Authored by Bruno Liebhaberg, Executive Chairman CERRE
Europe’s competitiveness challenge no longer requires a diagnosis. The Draghi and Letta reports, the Competitiveness Compass and countless policy debates have made the broad direction of travel clear. Europe needs more investment, innovation and productivity.
The harder question is how to overcome the entrenched political constraints that have made the necessary reforms so hard to achieve. These constraints have led to too much focus on deregulation as the pathway to competitiveness – and not enough on how good regulation can unlock access to capital, create a more dynamic economy, and push industries to innovate.
That was the starting point for CERRE’s Competitiveness Summit on 30 September, which brought together policymakers, regulators, industry representatives, civil society activists and CERRE’s academic experts. The day explored where Europe’s competitive edge might actually lie – and what role regulation should play in finding it.
Across discussions based around CERRE’s recent publications on AI governance, telecoms investment and industrial policy, one message came through clearly: Europe’s competitiveness strategy cannot simply be a choice between “more regulation” or “less regulation”. The challenge is how Europe can make smarter choices about where regulatory intervention is needed – and how public policy can help nudge innovation in directions that align with Europe’s values and strengths, rather than slowing down the pace of technological development. With the right design, including an in-built capability to adapt to technological development, regulation can serve to support innovation. Moreover, regulation should not merely manage the market that exists; it should help create the market that Europe will need tomorrow.
The Summit also highlighted that regulation can only be one part of a competitiveness strategy. CERRE’s research examined how industrial policy and public procurement rules can work alongside regulation to support Europe’s economic ambitions. This research will be important as the EU’s co-legislators consider the ‘made in Europe’ rules in the proposed Industrial Accelerator Act, Cloud and AI Development Act, and the Public Procurement Regulation.
Finally, regulation can no longer be considered in a silo or as a set of technocratic decisions. It now engages major political questions about whether and how Europe should shift away from open markets, how an active industrial policy should be designed, and how Europe can deliver the growth needed to pay for its own defence, bolster its economic security, and deliver the welfare needs of an ageing population and one which faces potentially immense disruption from AI.
The Competitiveness Summit reflects CERRE’s evolution as a think tank and our ability to produce timely, incisive research to meet the EU’s current challenges.
If you missed the Summit, you can catch up on the recorded sessions here.
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