Published by Global Banking & Finance Review®
Posted on January 29, 2025
4 min readLast updated: January 27, 2026
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The EU's Competitive Compass aims to boost industrial growth, reduce energy costs, and cut red tape, positioning Europe to better compete with the US and China.
By Philip Blenkinsop and Kate Abnett
BRUSSELS (Reuters) - The European Commission presented on Wednesday its plans to reverse industrial decline in the bloc and step up efforts to compete with the United States and China in new fields such as AI, to lower energy costs and to cut red tape.
The Competitive Compass sets out the EU executive's course of legislation and initiatives over the next two years in established sectors like steel and cars and new technologies, including biotech and quantum computing.
"If Europe accepts a managed and gradual economic decline, it is condemning itself to a 'slow agony'," the compass paper says, echoing former European Central Bank chief Mario Draghi, whose report on EU competitiveness last year is part of the foundation of the EU plan.
BusinessEurope welcomed the plan and said it needed to be swiftly followed by concrete action.
However, Sebastian Mang, policy adviser at the New Economics Foundation think tank, said it overlooked the need for increased public investment, recalling Draghi's appeal for 800 billion euros a year in funding.
First up on Feb. 26 will be the Clean Industrial Deal, a multi-year plan to help energy-intensive industries decarbonise and boost production of clean technology, accompanied by ideas to promote affordable energy.
On the same day, the EU executive will also unveil plans to reduce business reporting requirements, focused on sustainability reports that larger businesses need to file, due diligence rules and a system that defines which investments can be labelled as climate-friendly.
The Commission says this will be the first of a series of simplification packages in its push to reduce the reporting burden by at least 25% and for smaller firms by at least 35%, cutting 37.5 billion euros ($39.0 billion) of costs per year.
Campaign group Climate Action Network said the Commission was taking a dangerous misstep by framing regulation as a primary obstacle to competitiveness. Lack of investment and high energy prices, not rules, were holding companies back, it said.
MORE COORDINATION AND INTEGRATION
The Competitive Compass roadmap also includes a proposal to favour European companies in public procurement tenders and a proposal that the Commission coordinate national policies in energy infrastructure like electricity grids and storage.
The EU executive arm could have a similar coordination role in investment and the building out of digital infrastructure and Artificial Intelligence use, as well as in key manufacturing areas like critical medicines.
Further ideas include a special legal regime for innovative companies so that they can make better use of the EU's single market and access to finance, joint purchases by the EU as a whole of critical raw materials, and creating an integrated, single European market for the defence industry.
The Commission is under pressure from business, the centre-right European People's Party and countries including France not just to simplify reporting but to delay or water down recently approved climate legislation.
The bloc is also facing fresh challenges from the new U.S. administration of President Donald Trump, who is promising to roll back U.S. corporate rules and has urged the EU to make it easier to do business.
France proposed last week to delay indefinitely a new EU directive on corporate due diligence and to delay by two years the corporate sustainability reporting directive.
The Commission will hear further complaints on Thursday from the European auto sector over 2025 CO2 emissions targets and potential fines as its launches a "strategic dialogue' to ensure the sector's future.
"We will identify immediate solutions to safeguard industry's capacity to invest, by looking at possible flexibilities to make sure our industry remains competitive, without lowering the overall ambition of the 2025 targets," the compass paper says.
($1 = 0.9615 euros)
(Reporting by Philip Blenkinsop; editing by Jan Strupczewski and Hugh Lawson)
The article discusses the EU's Competitive Compass plan to enhance industrial competitiveness against the US and China.
It is a multi-year plan to help energy-intensive industries decarbonize and boost clean technology production.
The EU aims to cut business reporting requirements and reduce costs by 37.5 billion euros annually.
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