COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a more resilient, competitive and sustainable Europe
Date: 2023-09-27
Institutions: European Commission, Secretariat-General
Subjects: EU energy policy, EU growth strategy, European security, climate change policy, competitiveness, digital transformation, economic development, investment, single market, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 27.9.2023  COM(2023) 558 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a more resilient, competitive and sustainable Europe      
 
 
1.  Introduction  

Russia’s war of aggression against Ukraine has shaken the rules-based order and further 
accelerated  tectonic  shifts  in  an  evolving  geopolitical  and  economic  environment, 
requiring  an  urgent,  coordinated  and  sustained  policy  response  across  all  areas.  The 
urgent  fight  against  climate  change  has  brought  renewed  competition  for  resources  and  a 
technological  and  industrial  race  in  clean  tech,  while  the  COVID-19  pandemic  had  already 
exposed the fragility of supply chains and the need for more resilience.  

The EU has reacted promptly. Confronted with growing instability, strategic competition and 
security threats, the Versailles Declaration of 11 March 20221 committed the EU to take more 
responsibility for its security and to take further decisive steps towards building our European 
sovereignty, reducing our dependencies and designing a new growth and investment model for 
2030. It set out a wide-ranging, collective agenda to enhance Europe’s capacity to contribute 
to  both  regional  and  global  security.  The  EU  has  adjusted  its  policies  and  accelerated  their 
implementation,  while  remaining  committed  to  its  long-term  priorities.  These  include  the 
European Green Deal as the EU’s sustainable growth strategy, a digital transition in keeping 
with our values, as well as the need to enhance the EU’s economic and social resilience and 
preparedness for future shocks. 

The EU continues to stand united with Ukraine for as long as it takes. It has mobilised a 
total  of EUR 81 billion in  military, humanitarian, and financial assistance to  Ukraine while 
welcoming those fleeing from Russia’s war of aggression. Since the start of the war, the EU 
has  adopted  eleven  sanctions  packages,  targeting  critical  sectors  funding  the  Russian  war 
machine in addition to freezing the assets of around 1800 individuals and companies. The EU 
is firmly committed to ensuring that Russia is held accountable for its crimes, including the 
crime of aggression against a sovereign state. With a view to supporting Ukraine’s recovery 
and reconstruction, the EU is contributing substantially to boost the country’s resilience.  

In light of the rising geopolitical tensions and the technological transformation, the Union 
has embarked on a new approach to better protect its economic, security and strategic 
interests. In close cooperation with the private sector, and building on its research prowess, 
the EU is taking steps to de-risk and address vulnerabilities in the EU economy across a number 
of  key  sectors,  by  promoting  the  resilience  of  its  industry,  diversifying  and  building 
partnerships with third countries.2  

To  deliver  on  Europe’s  strategic  priorities  and  address  future  challenges,  significant 
additional investment will be needed. While most of the funding will need to come from the 
private  sector,  public  investment  has  an  important  role  to  play.  The  EU  budget  has 
demonstrated its value in addressing these unprecedented challenges through significant and 
rapid redeployments. However, the scope for such flexibility has been exhausted. While the 
future public and private investment needs are much greater, the targeted adjustments proposed 
in June 2023 are the essential minimum to safeguard the EU budget’s ability to deliver in the 
immediate future.  

1 20220311-versailles-declaration-en.pdf (europa.eu) 
2 JOIN (2023) 20 final. 

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18 months after the Versailles Declaration, it is time to take stock and look to the future. 
Taking into account the European Council Conclusions of March 2023,3 this Communication 
summarises what has been achieved to promote  and build a more resilient, competitive and 
sustainable economy, protect EU citizens and guarantee their well-being. The Communication 
provides a contribution to the forthcoming leaders’ debate in Granada on the future-oriented 
approach to reinforce the EU’s open strategic autonomy and on priority policy objectives for 
the EU in the years ahead.  

2.  A concerted approach to boost the EU's resilience and sustainable competitiveness  

The EU has responded to the multiple crises since Russia’s full-scale invasion of Ukraine 
in a decisive, timely and united manner. It has mobilised its collective strength and resolve 
in  an  unprecedented  way,  expanding  the  boundaries  of  what  it  had  been  considered  to  be 
capable of. However, important challenges remain. 

2.1. Bolstering our defence capabilities and building lasting peace in Europe 

Since the Versailles Summit, the EU has taken bold steps to further develop its defence 
dimension  and  bolster  Europe’s  defence  capabilities.  The  Union  thereby  responded 
decisively  to  the  pressing  defence  needs  generated  by  Russia’s  war  of  aggression  against 
Ukraine. With the Strategic Compass for Security and Defence4, the EU has taken action to 
strengthen its  capacity as a security provider,  while ensuring complementarity  with  NATO. 
Progress was made across all dimensions of the Compass – act, secure, invest and partner. In 
this framework, the Commission and the High Representative respectively play an important 
role through initiatives spanning materials, technologies, infrastructure and industrial support, 
as well as fast-emerging challenges in the domains of land, space, maritime and cyber.  

The EU has continued building and expanding on key security partnerships. In particular, 
the  EU–NATO  strategic  partnership  has  been  substantially  reinforced  with  the  signing  of  a 
third  Joint  Declaration  in  January  2023.  New  cooperation  areas  include  emerging  and 
disruptive technologies, climate and defence, as well as space. The EU and NATO have also 
launched an EU–NATO Task Force on Resilience of Critical Infrastructure, which delivered 
recommendations in June 2023.5 

Important steps have been taken related to the provision of military aid, joint defence 
procurement and supporting ammunition production with the EU budget. The scale and 
nature  of  the  EU’s  unwavering  support  for  Ukraine  are  unprecedented.  Military  support, 
provided through the European Peace Facility and by the Member States directly is now about 
EUR 25 billion. Inevitably, massive and sustained donations have opened up critical gaps in 
Member  States’  defence  stockpiles.  Building  on  the  May  2022  Defence  investment  gaps 
analysis6, legislative and coordination initiatives have been taken to promote joint procurement 
of urgently needed military equipment.7 The Council agreed in March 2023 on a three-track 
approach to speed up production, joint procurement and delivery of artillery ammunition and 

3 EUCO 4/23. 
4 EEAS (2022), A Strategic Compass for Security and Defence. 
5 NATO-EU Task Force (2023), Final Assessment Report. 
6 JOIN(2022) 24 final. 
7 Defence Joint Procurement Task Force and the European Defence Industry Reinforcement through common Procurement 
Act (EDIRPA), which should enter into force this year with a budget of EUR 300 million. 

2 

 
 
 
missiles to Ukraine.8 To ramp up the existing production capacity, a new legal instrument, the 
Act in Support of Ammunition Production (ASAP) with a budget of EUR 500 million, entered 
into force in July 2023. 

EU  defence  initiatives  remain  crucial  to  strengthening  defence  cooperation  among 
Member  States.  The  continuing  implementation  of  the  European  Defence  Fund  (EDF)  is 
boosting innovation and cooperative approaches in the EU’s defence industry. To date, more 
than EUR 3 billion have been invested into tomorrow’s defence technologies and systems. In 
2023, another EUR 1.2 billion from the EDF will go into projects in critical defence domains, 
such  as  space  situational  awareness,  countering  hypersonic  missiles  and  the  prototype 
development of a European patrol corvette. With the EU Defence Innovation Scheme, the EU 
also supports small and medium-sized enterprises, including start-ups and other non-traditional 
players, in the defence industry ecosystem.  

However, more needs to be done to strengthen the European defence technological and 
industrial base, including with more investments. The Commission proposal for the mid-
term review of the Multiannual Financial Framework foresees an additional EUR 1.5 billion 
for the EDF as part of the Strategic Technologies for Europe Platform (STEP). In parallel, the 
Commission  will  present  a  European  Defence  Industrial  Strategy  to  prepare  the  future 
framework  for defence cooperation, drawing on the experience of EDIRPA and ASAP and 
identifying  regulatory,  programming,  policy  coordination  and  other  levers  to  increase  our 
defence readiness.  

Efforts will need to continue to boost military mobility throughout the EU and address 
cyber and hybrid threats. The new Military Mobility Action Plan 2.09 broadens the scope of 
work  in  this  crucial  area.  EUR  790  million  have  been  allocated  to  dual-use  infrastructure 
projects in 2023. As a result, we will have fully used the dedicated EUR 1.69 billion budget 
from  the  Connecting  Europe  Facility10  military  mobility  envelope.  Military  mobility 
throughout the EU will require continued attention going forward. In parallel, the joint proposal 
for an EU Policy on Cyber Defence11 aims to help the EU and Member States to better protect, 
detect,  deter  and  defend  against  cyber-attacks.  The  EU  has  also  recently  revised  its  Cyber 
Diplomacy Toolbox12. Given the vital contribution of EU sanctions to securing a just peace, 
the  Commission  contributes  to  a  uniform  and  effective  implementation  across  the  Union, 
through  extensive  guidance  and  outreach;  information  exchange  and  tailored  support  to 
enforcement authorities; and coordination with third countries to tackle circumvention. 

Disinformation  and  foreign  interference  are  a  core  part  of  hybrid  threats  against  the 
Union, especially as Europeans will go to the polls in June 2024. Actions will be needed at 
all levels to quickly and concretely react to information manipulation, along with the support 
of free media and improving  digital literacy. The Commission  and the High Representative 
have worked with  Member States on the  Toolbox to  counter hybrid threats,  the Toolbox to 

8 In this context, the European Defence Agency has set up a project for collaborative procurement of ammunition. 
9 JOIN(2022) 48 final. 
10 PE/52/2021/INIT. 
11 JOIN(2022) 49 final. 
12 10289/23  

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counter Foreign Information Manipulation and Interference, and are currently working on the 
future Hybrid Rapid Response Teams.13  

Important initiatives were launched for space, which is crucial not only for our societies 
and economies, but also for our security and defence. The 2023 European Space Strategy 
for Security and Defence14 aims to enhance the resilience of the EU space infrastructure and 
space capabilities, the EU’s response to  space threats  and the use of space  for security  and 
defence, while promoting partnerships for responsible behaviour in outer space. The ongoing 
implementation of the 2023-2027 Union Secure Connectivity Programme15 ensures the long-
term,  worldwide  availability  of  uninterrupted  access  to  secure  and  cost-effective  satellite 
communication services. Furthermore, the EU Approach to Space Traffic Management16 helps 
to provide for the safety and resilience of the EU’s and Member States’ space assets. Before 
the end of the mandate, the Commission will put forward a proposal for an EU Space Law.  

Russia’s war of aggression against Ukraine also underscores the importance of the EU’s 
enlargement, showing that the European project offers hope to many for a life in peace 
and freedom. In June 2022, the European Council granted a European perspective to Ukraine, 
Moldova and Georgia. The status of a candidate for accession has been granted to Ukraine, 
Moldova as well as Bosnia and Herzegovina, while accession negotiations were launched for 
Albania  and  North  Macedonia.  The  EU  continues  providing  assistance  to  all  candidate 
countries  on  their  path  to  full  membership  and  will  assess  the  progress  made  so  far  in  its 
upcoming annual Enlargement Package. It has taken further actions to ease Ukraine’s access 
to the Single Market, based on the revised Priority Action Plan for enhanced implementation 
of the EU-Ukraine Deep and Comprehensive Free Trade Area, including by bringing Ukraine 
into  the  EU  free  mobile  roaming  area  and  into  the  Common  Transit  Convention  and  by 
providing vital physical links with world markets through the Solidarity Lanes. Ukraine was 
speedily  integrated  into  continental  Europe’s  transport  networks  and  synchronised  with  its 
electricity system. We also need to ensure that the Union, including its policies and institutions, 
is prepared to welcome new members. 

2.2. Enhancing Europe’s energy security and tackling the climate crisis 

Since the outbreak of the war, the EU has severely weakened the grip that Russia had on 
our  economy  and  energy  supply  through  united  and  determined  action.17  In  light  of 
Russia’s use of energy as a political and economic weapon, we acted as a Union to reduce our 
dependence  on  Russian  fossil  fuels  and  strengthen  our  energy  security  while  continuing  to 
address  the  climate  crisis.  The  emergency  measures  adopted  in  2022  made  it  possible  to 
weather the storm by reducing demand and addressing affordability and supply.18 We also took 
action to enhance the resilience of the EU’s critical infrastructure and critical entities, including 

13 A joint report by the Commission and the Centre of Excellence for Countering Hybrid Threats provides for the first time a 
comprehensive  framework  to  increase  resilience  against  hybrid  threats:  Hybrid  Threats:  A  Comprehensive  Resilience 
Ecosystem, EUR 31104 EN, Publications Office of the European Union, Luxembourg, 2023, ISBN 978-92-76-53292-7. Other 
workstreams include actions to address the climate and security nexus (JOIN (2023) 19 final) and in the field of maritime 
security (JOIN (2023) 8 final). 
14 JOIN/2023/9 final. 
15 PE/65/2022/REV/1. 
16 JOIN/2022/4 final. 
17 The 2023 State of the Energy Union Report will further elaborate on how the EU reacted towards the unprecedented energy 
crisis and reflect on remaining challenges. 
18  These  included  the  Gas  Demand  Reduction  Regulation,  the  Regulation  to  address  high  energy  prices,  the  Solidarity 
Regulation, the Market Correction Mechanism and the Permitting Regulation. 

4 

 
 
 
of crucial services in the energy sector, such as electricity production and energy storage. We 
must  maintain  the  broad  recognition  that  the  energy  transition  is  vital  and  urgent  for  our 
sovereignty and competitiveness as well as to address the climate emergency.  

The  EU  has  capitalised  on  its  collective  strength  to  reinforce  ties  with  international 
partners and diversify energy supplies. It has built on existing relations and established new 
ties with reliable partners across the world, allowing the EU to increase its gas imports from 
these  partners  significantly,  while  cutting  its  dependency  on  Russian  fossil  fuels.  Today, 
Norway is the EU’s main gas supplier and the United States is its main supplier of liquefied 
natural gas. Since 2022, the EU also struck agreements with further countries, amongst which 
Egypt,  Israel,  Japan,  Kazakhstan,  Namibia,  Argentina,  Uruguay  and  Ukraine,  strengthening 
energy partnerships to adapt to the new geopolitical reality. With the new EU Energy Platform, 
the EU is coordinating gas demand on global markets to avoid Member States outbidding each 
other. By leveraging its political and market weight, the EU is improving the security of supply 
for consumers and ensuring a high level of competition for supply. At the same time, and most 
notably through Global Gateway, the EU is supporting low- and middle-income countries in 
their  twin  transition  and  energy  access.  The  EU  is  also  engaged  in  Just  Energy  Transition 
Partnerships through G7. 

With a view to becoming climate-neutral by 2050, the EU is committed to reducing its 
reliance on fossil fuels and massively accelerating the deployment of renewable energy. 
Thanks to the Commission’s REPowerEU Plan19, the EU already diversified a significant part 
of its energy supply away from Russia, reducing Russian pipeline gas from 50% of total gas 
imports in 2021 to less than 10% in 2023 so far. Oil imports from Russia have dropped from 
27% of total oil imports to 6% while coal imports are now at zero, down from 46% of total coal 
imports in 2021.  In view of the EUR 210 billion of additional investments needed between 
2022 and 2027 to deliver on REPowerEU, the Commission is helping Member States make 
optimal  use  of  the  existing  Recovery  and  Resilience  Facility  (RRF).20  The  European 
Investment Bank topped up REPowerEU with an additional EUR 45 billion in loans and equity 
financing, allowing for EUR 150 billion of investments until 2027. In 2022, Member States put 
in  place  a  temporary  framework  to  speed  up  permitting  processes  for  renewable  energy 
projects. The revised Renewable Energy Directive21 introduces rules enabling Member States 
to establish faster and simpler permitting rules on a permanent basis and targeting an increase 
of the share of renewable energy in the EU’s overall energy consumption to 42.5% by 2030, 
giving legal certainty to industry on the path to net-zero.  

The  EU  took  coordinated  action  to  increase  preparedness  for  the  winter  and  shield 
consumers from high energy prices, but the risk of price increases remains. Thanks to the 
swift agreement on the Gas Storage Regulation22, Member States achieved a gas storage filling 
level of over 95% before the winter 2022/2023, exceeding the agreed target of 80%. As Europe 
enters the next winter, gas storages were already filled above 90% more than two months ahead 
of  the  November  target  and  European  traders  have  started  storing  gas  in  Ukraine,  further 
strengthening our preparedness. In the year from August 2022, the Member States reduced gas 

19 COM/2022/230 final. 
20 At the time of the publication, 21 Member States have formally submitted REPowerEU chapters to the Commission of 
which 4 have been adopted. 
21 PE/48/2018/REV/1. 
22 PE/24/2022/INIT. 

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demand by 17%, exceeding the requirements under the Demand Reduction Regulation. Against 
the background of high energy prices, the Commission took measures to enable Member States 
to use the flexibility foreseen under State aid rules to support European industry on a targeted 
and temporary basis, as well as to temporarily intervene, under Article 122 TFEU measures, in 
retail price regulation and to redistribute windfall profits from energy companies. The market 
correction  mechanism  adopted  as  an  emergency  measure  aims  to  shield  companies  and 
consumers from any possible episodes of excessive gas prices. As price pressures eased, the 
focus shifted to the phasing out of national fiscal measures introduced to protect households 
and firms from the energy price shock.23 In 2023 and beyond, all actors should monitor energy 
markets and - drawing on the experience, the tools and the guidance that the EU has put in 
place - remain prepared for renewed efforts to secure the supply of energy and protect the most 
vulnerable in the society if needed. In this context, reduced structural demand for all energy 
sources via energy efficiency will continue to be a goal for the EU.24 As we head, much better 
prepared, into a new winter season, there is still no place for complacency, in particular given 
the still higher than targeted overall inflation rate. 

The remaining bottlenecks should be addressed as a matter of priority. The reform of the 
electricity market design will further facilitate the integration of renewable energy and ensure 
access to affordable renewable and non-fossil electricity. Co-legislators should conclude the 
inter-institutional  negotiations  as  soon  as  possible.  The  EU  needs  to  improve  energy 
interconnections in the Single Market and upgrade its grids. To this effect, the Commission is 
working on a set of actions to help Member States to expand and upgrade networks, making 
them  fit  for  the  growing  share  of  renewables  in  the  electricity  mix.  Member  States  should 
swiftly implement the simplified permitting rules to accelerate grid roll-out. The diversification 
away from Russian nuclear fuel is producing first results. 

The  EU  continues  to  support  the  long-term  competitiveness  of  its  renewable  energy 
industry in the global race to net-zero. Under the Fit-for-55 package, the Innovation Fund 
was  strengthened  to  support  innovative  renewable  energy  generation  alongside  other  low-
carbon technologies and processes. The Hydrogen Bank is being finalised and the Commission 
will launch the first pilot auction for European renewable hydrogen production in November. 
Our efforts to fight the global climate crisis will reach a new milestone with the launch of the 
world’s first carbon border adjustment mechanism. 

2.3. Building a more robust and sustainable economic base 

The EU has continued to build a more competitive, circular and resilient economic base 
that is fit for the fair green and digital transitions, while tapping into the opportunities of 
open  trade  and  investment  and  remaining  socially  inclusive.  In  this  context,  the  Single 
Market needs further deepening and has to continue adapting to the changing environment and 
boost  the  EU's  long-term  sustainable  competitiveness  and  productivity,  while  preserving 
cohesion  and  a  level  playing  field.  In  ‘The  Single  Market  at  30’  Communication25,  the 
Commission has renewed its commitment to completing the Single Market in cooperation with 
all levels of governance and all stakeholders, focusing specifically on enforcing existing Single 

23 Communication from the Commission to the Council, Fiscal policy guidance for 2024, COM(2023) 141 final. 
24 Cf. the ambitious agreement on the recast Energy Efficiency Directive and the upcoming recast Energy Performance of 
Buildings Directive. 
25 COM(2023) 162 final. 

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Market  rules  and  removing  Member  State-level  barriers  that  may  hamper  investment,  in 
particular in services. To this effect, a High-Level Report on the future of the Single Market is 
being prepared by former Italian Head of government Enrico Letta, in conjunction with the 
Council Presidencies and the Commission, and is to be presented to the European Council in 
March 2024. Meanwhile, the Single Market Programme and industrial alliances26 are helping 
to build stronger and more diverse connections between relevant actors in value chains within 
and  beyond  the  EU.  In  the  event  of  future  emergencies,  the  Single  Market  Emergency 
Instrument27  will  help  preserve  the  free  movement  of  goods,  services  and  persons  and  the 
availability of essential goods and services, to the benefit of citizens and businesses across the 
EU.  

In  follow-up  to  the  long-term  competitiveness  strategy28,  the  Commission  is  taking 
further  measures  to  reinforce  the  drivers  of  the  EU’s  competitiveness.  It  will  build  on 
success stories, such as Horizon Europe, to enhance innovation in Europe. The Commission 
will report annually on the evolution of key performance indicators set out in this strategy, such 
as for 3% of GDP to be invested in research and development, and has requested former Italian 
Head  of  government  and  ECB  President  Mario  Draghi  to  prepare  a  report  on  the  future  of 
European competitiveness.  In the  coming months, the Commission  will come forward with 
further  proposals  to  rationalise  and  reduce  reporting  requirements  for  companies  and 
administrations in green, digital and economic thematic areas, with the ultimate aim of reducing 
such  reporting  burdens  by  25%,  without  undermining  the  related  policy  objectives.  The 
recently adopted SME Relief Package, with a focus on improving the business environment in 
terms of payments, tax compliance and regulatory burden, will make it easier for SMEs to set 
up  and  expand  their  business.  Alongside  the  SME  Relief  package,  the  Commission  also 
adopted a proposal for ‘Business in Europe: Framework for Income Taxation’ to simplify tax 
rules and reduce tax compliance costs for groups of companies in the EU. The Commission has 
also proposed far-reaching reforms of the EU Customs Union to address unfair competition 
and to ensure compliance with high health, safety and environmental standards.  

The  war  has  exacerbated  pre-existing  risks  to  our  economic  security.  The  European 
Economic Security Strategy29 aims to minimise such risks to resilience of supply chains and to 
critical  infrastructure  as  well  as  risks  of  technology  security  or  technology  leakage,  and  of 
weaponisation of economic dependencies in the context of increased geopolitical tensions and 
accelerated technological shifts. The Strategy focuses on de-risking, while ensuring that the 
EU continues to reap the benefits of economic openness, working together with partners around 
the world.  

The  EU  continues  to  pursue  an  ambitious  and  robust  trade  policy  while  adjusting  to 
increased geopolitical instability and fragmentation and to the climate emergency. The 
EU  seeks  stability  in  international  trade  by  supporting  the  rules-based  system  and  leading 
efforts to reform the WTO. It builds resilience and creates new opportunities by developing its 
network  of  trade  agreements30  and  by  deepening  partnerships  through  flexible  forms  of 
engagement with third countries, such as the Trade and Technology Councils with India and 

26 https://single-market-economy.ec.europa.eu/industry/strategy/industrial-alliances_en 
27 COM/2022/459 final. 
28 COM/2023/168 final. 
29 JOIN/2023/20 final. 
30 Including finalising negotiations with Chile, New Zealand and Kenya, and advancing negotiations with Australia, Mexico 
and Mercosur, as well as India and Indonesia. 

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the US, as well as developing the Critical Raw Materials Club. The Union has put in place and 
continues to develop the tools needed to better deal with geopolitical risks and fragmentation 
and to  better identify,  assess  and mitigate potential  risks for security or public order, while 
ensuring EU openness to foreign investment. These include the Anti-Coercion Instrument31, 
the Dual-use Export Control Regulation32, the Foreign Direct Investment Regulation33 with its 
forthcoming review and the upcoming initiative on outbound investments. 

To  preserve  and  promote  the  EU’s  unique  social  model  in  the  context  of  the  twin 
transitions  and  disruptive  geopolitics,  the  Commission  has  continued  to  deliver  on  the 
European  Pillar  of  Social  Rights  action  plan.  To  meet  the  2030  employment,  skills  and 
poverty goals and sustain the competitiveness of the EU, additional efforts are necessary to 
address the increasingly pressing issue of labour and skills shortages while ensuring that the 
twin transition is fair and leaves no one behind. Building on the European Skills Agenda, the 
Green  Deal  Industrial  Plan  and  the  Net-Zero  Industry  Act  proposal  foster  a  skills-first 
approach. New actions have been launched to boost reskilling and upskilling, such as new skills 
partnerships  for  onshore  renewables,  heat  pumps  and  energy-intensive  industries.  The 
European Year of Skills34 is giving an additional boost to these efforts. The Commission will 
come forward with a Demography Toolbox in the coming weeks to assess how the EU can 
maintain its competitive edge. It is also necessary to make Europe a more attractive destination 
for talent from third countries: this calls both for proactive steps to help match employers and 
employees, and an approach of partnership with key countries as set out in the New Pact on 
Migration and Asylum. To tackle the labour market challenges stemming from labour and skills 
shortages or the impact of artificial intelligence, the Commission and the Belgian Presidency 
plan to convene a new Social Partner Summit at Val Duchesse in the first half of 2024. 

The  EU  has  acted  decisively  to  address  economic  risks  and  strategic  dependencies  by 
taking steps for de-risking in key areas, including:  

a)  Critical raw materials 

Critical raw materials are indispensable for a wide set of strategic sectors including the 
net-zero  industry,  the  digital  industry,  health,  aerospace  and  defence  sectors.  With  the 
proposed Critical Raw Materials Act and Communication35, the EU will have a comprehensive 
set of actions to improve its access to a secure, diversified, affordable and sustainable supply 
of critical raw materials. In this area, public authorities will work closely with industry, for 
instance  through  a  large-scale  skills  partnership  on  critical  raw  materials  and  by  improving 
recovery and recycling capacities to limit dependency on imports. The STEP will also help 
finance  critical  raw  materials  necessary  for  the  development  and  manufacturing  of  critical 
technologies  in  the  Union.  Moreover,  the  EU  is  strengthening  its  global  engagement  with 
reliable  partners,  seeking  mutually  beneficial  partnerships  with  resource-rich  countries  and 
developing economies, including by establishing a Critical Raw Materials Club to strengthen 
global supply chains.  

31 COM/2021/775 final. 
32 PE/54/2020/REV/2. 
33 PE/72/2018/REV/1. 
34 COM/2022/526 final. 
35 COM/2023/160 final and COM(2023) 165 final. 

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b)  Semi-conductors 

Ambitious  and  rapid  actions  on  semi-conductors  will  also  help  enhance  the  EU’s 
technological leadership and further develop domestic production capacity. With the EU 
Chips  Act36,  policy-driven  investment,  at  EU  and  national  level,  will  scale  up  research, 
development and production capacities of semi-conductors across Europe, stimulating long-
term private investment. The Commission has already approved State aid of almost EUR 3.2 
billion for two projects in Italy and France, unleashing investments of more than EUR 8 billion. 
The Important Project of Common European Interest in microelectronics and communication 
technologies  approved  by  the  Commission  in  June  2023  brings  EUR  8.1  billion  of  public 
support by the Member States, which is expected to unlock an additional EUR 13.7 billion in 
private investments. Since the proposal for the Chips Act by the Commission in February 2022, 
several  companies  have  announced  investments  in  semiconductor-related  manufacturing 
facilities for a total amount of approximately EUR 100 billion. This will contribute to ensuring 
Europe’s digital sovereignty and rebalancing global supply chains. The EU is also partnering 
with like-minded countries to work on semi-conductors. 

c)  Net-zero technologies 

To scale up manufacturing of clean technologies in the EU, the Commission proposed the 
Net-Zero Industry Act37 following the Green Deal Industrial Plan38. It aims to create better 
conditions to set up net-zero industrial projects in Europe faster and attract investments. The 
Act has the ambition to enhance the Union’s strategic net-zero manufacturing capacity so that 
it  can  satisfy  at  least  40%  of  its  deployment  needs  by  2030.  The  Act  covers  issues  like 
permitting,  auction  design  and  procurement,  innovation,  skills  and  notably  addresses 
technologies that will make a significant contribution to decarbonisation. Complementing the 
2022 Solar Energy Strategy, the announced European Wind Power Package will accompany 
and anticipate the implementation of the Net-Zero Industry Act by supporting companies in 
the  sector,  including  through  the  acceleration  of  permitting,  improvements  of  the  auction 
systems across the EU, skills, access to finance and stable supply chains. More broadly, the 
Commission has presented a series of initiatives to advance resource efficiency and the circular 
economy  in  key  value  chains,  including  batteries  and  vehicles.  The  Commission  closely 
monitors existing and possible future effects of support programmes applied by other countries 
on European markets and competitiveness. It acts rapidly to address possible discriminations. 
As requested by the European Council, the Commission will report in the coming weeks on 
impacts of the US Inflation Reduction Act on investment in Europe and the effectiveness of 
measures taken in response. 

d)  Health 

Drawing on the lessons from the pandemic, the EU is enhancing the security of supply of 
medicines and making sure they are available to patients regardless of where they live in 
the  EU.  The  recently  proposed  reform  of  the  EU  Pharmaceutical  legislation39  intends  to 
support access and availability of medicines and boost Europe’s innovation capacity as well as 
the  sustainable  European  production  of  affordable  medical  products.  Research  and 

36 COM/2022/46 final. 
37 COM(2023) 161 final.  
38 COM(2023) 62 final. 
39 COM/2023/190 final. 

9 

 
 
 
development  in  the  health  and  pharmaceutical  sectors  as  well  as  medical  countermeasures 
benefit from EU financial support, especially under Horizon Europe, but also under Cohesion 
Policy funds, RRF and EU4Health. The Commission’s Health Emergency Preparedness and 
Response  Authority  (HERA)  has  taken  specific  measures  to  support  the  development  and 
availability of medical countermeasures necessary for pandemics and other  emerging health 
crises,  with  almost  EUR  2  billion  allocated.  The  EU  has  also  increased  cooperation  with 
partners  around  the  world  to  foster  pandemic  prevention  and  preparedness,  and  support 
resilience of health systems at global level.  

The  STEP  will,  together  with  the  EU  Biotech  and  Biomanufacturing  Initiative  planned  for 
2024,  provide  additional  support  for  biotechnology  production,  for  health  and  across  the 
economy.  Finally,  in  October  2023,  the  Commission  will  come  forward  with  additional 
initiatives  to  contribute to  ensuring  the availability of medicines at  all times and to  prevent 
critical shortages.  

e)  Digital transformation 

The  EU  has  made  significant  steps  towards  building  a  digital  economy  that  promotes 
rights and principles for a human-centred digital age and the digital dimension of the 
Single  Market.  With  the  2030  Digital  Decade  Policy  Programme40,  Europe  has  a  robust 
framework for its digital transformation. It has taken decisive steps towards strengthening its 
normative framework. With the swift adoption of the Data Act41, the Digital Markets Act42 and 
the Digital Services Act43, the Commission set the standards for a safer and more open digital 
space for users and a level playing field for companies operating in the Single Market. Once 
adopted, the Artificial Intelligence (AI) Act44 would be the world’s first comprehensive legal 
framework  on  AI  to  provide  innovation-friendly,  risk-based  guardrails  and  a  governance 
system to promote trustworthy AI. The EU is determined to  continue  and step up its active 
engagement at various international fora, notably the G7 Hiroshima Process, and bilaterally to 
promote the development and uptake of trustworthy AI globally. 

To enhance its digital leadership, the EU needs to step up its investment in key digital 
technologies. The Commission estimates that substantial public and private investments are 
needed to achieve the targets in this area. In particular, investments are needed for AI, quantum, 
cloud and 5G, and to foster EU leadership in the development of standards for 6G and beyond. 
For instance, under the Coordinated Plan on Artificial Intelligence, the objective is to gradually 
increase public and private investment in AI to a total of EUR 20 billion per year until 2030 
(up  from  an  estimated  EUR  12.7  -  16  billion  in  2020).45  Moreover,  the  Gigabit  and  5G 
connectivity investment gap will require at least EUR 174 billion of cumulative private and 
public  funding  until  2030.46  As  highlighted  in  the  Commission’s  first  State  of  the  Digital 
Decade report, the EU must further develop more sovereign digital technologies, fostering the 
development  and  scale-up  of  innovative  startup  ecosystems  in  key  areas47.  The  EU  is  also 

40 PE/50/2022/REV/1. 
41 COM/2022/68 final. 
42 PE/17/2022/REV/1. 
43 PE/30/2022/REV/1. 
44 COM/2021/206 final. 
45  Tatjana  Evas,  Maikki  Sipinen,  Martin  Ulbrich,  Alessandro  Dalla  Benetta,  Maciej  Sobolewski  and  Daniel  Nepelski,  AI 
Watch: Estimating AI investments in the European Union, Publications Office of the European Union, Luxembourg, 2022. 
46 European Commission (2023), Investment and funding needs for the Digital Decade connectivity targets. 
47 COM(2023) 570. 

10 

 
 
 
taking a more strategic approach to the geopolitics of technology through its digital diplomacy 
and  partnerships  with  like-minded  partners,  notably  through  its  digital  partnerships  and  the 
Trade  and  Technology  Councils.48  Digital  trade  rules,  including  on  data  flows,  will  drive 
economic growth by balancing openness with the protection of our values and regulation, and 
project the EU’s approach internationally to shape global rules. 

f)  Food 

The EU has taken further measures to ensure food security, sustainability and resilience 
globally  both  in  the  short  and  medium  term.  Adding  to  increased  pressure  on  farm 
productivity  and  fisheries  due  to  environmental  deterioration  and  climate  change,  the 
consequences  of the war have  driven up food  production costs and destabilised  agricultural 
markets. In response, the Commission put forward a package49 of financial support and crisis 
measures to support EU farmers and improve the resilience of EU food systems, including the 
activation  of  the  European  Food  Security  Crisis  preparedness  and  response  Mechanism50. 
Nature and nature-based solutions will be essential for the fight against climate change and the 
long-term sustainability and resilience of the agriculture sector. The Farm to Fork Strategy and 
the different initiatives thereunder aim to accelerate the transition to a sustainable food system, 
a  prerequisite  to  ensure  future  food  security  and  resilience.  For  example,  the  proposed 
Regulation  on plants  obtained by certain  New  Genomic Techniques51 will contribute to  the 
availability of plant varieties that are adapted to changing climatic conditions and can deliver 
stable yields, while the proposed Soil Monitoring Law will incentivise farmers to enhance the 
quality of soils and of the food produced on them. The Commission will also launch a strategic 
dialogue on the future of EU agriculture.  

The  Commission  has  spared  no  effort  to  facilitate  Ukraine’s  agricultural  exports, 
contributing to global food security. Between May 2022 and August 2023, the EU-Ukraine 
Solidarity Lanes have helped Ukraine export agricultural goods amounting to  more than 53 
million tonnes and close to 42 million tonnes of non-agricultural products, while enabling the 
import of goods which the country needs. After the unilateral withdrawal of Russia from the 
Black  Sea  Grain  Initiative,  the  Solidarity  Lanes  remain  the  most  important  lifeline  for 
Ukrainian agricultural exports. In addition, through its Team Europe Response to Global Food 
Insecurity,  the  EU  invests  in  solidarity,  sustainable  production  and  trade  while  working 
together on multilateral fora.52  

g)  Critical technologies 

As  part  of  the  European  Economic  Security  Strategy,  a  list  is  being  established  of 
technologies with potential dual use applications, which are critical to economic security. 
The risks associated to the security and leakage of these technologies will be assessed with a 
view to devising appropriate mitigating measures. Based on initiatives such as the STEP, the 
list and the common risk assessments are the next stages in the new approach to EU economic 
security  that  promotes  our  competitiveness,  protects  against  economic  security  risks  and 
partners with countries sharing our concerns and interests. Additionally, the Commission has 

48 Among the first deliverables of the EU-US TTC is the Joint Roadmap for Trustworthy AI and risk management. 
49 COM/2022/133 final. 
50 COM/2021/689 final. 
51 COM/2023/411 final. 
52 Team Europe spends EUR 18 billion for food security until 2024. 

11 

 
 
 
set up an EU Observatory of Critical Technologies to provide regular monitoring and analysis 
of critical dual-use technologies, their potential applications, value chains and existing gaps 
and dependencies for the defence, space and related civil industries.  

2.4. Fostering public and private investment 

The  EU  is  facilitating  investment  in  key  areas  to  overcome  market  failures,  leverage 
private investment and boost innovation as the global race to net-zero accelerates. The 
Recovery and Resilience Facility provided a much-needed boost to the recovery and is helping 
put the EU on a path to sustainable growth by incentivising ambitious reforms and investments. 
In  addition  to  the  EUR  338  billion  in  non-repayable  financial  support  provided  by  the 
instrument, Member States have requested over EUR 292 billion in loans by 31 August 2023.53 
Cohesion policy programmes contribute to strategic priorities, for instance with EUR 92 billion 
going towards green transition objectives. Horizon Europe will dedicate EUR 20.2 billion to 
research and development of clean tech; EUR 11.5 billion to biotech and medicines; and EUR 
19.3 billion to digital technologies. Furthermore, InvestEU helps mobilise private investments 
for the EU's top policy priorities, such as the green and digital transition, innovation and social 
investments and skills as well as support for SMEs. Due to the strong uptake of InvestEU,54 
and the fact that demand exceeds supply, a budgetary reinforcement is needed to continue to 
provide support in the coming years, as proposed under the STEP. The Temporary Crisis and 
Transition Framework (TCTF) for State aid enables Member States to support the economy by 
allowing for crucial support and investments needed to withstand and recover from the crisis, 
move away from fossil fuels and develop a net-zero economy. Until 20 September 2023, the 
Commission  has  approved  aid  of  around  EUR  743  billion  under  the  Temporary  Crisis 
Framework  (TCF)  and  the  TCTF.  These  EU  efforts  are  complemented  by  the  investment 
support delivered to EU partners through the Global Gateway initiative, as well as joint work 
with G7 partners under the Partnership for Global Infrastructure and Investment. 

The EU’s long-term budget for 2021-2027 has proven to be a flexible instrument in times 
of  multiple  crises.  Extensive  use  of  redeployments  and  reprogramming,  on  top  of  existing 
budgetary  flexibilities,  has  been  necessary  to  address  unforeseen  challenges.  The  swift 
amendments to Cohesion Policy Regulations (CARE, FAST-CARE, SAFE) allowed Member 
States  to  mobilise  investments  for  housing,  healthcare,  translation  services  or  training  for 
people  who  were  displaced  as  a  result  of  Russia’s  war  of  aggression  and  to  address  its 
consequences  on  vulnerable  people  and  businesses  within  the  EU.  Other  instances  where 
redeployments  have been used to  respond  to  emerging challenges include  REPowerEU, the 
Secure Connectivity Programme and the Chips Act. 

Since the comprehensive and rapid action outlined above has brought us to the limits of 
what can be achieved with the current  MFF, the Commission has proposed a targeted 
mid-term  revision  limited  to  the  vital  minimum  for  the  EU’s  immediate  policy  and 
investment priorities. The key areas to be reinforced under the review include the long-term 
support to Ukraine, migration and strengthening partnerships, as well as promoting the EU’s 
long-term competitiveness.55 The Commission proposed the STEP56 initiative, which would 

53 So far, 20 Member States have submitted payment requests equalling a total of EUR 188.22 billion. 
54 The deployment is well on track with 87% or EUR 22.75 billion of the initial guarantee already contracted with implementing 
partners, allowing to mobilise over EUR 320 billion in additional investments so far. 
55 COM/2023/336 final. 
56 COM/2023/335 final. 

12 

 
 
 
reinforce  existing  EU  instruments  (such  as  InvestEU,  the  Innovation  Fund,  the  European 
Innovation Council and the European Defence Fund) and leverage others (such as the Cohesion 
Funds) in order to finance investments in deep tech and digital, clean and bio technologies in 
the EU as well as in people who can develop and deploy those technologies. This initiative is 
a first step towards addressing the heightened need for EU public investments in such critical 
technologies,  to  leverage  much  greater  private  investments.  The  increased  frequency  of 
extreme weather events, such as the fires, droughts and floods that swept Europe during the 
summer, also highlight the need to reinforce the EU’s prevention, preparedness, response and 
solidarity tools, notably the European Union Solidarity Fund. 

A swift agreement on the reform of the economic  governance framework is a pressing 
priority at the current critical juncture for the EU economy, with higher interest rates, 
increased  climate-related  fiscal  risks,  Russia’s  on-going  war  against  Ukraine  and 
geopolitical instability. Therefore, it is crucial that debt ratios are brought on a sustainable 
downward  path  by  feasible  and  credible  fiscal-structural  plans  that  combine  gradual 
consolidation and growth-friendly reforms and investments. As a matter of fact, the green and 
digital transitions will require a sizeable, sustained increase in investment. While the private 
sector  will  take  on  the  major  share,  public  investment  has  a  crucial  role  to  play  to  de-risk 
innovative ventures and correct market failures. The Commission’s proposals for a reform of 
the EU’s economic governance framework aim to strengthen public debt sustainability while 
promoting  sustainable  and  inclusive  growth  in  all  Member  States  in  line  with  common 
priorities. Given the expiry of the general escape clause at the end of this year, it is crucial to 
swiftly  agree  on  the  proposed  reform  to  adequately  respond  to  the  challenges  ahead  and  to 
create clarity and predictability for fiscal policy going forward.  

As most of the financing for the EU’s key priorities will have to come from the private 
sector, it is crucial to create an investment-friendly business environment. The regulatory 
environment  in  the  EU  also  needs  to  help  effectively  raise  and  channel  private  financing 
towards economic activities that contribute to the decarbonisation, digitalisation and enhanced 
resilience of our economies. Deep and integrated capital markets, progress in completing the 
Banking Union and an effective sustainable finance framework are essential pre-requisites for 
mobilising  the  funding  necessary  for  the  twin  transition. Following  up  on  the  2020  Capital 
Markets  Union  Action  Plan,  the  Commission  has  tabled  all  the  planned  legislative 
proposals. The  swift  adoption  by  the  co-legislators  of  the  pending  Listing  Act  and  of  the 
proposals to harmonise certain aspects of corporate insolvency law, to facilitate cross-border 
witholding  tax  procedures  and  to  improve  the  efficiency  and  resilience  of  Union  clearing 
markets  would help  improve access  to  finance, diversify sources of funding for companies, 
tackle  structural  obstacles  in  cross-border  financial  services  and  address  risks  to  the  EU’s 
financial stability. While developing the sustainable finance framework, the Commission has 
remained responsive to the needs of the users and adopted a series of measures and initiatives 
to  reduce  complexity,  enhance  the  usability  of  the  rules  and  support  stakeholders  in  their 
implementation. It also took steps to streamline reporting obligations in view of reducing the 
administrative burden for companies. 

13 

 
 
3.  Conclusion  

Russia’s  war  of  aggression  against  Ukraine  has  exposed  strategic  dependencies  and 
vulnerabilities, including through supply chain disruptions. The EU has taken important 
steps  to  address  these  across  several  areas  including  defence,  energy,  food,  critical  raw 
materials,  digital  technologies  and  health.  The  EU  has  made  progress  in  promoting  its 
competitiveness,  building  on  its  assets  including  a  skilled  workforce,  good  infrastructure, 
innovation,  technology,  and  a  strong  industrial  and  manufacturing  base.  Green  growth  and 
trusted digital tools are the EU’s strength.  

However, in the face of adversity, the EU must stay the course and transform into a more 
resilient, competitive and sustainable economy that fosters citizens’ well-being.57 Further 
efforts are required to build a more innovative and interconnected Single Market, to preserve 
internal cohesion, and to foster alliances with a wide range of international partners. We must 
continue work to de-risk and reinforce Europe’s economic and industrial base while protecting 
its economic security. We must address with renewed vigour strategic dependencies and critical 
risks,  assertively  promoting  and  enforcing  a  global  level-playing  field,  in  the  face  of  major 
economic distortions. We must be prepared for both direct and indirect attempts to undermine 
our democratic processes. Stability and resilience also rely on providing long-term solutions to 
the  common  challenges  faced  by  European  society  today:  the  New  Pact  for  Migration  and 
Asylum – backed up by delivering immediate operational steps – is a key building block in 
providing lasting and credible answers where we need to act as one. 

To achieve these important steps, the EU budget has demonstrated flexibility in adapting 
to the changing environment. However, it has reached a point where targeted adjustments are 
urgently  needed  if  the  MFF  is  to  continue  to  deliver  on  the  most  essential  objectives,  for 
example, on the continued financial support for Ukraine, for competitiveness, on migration and 
partnerships  with  our  closest  neighbours.  The  Commission  therefore  calls  on  the  European 
Parliament and the Council to swiftly agree on the relevant proposals.  

The new security challenges, rising inflation and the investments needed to deliver on the 
green  and  digital  transitions  have  also  put  extra  pressure  on  national  budgets.  This 
highlights  the  need  to  swiftly  agree  on  the  reform  of  the  EU’s  economic  governance 
framework.  This  will  strengthen  public  debt  sustainability,  and  promote  sustainable  and 
inclusive growth, through investment and reforms, and support the welfare and well-being of 
citizens, in particular the most vulnerable. 

The new geopolitical reality requires the Union to strengthen its capacity to protect the 
Union’s strategic interests and to act as a credible security provider for our citizens and 
our partners, thereby contributing to global security. The Union must stand together when 
faced with new security challenges, while further deepening ties with partner countries as well 
as  those  that  share  our  concerns  and  interests  on  specific  issues.  Future  enlargement  of  the 
Union presents important opportunities and provides a foundation for building lasting peace in 
Europe. 

57 COM(2023) 376 final, 2023 Strategic Foresight Report: Sustainability and people's wellbeing at the heart of Europe's 
Open Strategic Autonomy. 

14