Europe’s Competitiveness Gambit: How Political Unity and Green Transition Could Reshape Global Industry

The Turning Point for European Competitiveness

When former European Central Bank President Mario Draghi delivered his landmark report on Europe’s competitiveness, he ignited a crucial conversation about the continent’s future in the global economy. The report served as both a warning and a roadmap, highlighting the urgent need for coordinated industrial policy to prevent Europe from falling further behind economic powerhouses like China and the United States. One year later, the question remains whether European leaders can muster the political will to transform these recommendations into reality.

The Turning Point for European Competitiveness
A Shift in Mindset and Momentum
Crisis as Catalyst: The Sovereignty Agenda
Decarbonization as Competitive Advantage
Breaking Down Barriers: The Single Market Revolution
Europe’s Secret Weapon: Regulatory Predictability
The Path Forward: Necessary Integration

A Shift in Mindset and Momentum

According to Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy of the European Commission, the Draghi report has triggered a significant change in perspective throughout EU institutions. “There has been a real change of mindset,” Séjourné explained in an interview with Fortune. “Europe must return to global competition. And it will. There’s now a real momentum of political and social acceptance to build a stronger internal market and regain competitiveness.”

This emerging consensus represents a crucial first step, but European officials acknowledge that agreement alone cannot guarantee success. The EU faces substantial challenges in simplifying policies, accelerating innovation, and securing necessary investments. Most critically, success depends on the willingness of all 27 member states to act as a unified economic force, eliminating national barriers and regulatory differences that have historically hampered European competitiveness.

Crisis as Catalyst: The Sovereignty Agenda

The EU’s renewed focus on competitiveness emerged from consecutive economic shocks that exposed vulnerabilities in the continent’s economic foundation. “There were two major economic shocks that shaped this new way of thinking,” Séjourné noted., according to recent innovations

The COVID-19 pandemic revealed dangerous dependencies on raw materials from outside the EU, while Russia’s invasion of Ukraine highlighted Europe’s energy vulnerability. “Except for a few countries like France, which had a nuclear mix, much of Europe was vulnerable because of our dependence on Russian gas, which suddenly stopped,” Séjourné explained., according to according to reports

These twin crises sparked what officials now call the “sovereignty agenda” – a strategic priority to bolster EU competitiveness and regain control of critical economic sectors. The agenda focuses particularly on securing access to critical raw materials while maintaining a careful balance between trade protection and global openness., according to recent developments

Decarbonization as Competitive Advantage

European leaders are positioning the green transition not just as an environmental imperative but as a core economic strategy. Séjourné views decarbonizing heavy industries as serving dual purposes: advancing climate goals while creating new jobs, attracting investment, and building economic resilience., according to technology trends

“Our decarbonization strategy will help steelmakers, chemical plants and vapor-crackers that produce key molecules modernize their production systems to be more competitive worldwide,” he stated., as previous analysis

This approach represents a fundamental departure from American energy policy, which still relies heavily on domestic oil and gas production. Europe’s lack of fossil fuel resources makes reducing strategic dependence an economic necessity. “We spend €450 billion each year importing oil and gas, which can be invested in Europe’s competitiveness instead,” Séjourné argued. “It’s a medium to long-term bet, but one we’re convinced we’ll win.”

Breaking Down Barriers: The Single Market Revolution

Despite ambitious goals, Europe’s notorious bureaucratic complexity continues to hinder progress. The EU’s single market, designed to ensure free movement of goods, services, capital and persons, remains hampered by legal, fiscal and regulatory differences between member states.

The European Commission’s proposed solution is the so-called ’28th Regime’ – a harmonized set of EU-wide rules that would allow innovative companies to operate across the single market without navigating 27 distinct legal systems. Séjourné describes this initiative as “the most important project for Europe’s economy.”

“Our ambition is to offer companies one single European framework — one legal representative, one accountant, one company status throughout Europe,” he explained. “That will make it much easier to trade, invest, and expand beyond borders.”

Europe’s Secret Weapon: Regulatory Predictability

Even as it pursues aggressive reforms, Europe maintains a less visible but potentially decisive competitive advantage: regulatory stability. While the U.S. faces policy uncertainty with each election cycle and China operates with state-directed rapidity, Europe offers predictability that appeals to long-term investors.

“In the U.S., everything can change after an election,” Séjourné observed. “In Europe, we may move slower at first, but once the system is in place, it’s stable. Investors know what to expect five or 10 years ahead. Predictability and reliability are crucial.”

This reliability represents Europe’s strategic counter to American speed and Chinese scale. In an era defined by global shocks – pandemics, conflicts, and trade wars – Europe’s promise of consistency has emerged as a valuable commodity, provided the EU can demonstrate both stability and adaptability.

The Path Forward: Necessary Integration

Séjourné’s vision for European competitiveness hinges on what might be termed ‘necessary integration.’ Decarbonization requires new energy grids and supply chains that demand cross-border financing and unprecedented institutional cooperation. Each element depends on the last, requiring leaders willing to spend political capital to make the system work.

“The Commission’s role is to give coherence to this mix by building cross-border infrastructure — grids that allow electricity to flow freely between countries according to production and demand,” Séjourné explained. “Price differences still exist between member states, but we’re working to stabilize electricity prices across Europe.”

European business leaders have echoed this urgency. At a recent meeting between the European Commission and 60 corporate leaders, including representatives from SAP and IKEA, the consensus was clear: Europe’s competitiveness now depends on execution speed rather than new policy declarations.

The second Von der Leyen Commission, now approaching its first anniversary, continues to advance an ambitious policy agenda. Yet the EU’s system of shared sovereignty ensures that every reform requires painstaking negotiation, and every directive must be translated into 27 languages and legal systems.

Despite these challenges, Séjourné remains optimistic about Europe’s prospects. “Europe is not just a beautiful idea; it’s a powerful and stable economic space,” he affirmed. “And that’s what we want to preserve.” As global competition intensifies, Europe’s ability to transform political consensus into concrete action will determine whether it can reclaim its position as an industrial powerhouse or continue to cede ground to global competitors.