BRUSSELS: The EU unveiled a much-anticipated blueprint to revamp Europe’s economic model on Wednesday, marking a shift towards a more business-friendly Brussels after five years of heavy focus on green goals.

With US President Donald Trump promising tariffs and a gargantuan artificial intelligence push, and China rising in key industrial and digital sectors, the 27-nation bloc is under pressure to make life easier for the companies driving its own growth.

“We need to reignite Europe’s innovation engine,” EU chief Ursula von der Leyen told a news conference to present the “competitiveness compass” — the first major initiative of her second mandate.

The European Commission’s recent priorities of climate change and business ethics left many firms complaining about excessive regulation compounding high energy costs and weak investments.

Heeding their call, the EU hopes to get back in the race by turning recommendations made last year by former Italian leaders Enrico Letta and Mario Draghi into a tangible plan of action. But von der Leyen vowed the bloc remained committed to reaching carbon neutrality within 25 years to reduce dangerous climate change — while also slashing red tape.

“The goals are cast in stone that we have by 2050,” she said, although Europe would need to be “flexible” on how to reach them. In particular, the blueprint said “possible flexibilities” should be on the cards for Europe’s struggling carmakers who are facing steep emission fines in 2025.

Simplification shock

Under the plan, dozens of laws will be revised, with rules on environmental and human rights supply chain standards, corporate sustainability and chemical safety all facing a trim. The “simplification shock” — as billed by commission vice-president Stephane Sejourne — has set alarm bells ringing with environmentalists.

“Under the guise of ‘simplification’, this initiative will dismantle essential safeguards for European citizens, the environment and the climate,” warned Kim Claes at Friends of the Earth Europe. But Markus Beyrer, director general at the EU-wide lobby group BusinessEurope, welcomed the plan as “a clear signal that the EU is committed to strengthening Europe’s economy”.

A new category of mid-sized company will be created to reduce the regulatory burden for thousands of firms, according to the text. A European legal regime, distinct from the 27 member states’ national jurisdictions, is to be set up to allow innovative companies to benefit from a single, harmonised set of rules on insolvency, labour law and taxation.

Reducing energy costs

Europe is suffering from energy costs that are much higher than those of its international competitors after the war in Ukraine cut off supplies of cheap Russian gas. Von der Leyen told a gathering of the world’s elite in Davos last week the bloc must “continue to diversify our energy supplies” and expand clean power sources including nuclear — once a Brussels taboo.

Green industry push

“Targeted, simplified aid” will encourage industrial decarbonisation, with Sejourne hoping the priority goes towards greening the “top 100 CO2-emitting sites”, which alone account for more than half of Europe’s industrial emissions. The plan also envisages the creation of labels to spur demand for low-carbon products — such as “green” steel, which Brussels is keen on but is in low demand due to its prohibitive costs. Specific plans are to be drawn up for troubled sectors such as chemicals, steel and automotive.

Published in Dawn, January 30th, 2025