A Competitiveness Compass for the EU

Today, the European Commission presented its Competitiveness Compass. The document sets out the EU’s industrial policy for the next several years and has two broad goals. The first is to identify policy changes Europe needs to increase its competitiveness. The second is to develop new ways of working and coordinating with Member States. The report builds on last year’s Draghi report and turns many of the recommendations contained in the report into a roadmap for the new European Commission.

While the document is not legally binding, the Compass lists “Flagship Actions,” which outline the Commission’s legislative agenda for 2025 and 2026. The compass also outlines the Commission’s priorities for the next Multi-annual Financial framework of the EU:

The next Multi-annual Financial Framework will be an opportunity to go further and rethink the structure and allocation of the EU budget in support of competitiveness priorities. The EU budget spending is currently fragmented over too many programmes – often with limited coordinated strategic steer and high complexity for the beneficiaries. Focusing on EU competitiveness requires a set of commonly agreed funding priorities in the form of EU public goods and multi-country investment projects, to be defined through a strengthened policy steering mechanism.

This aligns with our previous analysis of EU innovation funding where we point to the importance of prioritizing strategic investments that address current problems to reduce digital dependencies. Related to this, the report’s recognition of the central role of public goods is consistent with our work on public digital infrastructure that calls for governments to take a more active role in shaping the digital economy to meet societal needs, including by investing in digital commons as providers of that infrastructure.