The Shifting Sands of European Competitiveness
European leaders convened at Alden Biesen castle on February 12, 2026, signaling a renewed focus on bolstering the EU’s economic standing. The retreat, attended by key figures including Antonio Costa, President of the European Council, and Mario Draghi, highlighted a growing consensus: the EU must act decisively to reverse a decades-long trend of economic stagnation relative to the United States and China.
The Urgency of the Moment
The current economic landscape demands a proactive approach. As noted during the summit, the EU’s GDP, currently at $19.5 trillion, lags significantly behind the US’s $28.75 trillion. This gap, which began widening in 2008, underscores the demand for fundamental reforms. Leaders acknowledged the situation as potentially “existential” for European industry, particularly in Belgium, France, and Germany.
Key Priorities for a Revitalized EU
President Costa outlined four core priorities for enhancing EU competitiveness: deepening the single market, scaling up European businesses (including large enterprises), fostering a proactive trade policy, and strategically increasing both public and private investment. These goals are intertwined, with access to vibrant capital markets seen as crucial for enabling business growth.
Debate Over Funding and Debt
A central point of contention remains the question of funding. French President Macron advocates for a common debt instrument – issuing joint bonds – to finance critical investments in areas like defense, space security, clean technologies, artificial intelligence, and quantum computing. This proposal, however, faces resistance, particularly from Germany, which is wary of mutualizing debt. The discussion has evolved, with a focus shifting towards common debt for specifically European projects, rather than assuming pre-existing liabilities.
Streamlining Regulations and Boosting Innovation
Beyond funding, a key theme emerging from the summit is the need to reduce bureaucratic hurdles and foster innovation. Chancellor Merz of Germany called for “courageous” measures to deregulate across all sectors. Ursula von der Leyen, President of the European Commission, emphasized the importance of simplifying regulations, but likewise pointed to the slow pace of legislative progress within the EU system.
The “28th Regime” and the Single Market
One concrete proposal gaining traction is the “28th regime” for businesses, aimed at streamlining regulations and removing barriers to cross-border trade. This initiative, alongside efforts to harmonize standards across member states – illustrated by the differing truck weight limits between Belgium and France – seeks to unlock the full potential of the single market.
The Rise of “Pragmatic Federalism”
The discussions also revealed a growing interest in a more flexible approach to EU governance, often described as “pragmatic federalism.” This involves utilizing “enhanced cooperation” – allowing a subset of member states to proceed with initiatives even if others are unwilling to participate – and establishing clear timelines for achieving objectives. If deadlines are missed, those willing to proceed can move forward without being held back.
Protecting European Industries and Navigating Global Trade
Leaders also addressed the need to protect European industries from unfair competition, particularly from China. While a complete “decoupling” from the Chinese economy is not the goal, there is a growing recognition of the need to safeguard European economic interests. This includes exploring measures to ensure reciprocal technology transfers in investment agreements.
The “European Preference” Debate
The concept of a “European preference” – favoring products made in Europe – is also under consideration. While this approach could provide a boost to domestic industries, it also raises questions about potential costs and compatibility with international trade rules. The Industrial Accelerator Act, expected to be presented soon, may include a European preference for public procurement in strategic sectors.
FAQ
- What is the main goal of the EU summit at Alden Biesen? To identify ways to boost the EU’s economic competitiveness and reverse a trend of stagnation.
- What are the four priorities outlined by President Costa? Deepening the single market, scaling up businesses, proactive trade policy, and increased investment.
- What is the disagreement regarding funding? France proposes common debt, while Germany is hesitant about mutualizing debt.
- What is “pragmatic federalism”? A more flexible approach to EU governance allowing subsets of member states to proceed with initiatives even if others don’t agree.
Pro Tip: Staying informed about EU policy changes is crucial for businesses operating within the European market. Regularly consult official EU websites and industry publications for updates.
Did you realize? The EU’s economic growth has consistently lagged behind that of the US since 2008, highlighting the urgency of the current reform efforts.
To learn more about the EU’s economic policies and initiatives, visit the European Commission’s website.
What are your thoughts on the EU’s competitiveness challenges? Share your insights in the comments below!
