Swedish Enterprise’s input to the EU Industrial Forum

The European Commission’s update of its industrial strategy, and the establishment of an EU Industrial Forum, is of considerable importance to the Confederation of Swedish Enterprise. We therefore would like to provide our input to the members of this newly initiated Industrial Forum. This Forum is a high-level group, charged with the responsibility of assisting the Commission with implementing existing Union legislation, programmes and policies. As the name suggests, it has a particular focus on the industrial strategy. 

From our overall perspective, it is vital that the areas of growth, trade, competition rules, industrial ecosystems and R&D are priorities among the Commission’s efforts. It is fundamental that the industrial strategy is focused not simply on recovery but in particular on encouraging wider and longterm economic growth in Europe. This is something we have already discussed in more detail in our article here. 

The lessons to be drawn from the COVID-19 crisis

First, it is important to learn from the mistakes that were made during the time of the pandemic and to ensure that we put policies in place to avoid this happening again. The robustness of value chains must be further reinforced, not through a protectionist reshoring approach - which is both unrealistic and economically unsound - but rather through their business-driven diversification.

The pandemic has, in some respects, accelerated structural development of the economy, in particular the increase of digitalisation. This is something that should be embraced rather than counteracted. However, the fundamentals of economics are still valid – that sustainable growth, which will be more important than ever considering the raising levels of debts, are best achieved by well-functioning markets and free open trade. The business community is the engine of the economy and a pre-requisite for the evolution towards a climate neutral economy.

Our approach to ecosystems and industrial partnerships

The basic concept underpinning public-private-partnerships is both reasonable, and in some fields necessary, to accelerate development and share responsibility. Growth needs to be business driven, but the large levels of investment needed to tackle the twin Green and Digital transitions will also require public funding.

The deliverables of the Commission’s ecosystems approach, which it has been working on for some time, remain unclear. The process of analysing and selecting the ecosystems have been characterised by an unfortunate lack of transparency.

So far, our impression is that the 14 ecosystems selected have been used to provide an analytical framework to assess the different needs of various parts of the business economy in the light of the Covid 19 crisis. Their selection has, however, omitted several important sectors of the European industry or classified them as disparate parts of a large number of ecosystems that lack the conditions to gain real benefit. We are greatly concerned that this ‘ecosystem grid’ seems to have spread and been applied in other instances, such as in the use of the funds from the Recovery and Resilience Facility.

Any updated EU industrial Strategy must be market-driven and must safeguard open, fair and efficient markets. Such a strategy also needs to adopt a long-term approach if it is to build competitiveness by improving the fundamental conditions for business in Europe. It must provide the certainty to allow companies to invest in digitalisation and climate-friendly production. That also includes further development of the EU Single Market, more effective and clearer regulations with less red tape and unnecessary administrative burden, wide-ranging investments in research and education and new ambitious trade agreements.

Finally, we would caution against short-sighted public spending and selective measures, which risks distorting competition, as this poses potential problems. The biggest concern, however, is that these kinds of measures are placed in the spotlight and thus receive a disproportionate level of importance. This risks overshadowing the need for more comprehensive, and sometimes difficult, reforms.