks. The EU needs to start 
planning and developing future connectivity.  

Artificial intelligence offers many new possibilities to boost competitiveness. To bridge the 
gap  from  lab  to  the  market,  together  with  Member  States,  the  Commission  is  co-funding 
testing and experimentation facilities for companies to test their latest AI-based technologies 
in  real-world  environments.  The  Commission  will  promote  the  potential  of  artificial 
intelligence applications also in public administrations.  
Building on the success of the European High Performance Computing Joint Undertaking37, 
the EU will accelerate research and innovation in quantum computing, communication and 
sensing,  which  will  have  decisive  impact  and  unleash  opportunities  in  different  application 
sectors  including  finance,  logistics,  and  electronic  communications,  as  well  as  national 
security  and  defence.  Semiconductors  are  already  critical  for  the  resilience  of  the  industry 
and  they  will  become  even  more  necessary.  The  European  Chips  Act38  will  support  the 
technological 
competitiveness  of 
sovereignty and ensuring security of supply. 

the  EU  semiconductor  ecosystem, 

increasing  EU 

Looking  ahead,  the  Web  4.0,  where  everything  will  be  seamlessly  interconnected,  will  be 
ground-breaking. Organisations and businesses are already investing in digital twins, which 
provide  accurate  digital  simulations  of  an  object.  They  will  enable  more  efficient  planning 
and prediction of needs, downtimes or prevent breakdowns. The Commission is developing a 
digital twin of the Earth (Destination Earth) to model and simulate natural phenomena, which 
will be available mid-2024. The digital twin of the Oceans is foreseen for the end of 2024. 
Other digital twins will follow, such as the urban digital twins or ‘virtual twin of the human’ 
as a ground-breaking aid to medical research (expected by 2025 at the earliest).  

legislative  framework  for  cybersecurity 

An increasingly connected world does not come without risks. Cybersecurity is essential for 
security  and  resilience.  The  EU 
is  being 
strengthened,  including  through  the  proposed  Cyber  Resilience  Act  that  aims  at  protecting 
connected  products  –  it  will  establish  high  common  standards,  which  will  also  benefit  the 
European cybersecurity industry globally. The Commission is also assisting SMEs to become 
more  cyber  resilient  through  the  Digital  Innovation  hubs.  Investments  in  research  and 
development of cutting-edge cybersecurity technologies and their deployment at all levels of 
the economy are a necessity and an opportunity for the European cybersecurity industry. 

Digitalisation is the backbone of future competitiveness and efforts must be made for the EU 
to catch up and lead in this key sector globally. The Digital Decade Policy Programme has set 
the targets to achieve by 2030. We aim for more than 90% of SMEs reaching a basic level of 
digital intensity and at least 75% of enterprises taking up cloud computing services, big data 
or AI technologies39. 

To monitor this driver, the following KPIs are proposed: 

37 Thanks to the EuroHPC, the EU now counts 8 supercomputers in operation, 2 of which are among the top 10 
most powerful supercomputers of the world.  
38  Proposal  for  a  COUNCIL  REGULATION  amending  Regulation  (EU)  2021/2085  establishing  the  Joint 
Undertakings under Horizon Europe, as regards the Chips Joint Undertaking. COM/2022/47 final. 
39 Decision (EU) 2022/2481 of the European Parliament and of the Council of 14 December 2022 establishing 
the Digital Decade Policy Programme 2030, OJ L 323, 19.12.2022, p. 4–26.  

13 

 
 
 
 
                                                 
KPI 

11  Digital intensity of 
Union SMEs  
12  Digital technologies 

adoption by 
companies  

Source 
Eurostat 

Target 
90% by 2030  69% (2022) 

Latest available data 

Eurostat 

75% by 2030  Cloud computing services  
41% (2021)  
Big data  
14.2% (2020)  
Artificial Intelligence  
7.9% (2021)  

8.  Education and skills 

With the green and digital transitions, more and more individuals will have to acquire new 
skills to keep up with technological developments in their own jobs,  or to take on jobs in 
other  sectors.  This  is  why  the  European  Pillar  of  Social  Rights  Action  Plan  sets  the 
headline target for at least 60% of all adults to participate in training every year by 2030, 
up from 37% in 2016 and for at least 78% of employment rate by the same year. 

Addressing skills shortages requires facilitating mobility by making it easier to recognise 
skills and qualifications across Member States and those of third country nationals. 

The  EU’s  high-quality  and  inclusive  education  and  training  systems  are  one  of  its  biggest 
strengths40, essential for EU competitiveness. However, Europe is already facing shortages of 
skilled  labour,  also  due  to  demographic  change.  A  workforce  with  the  requisite  skills  is 
essential  for  succeeding  in  the  twin  transitions,  enabling  companies  to  expand  in  growth 
sectors.  Therefore,  it  is  imperative  to  foster  not  only  the  supply  of  training  opportunities 
adapted  to  present  or  upcoming  needs,  but  also  recognition  by  businesses  and  public 
authorities of the skills and qualifications acquired, and sufficiently attractive conditions for 
current or potential workers to seize such opportunities to improve their skills and to practise 
them through high quality jobs. 

The 2020 European Skills Agenda41 is the EU’s roadmap to ensure the EU has the skilled 
workforce  it  needs  to  thrive  in  the  context  of  the  digital  and  green  transitions  and  boost 
economic  competitiveness  and  employment.  It  recognises  that  individuals  need  to 
continuously upskill but also reskill, as they are more likely to change jobs and even sectors 
throughout  their  careers.  This  requires  access  to  training,  but  also  guidance  and  validation 
services. The structural dialogue on digital education and skills aims to ensure future oriented 
skillset as a foundation for long-term competitiveness.  

The  2023  European  Year  of  Skills  will  put  the  spotlight  on  skills  to  help  workers  and 
companies,  in  particular  SMEs,  to  address  skills  shortages  in  the  EU.  It  will  promote  a 
mindset of reskilling and upskilling, helping people to get the right skills for quality jobs.   

40 The share of the population aged 25-34 who have successfully completed tertiary studies has increased from 
32.2% in 2010 to 41.2% in 2021, while the overall share of early leavers from education and training fell in the 
EU by 3.5 percentage points between 2011 and 2021 to 9.7%. Source: Early leavers from education and training 
- Statistics Explained (europa.eu) 
41 COM/2020/274 final 

14 

 
 
 
 
 
 
 
 
                                                 
One-stop-shops at national/regional level can facilitate individuals' access to all skills-related 
services. The Commission will continue to facilitate the exchange of best practices, building 
on existing tools,  such as Individual Learning Accounts. 

Further steps are needed to provide a sustainable solution to the skills shortages affecting the 
EU  economy,  promoting  a  ‘Skills-first’  approach.  This  can  be  particularly  beneficial  for 
people  from  disadvantaged  or  underrepresented  groups  as  this  approach  values  and 
recognises the actual skills instead of formal qualifications.  

Moving  toward  a  single  market  for  skills  requires  portability  of  skills  throughout  the  EU. 
The  Commission  will  encourage  making  full  use  of  the  provisions  of  the  Directive  on  the 
recognition  of  professional  qualifications,  in  particular  as  regards  common  training 
frameworks and common training tests. The Commission will also examine ways to facilitate 
validation  and  recognition  of  credentials,  including  qualifications  outside  the  scope  of  the 
Directive on the recognition of professional qualifications.  

We  need  to  tap  into  the  potential  of  women  and  the  young  with  measures  to  improve 
women’s participation rate in all sectors and at all levels and to promote the early integration 
of the young to the labour market. In addition, we need to encourage equal opportunities and 
participation  for  all,  including  for  people  from  disadvantaged  background,  minorities  and 
people  with  disabilities.  The  upcoming  initiative  to  update  the  Quality  framework  on 
traineeships  aims  to  address  the  latter.  The  integration  to  the  labour  market  of  people  with 
low  levels  of  educational  attainment,  and  other  under-represented  groups  will  be  overall 
beneficial to society and contribute to address the current shrinking of the EU’s workforce. 
Legal  migration  can  also  help  alleviate  the  most  pressing  labour  and  skills  shortages.  The 
Commission will present this year an initiative on the recognition of third country nationals’ 
skills and qualifications by combining systemic long-term measures to improve recognition, 
with short-term action to address some of the most imminent EU skills gaps. 

Technical  and manual work must be revalued and promoted, so that more professionals  are 
attracted to develop their careers in those fields. Vocational education and training (VET) 
needs  to  be  embedded  in  planned  economic  reforms  and  regional  and  sectoral  strategies  to 
ensure  timely  delivery  of  skills  for  professions  needed  in  the  future.  The  Centres  of 
Vocational Excellence EU initiative play an important role, working closely with businesses 
including  SMEs,  and  contribute  to  regional  development,  entrepreneurship,  innovation, 
industrial  clusters,  and  smart  specialisation  strategies.  The  Commission  also  continues  to 
support  apprenticeships  through  the  European  Alliance  for  Apprenticeships  (EAfA),  which 
has gathered over 1 million apprenticeships through 400 pledges in the past 10 years. More 
generally,  building  on  initiatives  such  as  the  2020  Council  Recommendation  on  VET,  both 
the  supply  of  educational  and  training  opportunities  and  the  attractiveness  of  such  learning 
opportunities to  potential learners  must be ensured. The Commission  will continue to work 
closely with Member States to ensure not only the quantity of training but also the quality of 
outputs and their adaptation to sectoral needs.  

Strong  education  systems,  availability  of  skilled  workforce  grounded  in  a  European  system 
with equal opportunities and quality employment are key to help businesses thrive and retain 
the best workforce. The KPI on participation in education and training will be available every 
second  year  to  monitor  how  workers  adapt  their  skills  to  changing  requirement.  A  strong 
trend for the ICT KPI will not only allow to track digital support in business, but also how 
women progress in this field.  

To monitor this driver, the following KPIs are proposed:  

15 

 
 
 
KPI 

13  Adult participation in 
education and training 
every year (female 
and male) 

14  Adult employment 

rate 

Source 
Adult 
Education 
Survey/Labour 
Force Survey 
Eurostat 

Target 
60% by 2030 

Latest available data 
37 % (2016) 

78% by 2030 

73% (2021) 

15  ICT specialists 

Eurostat 

(female and male) 

20 million by 
2030 

8.5 million 
19.1% women (2021) 

9.  Trade and open strategic autonomy 

Over  the  last  decades,  the  EU  has  drawn  economic  and  political  strength  from  being  a 
trading power, benefiting from the advantages of open trade not only in terms of goods, but 
also services and intellectual property protection. Two-thirds of the EU’s imports are made 
of  intermediate  inputs,  such  as  raw  materials,  parts  and  components  contributing  to  the 
production process. Long-term evidence from EU countries shows that a 1% increase in the 
openness of the economy is associated with an increase of 0.6% in labour productivity42. 

Open and diversified trade makes the EU more prosperous, competitive and resilient. In 
a shifting geopolitical environment, the EU needs to continue strengthening its supply chains 
and  reduce  trade  dependencies  on  critical  raw  materials43,  as  well  as  for  other  strategic 
products  and  technologies  where  the  EU  faces  dependencies  on  third  countries,  while 
building partnerships and tapping into external growth poles. Free, rule-based and fair trade is 
a prerequisite for the EU’s security and diversification of supply.  

The  EU  will  continue  working  to  open  markets  for  EU  companies  by  deepening  ties  with 
allies and trading partners. In particular, the Commission will continue to advance the EU’s 
network  of  Free  Trade  Agreements  (FTAs),  while  making  the  most  of  those  already  in 
place through effective implementation and enforcement. The EU will also continue engaging 
with the World Trade Organization including on its reform, and champion multilateral trade 
rules  as  the  most  effective  way  to  ensure  a  level  playing  field  for  economic  operators 
worldwide. 

The  EU  should  continue  leading  in  international  cooperation  to  the  mutual  benefit  of  all 
parties. The EU will continue to build partnerships, not only through trade agreements but 
also  through  other  arrangements  establishing  cooperation  with  partners  on  issues  of  mutual 
interest.  Global  Gateway,  the  EU’s  positive  offer  to  emerging  markets  and  developing 
economies  to  promote  the  twin  transitions  and  human  development,  is  key  in  this  regard. 
Furthermore, the EU is pursuing agreements on digital trade rules, with a focus on partners in 
Asia, building, where applicable, on digital  partnerships44 thereby promoting EU rights  and 
values. The EU-India Trade and Technology Council is another example of how to strengthen 
our international partnerships with strategic partners. Critical raw materials are  also an area 

42 European Commission, European Competitiveness Report 2007. 
43 COM(2023)165 final and COM(2023)160 final.  
44  In  this  context,  the  EU  will  engage  on  digital  trade  rules  with  South  Korea  and  Singapore,  as  well  as  seek 
cooperation on digital trade with ASEAN partners. 

16 

 
 
 
 
 
 
 
                                                 
where the EU will seek to expand its network of partnerships and cooperate in the framework 
of  a  future  raw  materials  club  bringing  together  consuming  countries  and  resource-rich 
countries to foster sustainable investment.  

The EU will also continue engaging ever more closely with the US, as a partner with shared 
strong  common  values.  The  EU  and  US  are  working  to  implement  a  new  Transatlantic 
Initiative for Sustainable Trade to advance shared objectives of achieving a green, sustainable 
trade and support the transition to low-carbon and resilient economy, in a mutually supportive 
manner.45 As agreed between President Biden and President von der Leyen on 10 March, the 
EU and US will deepen cooperation on diversifying critical mineral and battery supply chains 
and economic security.  

In deploying the above objectives, the EU and the Member States cannot afford to be solely 
reactive but is putting in place a coordinated framework for economic security that addresses 
the  risks  in  a  targeted  way,  while  safeguarding  the  benefits  of  open  trade  and  digital 
cooperation. The EU will also make a strategic use of available autonomous tools such as the 
trade  defence  instruments  (TDI),  the  Regulation  on  Foreign  Subsidies,  the  International 
Procurement Instrument, or the proposed EU Anti-Coercion Instrument. 

Reciprocal  market  access  and  removal  of  trade  barriers  (for  both  goods  and  services)  will 
bring more opportunities for trade, investment, innovation and productivity growth. 

To monitor this driver, the following KPI is proposed: 

KPI 

Source 

Target 

16  Trade with the rest of the 
world (as a share of GDP) 

Eurostat 

Up  

Latest 
available 
data 
21.5% (2021) 
20.2% (2020) 

III.  A growth enhancing regulatory framework 

The quality of public administration and that of the regulatory framework are crucial 
for the Union’s competitiveness. The EU has become a high standard-setter in policy areas 
such as consumer protection, competition, environment, and workplace safety, and provides 
regulatory stability and certainty. When preparing new regulation, the Commission relies on 
one  of  the  most  advanced  better  regulation  systems  ranked  top  by  the  OECD.  Yet, 
improvements are possible. 

The new competitiveness check ensures that the impact assessments of legislative proposals 
present  in  an  integrated  manner  the  expected  impacts  of  each  proposal  on  cost  and  price 
competitiveness,  international  competitiveness  and  the  capacity  to  innovate,  and  also  on 
SME’s  competitiveness.  To  complement  it,  the  Commission  will  work  on  how  to  better 
assess  the  cumulative  impacts  of  different  policy  measures  at  the  EU  level  with  a  view  to 
develop  a  methodology.  Furthermore,  the  ‘one-in,  one-out’  approach  aims  at  avoiding 
unnecessary burdens, where administrative costs, such as reporting obligations, certification 
or labelling are offset in the same policy area. The forthcoming Annual Burden Survey will 
show first promising results in that respect.  

45  Following  the  announcement  at  the  Ministerial  Meeting  of  the  EU-US  Trade  and  Technology  Council  in 
December 2022. 

17 

 
 
 
 
 
 
  
 
                                                 
Reporting obligations  are necessary  to  properly monitor and enforce legislation, however 
they  entail  costs,  particularly  for  SMEs.  Further  streamlining  reporting  obligations  and 
reducing administrative burden is a Commission priority46. To date, fitness checks47 have 
been  conducted  in  several  policy  areas  and  have  identified  potential  to  simplify  the 
requirements  and  reduce  reporting  costs.  The  Commission  will  make  a  fresh  push  to 
rationalize  and  simplify  reporting  requirements  for  companies  and  administrations  with 
first  proposals  for  each  of  the  green,  digital  and  economic  thematic  areas  before  the 
autumn. The aim should be to reduce such burdens by 25%, without undermining the related 
policy objectives. In light of the major legislative activity of this Commission mandate, this is 
an especially appropriate moment to intensify such work. Such measures have the potential 
not only to reduce red tape and simplify the regulatory environment but also to free up skilled 
resources,  benefiting  business  competitiveness.  The  same  can  apply  to  other  cross-cutting 
topics, such as simplifying/digitalising labelling rules. 

Well-designed  EU  rules  have  the  advantage  of  simplifying  life  for  citizens  and  businesses, 
especially  SMEs,  including  in  areas  where  they  replace  the  patchwork  of  27  national 
frameworks  with  a  single  set  of  rules.  The  Commission  will  further  develop  a  more 
through  greater  use  of  regulatory 
innovation-friendly  approach 
sandboxes/testbeds  which  allow  to  test  novel  solutions  in  a  controlled  environment  for  a 
limited amount of time. The Commission has already proposed such sandboxes for artificial 
intelligence and the net-zero industries and will propose to do so in the pharmaceutical sector. 
Building on this, the Commission will actively consider an extension to other areas/sectors.  

to  regulation 

The  Commission  will  also  consider  applying  wherever  possible  regulatory  models  which 
incentivise48 rather than prescribe, and therefore reduce compliance costs while achieving the 
same results.  

Competitiveness depends on renewal. The Commission will continue to regularly assess the 
EU  legislation  to  see  whether  it  remains  fit  for  purpose.  In  areas  subject  to  significant 
technological change, the Commission will explore making better use of sunset and review 
clauses  in  its  legislative  proposals  to  ensure  regulation  remains  future-proof.  Where  timely 
adoption  of  key  legislation  is  necessary  to  provide  stability  and  predictability  to  market 
players and other stakeholders, the Commission will seek a clear political commitment from 
the European Parliament and the Council as co-legislators.  

Once  legislation  is  adopted,  the  Commission  will  continue  to  assist  Member  States  in 
transposing EU law correctly, fully and on time. This dialogue will be pursued. Member 
States have an obligation to  apply correctly what  they have agreed as European legislators, 
including  refraining  from  the  still  frequent  addition  of  regulatory  or  administrative  burden 
beyond of what is required and placing of unnecessary burdens on business and citizens when 
transposing EU directives into national law (so-called ‘gold-plating’). Many of the practical 
benefits  of  harmonisation  in  the  Single  Market  can  be  lost  if  implementation  widely  varies 
across  Member  States.  Transposition  also  needs  to  be  timely,  to  minimise  the  risk  of 
uncertainty  as  regards  the  state  of  the  law,  especially  for  business.  In  this  respect,  Member 

46  For  example:  the  Regulation  (EU)  2018/1999  on  the  Governance  of  the  Energy  Union,  which  brought 
together energy and climate planning and simplified the monitoring of progress; the 2007 High-Level Group on 
Administrative Burden.  
47 For example, the Fitness check of Reporting and Monitoring of EU Environmental Policy, SWD (2017) 230, 
which reviewed 180 reporting obligations in 60 pieces of legislation. 
48 Through business or financial incentives. 

18 

 
 
 
 
                                                 
States,  regional  and  local  authorities  are  encouraged  to  carry  out  a  review  of  current 
processes for the transposition of EU legislation.   

A  strong  public  administration  is  indispensable  for  the  public  sector  to  keep  implementing 
EU  policies.  The  Commission  will  outline  several  actions49  to  deepen  and  enhance 
administrative cooperation, support authorities to improve the skillsets of civil servants, and 
facilitating  the  exchange  of  practices  and  staff  to  support  the  implementation  of  specific 
reforms, development of policy initiatives or the introduction of new management tools and 
approaches. 

This  KPI  reflects  the  extent  to  which  businesses  perceive  how  easy  it  is  to  comply  with 
government  regulation  and  administrative  requirements.  An  upward  trend  will  reflect  the 
extent  to  which  EU  and  its  Member  States  collectively  can  be  successful  in  ensuring  a 
legislative and administrative framework conducive to growth.  

To monitor this driver, the following KPI is proposed: 

KPI 

Source 

Target 

17  Ease of regulatory 
compliance 

Single Market 
Scoreboard 

Up  

Conclusion    

Latest 
available 
data 
3.64 (2021) 
3.33 (2018) 

In the face of strong global competition and a new geopolitical context, competitiveness can 
never  be  taken  for  granted.  It  deserves  political  attention  at  the  highest  political  level.  The 
renewed attention to long term competitiveness is about the European Union taking charge of 
its attractiveness and standing in the world economy. 

The EU is at a key moment for the next decade and it needs a joint push from businesses and 
policy  makers  to  put  Europe  on  the  right  path  to  the  future.  Businesses  have  long-term 
perspectives  and  need  predictable  and  competitive  framework  conditions  for  their 
investments. This is what will decide where the future economic growth will take place.   

This Communication highlights the main drivers for long term competitiveness. The drivers 
are interlinked and there is no  single answer to our current  challenges. In an ever-changing 
environment, these drivers will be measured on the basis of KPI, objectives, and monitoring 
frameworks  that  have  already  been  developed  in  sectoral  policies50,  the  Single  Market 
Scoreboard,  the  Digital  Decade  Policy  Programme,  and  the  European  Semester.  The 
Commission  intends  to  present  the  update  on  an  annual  basis  in  the  Single  Market  and 
Competitiveness Scoreboard. They can thus provide a combined measure of the state of EU 
competitiveness  for  the  March European Council  as well  as to  the  European Parliament,  in 
order to inform and prompt discussion on any necessary policy measures. They will also help 
guide the Commission in its daily work and the co-legislators in finalising legislation that has 
an impact on Europe’s competitiveness. Member States’ commitment to reforms and aligned, 

49 European Administrative Space in the EU (ComPAct) 
50The  sustainable  development  framework,  the  digital  economies  and  societies  index,  the  social  pillar,  the 
innovation scoreboard and many more provide a more granular view on related developments in the EU.  

19 

 
 
 
 
 
 
                                                 
strong messages to business  backed up by the required investment  and implementation  will 
allow to build future competitiveness on Europe’s strength. 

In  the  meantime,  the  Commission  will  actively  screen  its  regulation,  assess  if  it  is  fit  for 
purpose  and  work  towards  a  more  innovation-friendly  approach  to  regulation.  A  clear 
regulatory  framework,  support  for  key  innovation,  a  skilled  workforce  as  well  as  reduced 
reporting requirements where possible will enable a business environment for EU industry to 
grow in the long-term.  

The  European  Council  and  the  European  Parliament  are  invited  to  endorse  the  priorities 
identified in this Communication and take stock of progress made on a regular basis.   

20 

 
 
Annex – KPIs to monitor the competitiveness of EU industry 

No 

KPI 

Source 

Description  

Target 

Latest value 

1 

2 

3 

4 

5 

Integration in the Single 
Market   

Single Market 
Scoreboard51 

Trade flow in goods and services within the 
EU as a share of EU GDP. 

Up 

A Functioning Single Market 

Conformity deficit  

Single Market 
Scoreboard52 

It measures the number of directives 
transposed for which infringement 
proceedings for incorrect transposition 
have been launched by the Commission 

0.5% 

Net private investment as a 
share of GDP 

Single Market 
Scoreboard53 

Private investment is directly linked to the 
ease of access to private capital.  

Up 

Access to private capital and investment 

23.5% for goods (2021) 
21.5% for goods (2020) 
6.75% for services (2021) 
6.5% for services (2020) 
1.3% (2021) 

3.2% (2021) 
2.6% (2020) 
4.4% (2019) 

Venture capital investment  Single Market 
Scoreboard54 

Progress in this field is a good indicator of 
progress in access to private capital in 
general. Recent progress, but low in 
comparison at international level. 

Up 

0.48% (2021) 
0.03% (2018) 

Public investment as share 
of GDP  

AMECO 
database55 

Public investment and infrastructure 

Public investment plays a key role in 
developing and maintaining business 
supporting infrastructures like energy, 

Up 

3.2% (2022) 

51 Integration of goods and services| Single Market Scoreboard (europa.eu) 
52 Transposition | Single Market Scoreboard (europa.eu) 
53 Economic resilience | Single Market Scoreboard (europa.eu) 
54 Access to finance | Single Market Scoreboard (europa.eu) 
55 https://ec.europa.eu/economy_finance/ameco_dashboard 

21 

 
 
 
 
 
                                                 
6 

7 

8 

9 

R&D intensity % GDP 

Eurostat56 

Number of patent 
applications57 

Eurostat58 

transport or digital connectivity.  

Research and Innovation 

The total R&D expenditure (public and 
private).  

Patents reflect the capacity of an economy 
to exploit knowledge and indicate the 
competitiveness edge that can be obtained 
through innovation.  
Energy 

>3% 
beyond 
2030 
Up 

Share of energy from 
renewable sources 

Eurostat59 

Renewable energy generation (as proposed 
for the Renewable Energy Directive). 

45% in 
2030  

2.26% (2021) 
2.3% (2020) 
2.22% (2019) 
67 713 (2021) 
65 925 (2020) 
66 510 (2019) 

21.77% (2021) 
22.04% (2020) 
19.89% (2019) 

Electricity prices for non-
household consumers60 

Eurostat61 

Electricity price for industrial consumers 
gives a good indication of energy 
affordability. 

Down 
and then 
steady 

EUR 0.1604 per kWh  
(Semester 1 2022) 
EUR 0.0818  
(Semester 1 2020) 

10 

Circular material use rate 

Eurostat62 

Circularity 

The circular material use rate measures the 
share of material recovered and fed back 
into the economy in overall material use. 
Target from the Circular Economy Action 
Plan: Doubling compared to 2020. 

23.4% by 
2030  

11.7%% (2021) 
11.7% (2020) 

56 Database - Science, technology and innovation - Eurostat (europa.eu) 
57 Patent applications to the European Patent Office by applicants' country of residence, default view in the Eurostat dataset 
58 Statistics | Eurostat (europa.eu) Online data code: SDG_09_40 
59 Statistics | Eurostat (europa.eu) Online data code : NRG_IND_REN 
60 Band IC, consumption between 500 and 2000 MWh, default view in Eurostat dataset 
61 Statistics | Eurostat (europa.eu) Online data code : NRG_PC_205 
62 Statistics | Eurostat (europa.eu) 

22 

 
 
 
 
 
                                                 
11 

Digital intensity in SMEs 

Eurostat63 

12 

Digital technologies 
adoption by companies 

Eurostat64 65 66 

Digitalisation 

Share of EU enterprises with at least a 
basic level of digital intensity. A basic level 
entails the use of at least four of twelve 
selected digital technologies (such as using 
any AI technology; having e-commerce 
sales account for at least 1% of total 
turnover; etc.) as defined in the Digital 
Decade.  
Share of European enterprises that have 
taken up cloud computing services, big data 
and Artificial Intelligence . Target set in the 
Digital Decade. 

75% by 
2030  

90% by 
2030 

69% (2022) 

13 

Adult participation in 
education and training 
every year (female and 
male) 

Adult Education 
Survey/Labour 
Force Survey67 

Education and skills 
An increased participation in training will 
indicate good progress in the development 
of skills for sustainable competitiveness 
(target set in Porto Summit Targets, Social 
Pillar). 

60% by 
2030  

63 How digitalised are the EU’s enterprises? - Products Eurostat News - Eurostat (europa.eu) 
64 Statistics | Eurostat (europa.eu) Online data code : ISOC_CICCE_USE. Size of the enterprise : 10 persons employed or more  
65 Statistics | Eurostat (europa.eu) Online data code : ISOC_EB_BD. Size of the enterprise : 10 persons employed or more 
66 Statistics | Eurostat (europa.eu) Online data code : ISOC_EB_AI. Size of the enterprise : 10 persons employed or more 
67 This indicator will be implemented from 2022 onwards, with data available every two years 
68 Circabc (europa.eu) DG EMPL data from the Adult Education Survey, excluding ‘guided on the job training’  

23 

Cloud computing services 
41% (2021) 
23.9% (2018) 
Big data 
14.2% (2020) 
Artificial Intelligence 
7.9% (2021) 

37.4% (2016) 68 
Based on the adult 
education survey, which 
was carried out in the past 
once every 6 years. 

 
 
 
 
 
 
                                                 
15 

16 

17 

14 

Adult employment rate 

Eurostat69 

ICT specialists (female and 
male) 

Eurostat70 71 

An increased participation in the labour 
market implicates less labour shortages, 
enhancing sustainable competitiveness 
(target set in Porto Summit Targets, Social 
Pillar). 
This indicator, one of the targets of the 
Digital Decade, measures progress towards 
a well dimensioned workforce specialised 
in the development and deployment of 
digital technologies. 

Trade and open strategic autonomy 

78% by 
2030 

73% (2021) 

20 
million 
by 2030  

8.5 million72 (2021) 

Percentage of women 
19.1% (2021) 
17.8% (2019) 

Trade with the rest of the 
world (as share of GDP) 

Annual Single 
Market Report73 

Trade flow in goods and services with the 
rest of the world as a share of EU GDP. 

Up 

21.5% (2021) 
20.2% (2020)74 

Ease of regulatory 
compliance 

Single Market 
Scoreboard75 

Regulatory burden 

Business perception by replying to the 
question: "In your country, how easy is it 
for companies to comply with government 
regulation and administrative requirements 
(e.g. permits, reporting, legislation)? (1 = 
Overly-complex; 7 = Extremely easy)" in 
the survey for the Global Competitiveness 
Index of the World Economic Forum.  

Up 

3.64 (2021) 
3.33 (2018) 

69 Statistics | Eurostat (europa.eu) Employment and activity by sex and age - annual data. Online data code: LFSI_EMP_A.  
70 Statistics | Eurostat (europa.eu) Employed ICT specialists, percentage of total employment. Online data code: ISOC_SKS_ITSPT 
71 Statistics | Eurostat (europa.eu) Employed ICT specialists by sex. Online data code: ISOC_SKS_ITSPS 
72 Estimates. Base for calculation: 189,7 M people employed in 2021 Employment - annual statistics - Statistics Explained (europa.eu) 
73 ASMR 2023.pdf (europa.eu) Figure 1 
74 World trade in goods and services - an overview - Statistics Explained (europa.eu) 
75 Responsive administration and burden of regulation | Single Market Scoreboard (europa.eu) 

24