EU manufacturing possesses a number of competitive strengths that should be leveraged to promote economic growth, despite the current difficult economic environment. This is the conclusion of the two reports on industrial competitiveness released by the Commission today. However to ensure that growth does not stall, the EU and Member States urgently need to address a number of areas of concern: investment, access to finance, public administration, access to foreign markets, innovation and energy prices.
Advertisement
Industrial competitiveness varies widely per Member State
Looking at how well the Member States are doing, and whether they are improving or not, four groups emerge:
- Member States with high and improving competitiveness: the Netherlands, Germany, Denmark and Ireland.
- Member States with high but stagnating or declining competitiveness: Belgium, the United Kingdom, Austria, France, Italy, Luxembourg, Sweden and Finland.
- Member States with modest but improving competitiveness: Estonia, Lithuania, Spain, Latvia, Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Greece.
- Member States with modest and stagnating or declining competitiveness: Slovenia, Bulgaria, Croatia, Malta and Cyprus.
The EU has competitive strengths
Overall, the EU’s competitive strengths in manufacturing remain intact: highly skilled workers, high domestic content of export goods, and comparative advantages linked to complex and high-quality products. EU Member States have also implemented a range of policies to increase competitiveness over the period since the start of the crisis in 2008.
…but some policy areas need ongoing attention
Analysis of the data produced by both reports indicates that the following areas need to be considered for potential policy action
- Additional investment is needed across all sectors to ensure that European industry can maintain its competitiveness.
- Small and young firms find it more difficult to obtain bank credit compared to other firms, even if their financial performance is the same.
- Competitiveness is supported by more efficient innovation and commercialisation of research, and access to highly-skilled labour.
- Competitiveness requires reducing costs and uncertainties for businesses when dealing with public administration. Increasing the efficiency of public administration induces higher numbers of fast-growing firms, in particular by increasing firm’s financial turnover. Time-consuming and costly tax rules, corruption and ineffective justice systems are the most detrimental to firms’ growth. Most Member States also need to better take into account the effects of rules and legislation in other fields on competitiveness.
- Support is needed to help internationalisation of SMEs. Currently, smaller and younger firms are less likely to enter foreign markets and reap the associated benefits. Policies targeting the business environment with respect to access to capital, skills support for innovation and actions to enhance productivity are important to help small firms expand exports
- Competitiveness is negatively affected by electricity and gas prices which are higher in the EU than in a number of other economies. Energy efficiency improvements have not fully offset the negative impact of increasing prices. Efficient markets for electricity and diversified energy sources are therefore needed to ensure that energy is available at a competitive price.
Next steps
The results of the reports will be used in evidence-based policy-making at EU and national level. They will serve as an input into the discussion of the Competitiveness Council on 25-26 September 2014 and also into the Commission’s recommendations on Member States’ fiscal and structural reform policies during the European Semester process.
Background
The Commission’s industrial competitiveness reports are produced annually in order to provide evidence-based indicators to support policy making at EU and Member State level. The 2014 European Competitiveness Report ‘Helping Firms Grow’ gives a quantitative assessment of the competitive performance of EU industries and provides empirical answers to important questions in the industrial policy debate. The 2014 Member States’ Competitiveness Report “Reindustrialising Europe”, provides an indicator-based assessment of the implementation of industrial policy at EU and national level, with a country by country breakdown.
Further information
2014 European Competitiveness Report “Helping Firms grow”
