Opinion of the European Economic and Social Committee – Leaving the crises behind – Measures for a resilient, cohesive and inclusive European economy (own-initiative opinion)
Date: 2025-04-30
Institutions: European Economic and Social Committee
Subjects: EU growth strategy, competitiveness, economic and social cohesion, economic independence, economic integration, inflation, regulatory policy, social impact, sustainable development








C_202503195EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/3195


2.7.2025






Opinion of the European Economic and Social Committee
Leaving the crises behind – Measures for a resilient, cohesive and inclusive European economy
(own-initiative opinion)
(C/2025/3195)


Rapporteur: 
Elena-Alexandra CALISTRU






Plenary Assembly decision


5.12.2024




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Economic and Monetary Union and Economic and Social Cohesion




Adopted in section


15.4.2025




Adopted at plenary session


30.4.2025




Plenary session No


596




Outcome of vote (for/against/abstentions)


176/2/3






Preamble



This opinion is part of a wider package of EESC opinions on the cost-of-living crisis. With this package, the EESC is examining the different facets of this policy challenge and presenting a comprehensive and wide-ranging set of recommendations to European and national policy-makers, civil society organisations and other stakeholders. The package includes seven ‘sectoral opinions’
            
             (1)
, each dedicated to issues in a specific relevant policy area. In addition, an ‘umbrella opinion’
            
             (2)
presents the overarching policy recommendations to address the cost-of-living crisis as a whole and build resilience against future crises.

1.   Conclusions and recommendations









1.1.


The European Union stands at a critical juncture. The overlapping crises of the last five years – from pandemic geo-economic fragmentation to energy shock and inflation – have exposed structural vulnerabilities while widening economic disparities across regions and income groups. Despite headline inflation moderating, the cumulative impact continues to burden households and businesses unevenly. With tectonic geopolitical challenges, the spectre of the last crisis must be urgently transformed into lessons for the future.












1.2.


The EESC emphasises that the European Union must approach these challenges from a position of confidence, not apology. The EU remains the world’s most successful experiment in transnational governance, with unparalleled achievements in prosperity, social cohesion, rule of law and human development. Our welfare systems, commitment to human rights and life-course social investment approach represent signature strengths, not liabilities. The path forward should build on these foundational advantages while addressing identified vulnerabilities.












1.3.


These challenges demand not incremental adjustments but a fundamental transformation in how we approach economic resilience, strategic autonomy and inclusive growth. To leave these crises behind and prepare for future shocks, we recommend a formal, permanent and structured consultation process in which national governments work closely with authorities at all levels and in partnership with trade unions, employers, CSOs and other responsible bodies throughout the whole policy cycle, from preparation and implementation to monitoring and evaluation.












1.4.


A comprehensive EU economic resilience monitoring system is needed, with real-time tracking of systemically significant prices, supply chain vulnerabilities and market functioning. This early warning system would support targeted, temporary interventions before shocks propagate throughout the economy, using enhanced data from Eurostat, ESPON or the European Central Bank’s (ECB) data portal.












1.5.


The EU must urgently transition from a defensive to an offensive competitiveness strategy that balances economic dynamism with European values. This means streamlining regulations while maintaining high standards, accelerating approvals for strategic investments and harmonising implementation across Member States. At the same time, we must complete and deepen the single market. These efforts should leverage Europe’s distinctive strengths: our high-quality human capital, our institutional stability founded on the rule of law, and our social market economy model.












1.6.


We need to develop a more sophisticated EU inflation governance framework that directly address ‘shockflation’ through coordinated action between monetary policy and targeted sectoral measures. The limitations of monetary policy against supply-driven inflation demand more refined tools that can target the root causes of price pressures without suppressing growth. Such measures should be temporary and targeted towards affected populations, avoiding rigid price controls that would distort market signals.












1.7.


We need to build permanent EU-level fiscal stabilisation capacity that draws on the experiences gained with NextGenerationEU (NGEU), with automatic stabilisation mechanisms triggered by objective economic indicators and funded through dedicated EU revenue streams in the next multiannual financial framework (MFF). This would provide crucial support during asymmetric shocks, while offering differentiated financing for strategic investments.












1.8.


We need to identify and address the 20 most critical supply vulnerabilities in the EU economy by strategically reshoring or friend-shoring essential production, and through EU-level strategic reserves for critical commodities and public-private investment vehicles for strategic production capacity.












1.9.


Stronger social conditionalities need to be implemented in all forms of EU funding and public procurement to ensure that the EUR 2 trillion in annual public spending (3) actively promotes quality jobs, collective bargaining and decent working conditions, particularly in regions undergoing transition.












1.10.


We need to boost investment in human capital, with a particular emphasis on improving digital skills and AI integration as fundamental components of future workforce preparedness, while also addressing regional disparities in productivity and wages through targeted education and training initiatives.












1.11.


An EU investment fund of at least 1 % of EU GDP is needed to address the EUR 700 billion annual investment gap for strategic priorities (4), with emphasis on cross-border infrastructure, energy market integration and critical technologies that reduce Europe’s nearly twofold energy cost disadvantage compared to global competitors.












1.12.


We also need to create a targeted support system for vulnerable groups using an EU-wide vulnerability mapping tool with granular household data (5) to ensure that crisis responses protect those most at risk. This acknowledges the fact that lower-income households have borne a disproportionate burden during recent crises, while also respecting Member states’ primary responsibility in social policy.












1.13.


The EESC believes it important to balance defence spending with other strategic priorities, and to include other elements essential to the EU’s very existence in the definition of defence, namely democracy, rule of law and social values. Recognising the need for enhanced defence capabilities, we must also acknowledge potential inflationary effects and ensure that defence investments complement – and do not displace – critical investments in human capital, innovation and social cohesion.












1.14.


Measures should shift from reactive crisis management to proactive resilience building. Europe must move beyond relying primarily on demand management tools towards a comprehensive approach that directly addresses supply vulnerabilities, market failures and distributional imbalances.












1.15.


By integrating economic resilience with social inclusion and strategic autonomy, this framework offers a pathway to transform the European economy into one that can navigate future shocks while protecting its most vulnerable members and preserving its distinctive social market economy model.












1.16.


The EESC stresses that addressing the systemic risks facing the EU economy requires enhanced accountability from policymakers at all levels, and stronger cooperation between all stakeholders to secure a sustainable and resilient economic future. To meet the extraordinary challenges ahead, all competent and responsible parties will, more than ever, need to engage in dialogue and cooperation and work together to put the EU economy on a sustainable, durable and resilient path.




2.   General comments


Current state of play: Uneven effects of economic shocks









2.1.


Despite headline inflation moderating to 2,6 % in 2024, core inflation remains above target, and the cumulative impact of price increases continues to strain household budgets and business competitiveness unevenly across regions and income groups. Lower-income households and vulnerable regions bear a disproportionate burden. This shockflation – inflation unleashed by shocks to systemically significant prices – requires targeted governance structures rather than simply relying on monetary policy.












2.2.


European industry faces energy prices nearly double those in the US and China, creating a fundamental competitiveness challenge that affects industrial competitiveness and real household purchasing power, and reveals significant regional disparities in economic resilience. According to an ECB analysis from 2024, at the peak of inflation in 2022, real wages in Europe saw a record decline of 5,1 % year-on-year (6), while corporate profit margins expanded in some sectors operating in low-competitive markets or fragmented regulated markets, indicating a distributional imbalance in how the burden of inflation was shared.












2.3.


The competitiveness challenge has multiple dimensions:






—


a persistent productivity growth and investment gap with major competitors;










—


higher energy costs that impact industrial competitiveness;










—


a slower adoption of digital technologies and artificial intelligence;










—


regulatory complexities that can hinder business dynamism and scale-up; and










—


fragmented services and capital markets that limit growth potential. The Draghi report notes that eurozone household wealth grew at only one third the rate of US households (2009-2023), despite Europeans saving more.
















2.4.


These immediate challenges must be addressed while the EU navigates three major transitions:






—


the green transition, which requires massive investment but also presents opportunities for industrial leadership;










—


the digital revolution, which demands rapid adaptation and raises fundamental questions about workforce impacts; and










—


geopolitical shifts, which require enhanced strategic autonomy while maintaining beneficial international links.
















2.5.


Geo-economic fragmentation poses significant risks to EU economic resilience. Global economic fragmentation and trade barriers would reduce growth and add to inflation. Higher-than-expected inflation would prompt more restrictive monetary policy and could give rise to disruptive repricing in financial markets.












2.6.


Regional economic divergence threatens social cohesion through:






—


regional disparities in economic opportunities;










—


skill mismatches in a rapidly evolving labour market;










—


the distributional impacts of the green and digital transitions; and










—


demographic changes that are straining welfare systems.









Evaluation of crisis response measures









2.7.


Member States deployed various approaches to address the energy and inflation crisis with varying degrees of success. For example, research on Germany’s energy policy response shows that price stabilisation policies significantly contributed to lowering inflation (7). A comparison of different national approaches might suggest that targeted and temporary price caps might – in the very short term – be more effective than compensation-only measures, with early intervention yielding better outcomes. Any price cap will, however, distort decisions in a market economy and lead to negative consequences.












2.8.


While coordinated EU-wide responses to the energy shock have helped mitigate the most severe impacts (though implementation timelines varied in effectiveness), the EU currently lacks adequate governance structures for addressing shockflation, creating a gap between sectoral price policies and monetary policy.












2.9.


While macroeconomic indicators suggest crisis abatement, effects on household wealth, savings, disposable income, age asymmetric impact and regional disparities persist. However, the most important thing is to bring the fiscal side onto a sustainable path.












2.10.


With interest rates beginning to fall at EU level (with variable trends across Member States), new challenges emerge. While monetary policy must remain focused on price stability, in line with the ECB mandate, fiscal policy needs to navigate difficult trade-offs between supporting vulnerable groups and maintaining debt sustainability. These policy areas need to address multiple objectives simultaneously: allocation of public goods, redistribution for greater equity, and economic stabilisation.




3.   General observations and recommendations









3.1.


Key recommendations include:






(a)


enhanced policy coordination requiring: i) structured dialogue and cooperation between fiscal and monetary authorities at both EU and national levels; ii) clearer guidelines for asymmetric shock responses; and iii) a permanent EU-level mechanism to coordinate responses to major economic crises; and










(b)


an economic and fiscal governance approach, including: i) effective implementation of the new economic governance framework, balancing investment needs with debt sustainability; ii) more sophisticated country-specific analyses of fiscal space and debt sustainability; and iii) dedicated EU fiscal capacity for asymmetric shocks.
















3.2.


Success requires working simultaneously across multiple dimensions, including:






—


completing key pillars of economic integration, particularly deepening the single market while advancing the capital markets union;










—


enhancing strategic autonomy in critical sectors while maintaining beneficial international interdependencies;










—


strengthening social resilience through modernised safety nets and education systems; and










—


accelerating the green and digital transitions in ways that enhance rather than hinder competitiveness.
















3.3.


The EU must urgently address its competitiveness issues while preserving its distinctive social market economy model. This requires a careful balance between:






—


accelerating regulatory reforms and reducing administrative burdens to improve the business environment;










—


maintaining essential environmental and social standards that underpin our long-term resilience; and










—


ensuring strategic investment in key future-oriented sectors while avoiding wasteful subsidy races.
















3.4.


Smart regulation is a top priority. The EU must shift to an offensive competitiveness strategy. Rather than engaging in subsidy races or lowering essential standards, we should:






(a)


reduce regulatory complexity while maintaining high standards by streamlining approval processes (particularly for strategic investments), harmonising implementation and developing regulatory sandboxes for innovative businesses;










(b)


deepen the single market by removing service barriers, integrating energy markets to reduce cost disadvantages, creating a true digital single market, and accelerating the completion of the capital market union; and










(c)


leverage European strengths through high-quality human capital (especially STEM) and research institutions, a strong rule of law and stable institutions, and sustainable leadership.
















3.5.


Competition law principles should be used for market failures to prevent (and if needed, to sanction) operators individually or in a concerted way taking undue advantage of supply-demand imbalances. Free competition should ensure consumers get better deals. Measures should be targeted towards those who are most vulnerable, and last no longer than necessary to return to a balance between supply and demand that reflects the normal functioning of markets.












3.6.


Strategic investment and innovation require:






(a)


improved investment efficiency by coordinating EU and national instruments, leveraging private capital and streamlining procedures for strategic projects;










(b)


a focus on European public goods, such as cross-border infrastructure (particularly in energy and digital), joint research and innovation initiatives, and strategic technology; and










(c)


market-enabling frameworks, including technology-neutral support mechanisms, competition-preserving cooperation frameworks and market-based incentives.
















3.7.


Social resilience and inclusion require modernised systems. For this we need to:






(a)


empower through enhanced investment in education and skills, support for labour market transitions, modernised social protection systems and more effective public services;










(b)


address distributional challenges via targeted support for vulnerable groups, just transition mechanisms and regional development initiatives;










(c)


ensure human capital investments, focusing on digital skills and AI integration and addressing regional disparities in productivity and wages;










(d)


support labour market transitions, including addressing high youth unemployment, especially through active labour market policies; and










(e)


acknowledge housing affordability challenges and their impact on financial resilience against future economic shocks.
















3.8.


Fiscal and political constraints must be taken into account during implementation, which needs to be bold enough to meet the times. This means:






(a)


prioritising high-impact reforms that require no major new funding, while ensuring no effective solution is off the table;










(b)


using existing instruments more effectively before creating new ones;










(c)


focusing on European public goods with clear added value, such as the electricity grid or strategic defence capabilities;










(d)


ensuring that any new initiatives enhance rather than fragment the single market; and










(e)


acknowledging that defence spending is necessary, while understanding that it should not displace investments in human capital, defence of democracy and social cohesion, as these are critical to long-term European resilience.








4.   Specific observations and recommendations









4.1.


The path forward requires boldness, pragmatism and commitment. While the challenges are significant, they also present opportunities to strengthen European competitiveness and cohesion. Success will require careful prioritisation, effective implementation and sustained commitment to both market efficiency and social inclusion.












4.2.


Recent research (8) demonstrates that the impact of inflation varies significantly across different income groups and regions in the EU. This heterogeneity demands a more nuanced and targeted policy response than traditional broad-based measures. Furthermore, while macroeconomic indicators suggest improvement, significant increases in the general cost of living and persistent regional inequalities indicate ongoing challenges.












4.3.


The EU should develop an improved data collection system to better target policy responses to price shocks. This would help address the governance gap between monetary policy and sectoral interventions, providing more targeted and effective responses to supply shocks, while ensuring market mechanisms remain the primary price-setting method.












4.4.


Cohesion policy must evolve to address both traditional regional disparities and new challenges from the green and digital transitions. This requires:






(a)


a reform of cohesion instruments, including:






—


greater flexibility while maintaining long-term strategic focus;










—


enhanced coordination between cohesion funding and other EU instruments, especially the RRF; and










—


a stronger focus on capacity building in less developed regions;














(b)


new approaches to territorial development, such as:






—


support for regional innovation ecosystems;










—


an enhanced focus on cross-border and interregional cooperation; and










—


the integration of cohesion objectives into broader EU economic governance; and














(c)


efforts toward decentralising decision-making, ensuring that:






—


local and regional authorities are given more autonomy to implement policies tailored to their specific economic contexts;










—


the partnership principle is extensively embedded in the process; and that










—


civil society and social partners are consulted across the policy cycle, from design to implementation and monitoring.




















4.5.


Looking ahead to the 2028-2034 MFF, the EU faces new demands in areas such as defence, while still needing to address traditional priorities. Demographic changes and workforce aging create an additional silent transition. The EESC recommends:






(a)


strategic funding priorities, including:






—


new funding mechanisms for defence capabilities within treaty limitations;










—


enhanced coordination between EU defence initiatives and national spending; and










—


the integration of defence industrial policy with broader competitiveness objectives; and














(b)


a reform of the MFF, including:






—


more flexible mechanisms for emerging challenges;










—


new own resources to support expanded EU-level action (9); and










—


an enhanced focus on European public goods while maintaining essential cohesion and agricultural support.




















4.6.


Maintaining the competitiveness of European businesses requires a comprehensive approach, including:






(a)


immediate support measures, like:






—


targeted assistance for energy-intensive industries transitioning to cleaner technologies;










—


support for SMEs in adapting to economic transitions; and










—


enhanced export support in strategic sectors; and














(b)


long-term competitiveness initiatives, such as:






—


reduced administrative burdens (25 %, with 35 % for SMEs) in line with Commission objectives;










—


accelerated single market integration, particularly in services;










—


European industrial ecosystems in strategic sectors; and










—


enhanced support for innovation and adopting technology.




















4.7.


These recommendations acknowledge that addressing the cost-of-living crisis requires both immediate action and longer-term structural reforms. Success depends on careful coordination between different policy areas and levels of government, while maintaining focus on both effectiveness and fairness. Regular monitoring and adjustment of measures are essential for ensuring they remain fit for purpose as circumstances evolve. Enhanced stakeholder consultation with civil society and social partners is essential for achieving this goal.






Brussels, 30 April 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  CCMI/239 
Reindustrialisation of Europe – opportunity for businesses, employees and citizens in the context of the cost-of-living crisis
 (ongoing); EESC opinion on 
Leaving the crises behind – Measures for a resilient, cohesive and inclusive European economy
; EESC opinion on 
How single market dysfunctionalities contribute to the rising cost of living
 (OJ C, C/2025/3189, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3189/oj; EESC opinion on 
Phasing out fossil fuel subsidies while ensuring European competitiveness, mitigating the cost-of-living crisis, and promoting a just transition
 (OJ C, C/2025/3191, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3191/oj); REX/596 
Fragmentation of supply chains and impact on the cost of living
 (ongoing); SOC/823 
How to address the loss of purchasing power and the risk of rising inequalities, exclusion and marginalisation
 (ongoing); EESC opinion on 
Price hikes in transport, energy and housing: the role of quality public services in tackling the high cost of living
 (OJ C, C/2025/3192, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3192/oj).

(2)  ECO/660 
Recommendations of organised civil society to address the cost-of-living crisis
 (ongoing).

(3)  The EU’s 2021-2027 long-term budget, together with the NextGenerationEU recovery instrument, amounts to EUR 2,018 trillion in current prices – EU budget today.

(4)  Opinion of the European Economic and Social Committee – An EU investment fund for economic resilience and sustainable competitiveness (own-initiative opinion) (OJ C, C/2024/6862, 28.11.2024, ELI: http://data.europa.eu/eli/C/2024/6862/oj).

(5)  Such research is already being developed by ESPON, to be used.

(6)  
            Tracking euro area wages in exceptional times.

(7)  
            ‘Can Price Controls be Optimal? The Economics of the Energy Shock in Germany’, Forum for a New Economy
.

(8)  For reference, see: 
Inflation inequality in the European Union and its drivers
 (Bruegel, 2024); 
The unequal impact of the 2021-22 inflation surge on euro area households
 (ECB, 2024); 
The uneven impact of high inflation
 (OECD, 2023).

(9)  Opinion of the European Economic and Social Committee on the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: An adjusted package for the next generation of own resources (COM(2023) 330 final) and the amended proposal for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union (COM(2023) 331 final/2 – 2021/0430 (CNS)) (OJ C, C/2024/884, 6.2.2024, ELI: http://data.europa.eu/eli/C/2024/884/oj).


ELI: http://data.europa.eu/eli/C/2025/3195/oj
ISSN 1977-091X (electronic edition)