What the EU is doing to boost its competitiveness
In an era of growing instability, the EU is acting with determination to strengthen its competitiveness, ensuring prosperity and security for its citizens.
Why do we need to strengthen competitiveness?
Europe's productivity has been lagging behind other major economies in the last 20 years. Many EU companies in key sectors such as digital, telecommunications, capital markets and energy lack the necessary scale to achieve the levels of investment and innovation needed in a global marketplace.
Despite being one of the European Union's greatest achievements, the single market is still fragmented and faces significant obstacles at both national and European level. Removing the barriers to the free flow of goods, services, capital and people is essential to unlocking further growth across the EU and boosting trade and investment.
In the face of a changing global landscape and volatile geopolitical situation, action is urgently needed to reinforce the EU's long-term competitiveness and to secure its strategic autonomy and prosperity.
A more competitive economy will enable the EU to become more sovereign and better equipped to deal with immediate and future challenges.
EU action to bolster competitiveness
Following on from the Budapest Declaration on the new European competitiveness deal by EU leaders in November 2024, the Commission developed a competitiveness compass to guide its work for the 2024-2029 period on the basis of three pillars:
- closing the innovation gap
- linking decarbonisation and competitiveness
- reducing excessive dependencies and increasing security
A series of strategies and action plans have been prepared, with others still being developed by the Commission in a wide range of areas, and related legislative proposals to boost the EU's growth and competitiveness are currently under discussion by the Council and the Parliament.
Competitiveness compass
Main objectives
Support businesses
Simplify rules, reduce administrative burden, help scale-up startups, facilitate access to venture capital.
Decarbonise the economy
Help industries shift to clean tech, promote new circular business models, set a 90% emission-reduction target for 2040.
Reduce dependencies
Phase out Russian fossil fuels imports, reinforce security of supply of critical raw materials and medicines, diversify trade ties.
Encourage innovation
Increase investment in research and development, develop world-class research infrastructures, attract, grow and facilitate mobility of talent.
Boost digitalisation
Develop computing, data, cloud and network infrastructures, ensure access to supercomputers, encourage AI use for industries and the public sector.
Lower energy prices
Modernise the EU energy network and infrastructure, scale-up electrification, accelerate investments in clean energy.
Take the lead in strategic sectors
Support the development of EU industries in areas such as artificial intelligence, space, biotech, genomics, robotics, and semiconductors.
Increase resilience and security
Strengthen supply chains, foster better cooperation in defence, improve the EU's preparedness for potential threats.
Mobilise investments
Craft a long-term budget fit for the EU's needs, channel savings into the economy, create additional financing capacities for banks.
Here are some of the main areas which the Council is working on:
The way forward: One Europe, One Market
At the March 2026 European Council, EU leaders launched a 'One Europe, One Market' agenda, with strategic guidance, concrete measures and ambitious deadlines for key strands of actions:
- deepen and integrate the single market
- further simplify rules and reduce administrative burdens
- ensure affordable energy and achieve the energy transition
- foster Europe's industrial renewal, innovation and reduce dependencies
- mobilise investment
Boosting EU competitiveness: the way forward
See also
EU industrial policy
The EU single market: benefits, facts and figures
Energy
Last review: 19 March 2026