The French EU presidency has launched discussions on a new European growth and investment model. This is the Confederation of Swedish Enterprise input to ongoing discussions, focusing on three areas: recovery, growth, and investment.
Russia’s war in Ukraine will dominate the European agenda for the foreseeable future. But in those discussions – the economy, competitiveness, and what future direction we wish the EU to take will also need to play a role.
Importantly, we should not draw the wrong conclusions from what is happening and turn Europe inwards. Conflicts and crises must not become a pretext for isolating Europe.
Deepening the internal market and strengthening trade relations - not least across the Atlantic and with like-minded partners around the world – are strategically important for building prosperity and security.
The French EU presidency has launched discussions on a new European growth and investment model, and the Versailles declaration has provided initial guidance. The Confederation of Swedish Enterprise is keen to provide input to ongoing discussions, and our first contribution focuses on three areas: recovery, growth, and investment.
Our starting point is that Europe’s response to future challenges is open markets, competition on equal terms, and market-driven solutions that drive long-term growth in Europe. Given the direction of travel, it is vital to draw attention to the importance of open and competitive markets in a healthy economy and society. Our economy, competitiveness and hence ability to set global standards represent our global leverage.
Our assessment and recommendations include:
- Recovery is underway but with rising risks due to higher inflation and Russia’s aggression towards Ukraine.
- The Recovery and Resilience Facility (RRF) was to some extent necessary, but it is important to follow up on the decision to ensure funds are used efficiently with a focus on sustainable transition and competitiveness.
- Additional broad-based joint borrowing and common debt put long-term competitiveness and the need for structural reform at risk.
- Ensure a transparent and speedy follow-up via a scoreboard of how RRF funds are used.
- The EU needs a competitiveness compass to guide policy initiatives in support of business competitiveness.
- The public sector must set clear rules to guarantee a level playing field, and it is then up to businesses to compete to develop the best solutions.
- Investment in the EU today is overly focused on politically identified projects and technologies. The market is typically best at identifying the best investments for the future.
- Too much support is provided by individual member states rather than from the EU as a whole – this distorts competition, as resources differ between member states.
- Negotiate new free trade agreements, (for example with India), and ratifying and implementing already negotiated agreements, (Mercosur, Mexico).
- Expand bilateral co-operation with the United States under the Trade & Technology Council.
- Safeguard the central role of the WTO in global trade. The WTO needs to be reformed and new trade rules that are adapted to today’s realities need to be negotiated.
- Safeguard the Growth and Stability Pact and sound fiscal policies.
- Harmonised intellectual property rights are necessary to create a single market. Partial harmonisation results in considerable differences in copyright protection between member states.
- Investment should mainly be directed towards R&D – this is crucial for our competitiveness.
- There is too little investment overall – a larger share of the EU budget needs to be allocated to R&D, and EU member states should increase their overall contribution to R&D activities.
- Above all, investment should be driven by the private sector. That is why it is crucial to implement reforms that stimulate and improve businesses’ opportunities to invest in R&D within the EU.
- Remove obstacles in the EU acquis against cross-border and long-term investment.
- Facilitate access to suitable long-term projects in which businesses can invest.
- Ensure that foreign investment reviews are limited to genuine security threats.
- Requirements must be set for public investment in research projects that incorporate patent information.
- There must be plans for how the results of funded research are to be managed. These plans should include issues on whether the results are going to be shared through open innovation processes or whether rights are to be registered.