It’s always significant when the EU’s ‘Big Three’ get together. Unlike the traditional Franco-German axis, France, Germany and Italy rarely attempt to jointly shape EU policy.
The gathering of the ‘Big Three’s economy ministers in Meudon near Paris on Monday (8 April) was followed by a joint communique that amounts to a mini-economic manifesto for the next five years. Two months ahead of European elections that appear almost certain to deliver a second term for the German EU Commission president Ursula von der Leyen, this was an attempt to shape the next mandate of the EU institutions.
If that is so, it is revealing that the three ministers’ recommendations are something of a damp squib in policy terms.
The main proposal made by German economy minister Robert Habeck, his French counterpart Bruno Le Maire and Italy’s Adolfo Urso was that the commission should cut red-tape on small businesses to “unlock the innovation potential of European firms”.
This is not a bad idea, but it is hardly new and something that almost everyone agrees on. Campaigning for the EU to cut regulation on small firms was a hobby horse of successive UK governments before Brexit and has since been taken on by others, particularly Nordic and North European states. The commission itself, meanwhile, frequently expresses its intentions of cutting bureaucracy faced by businesses.
If so, it does not look like the next five years will be particularly ambitious.
Brussels insiders have spoken about the second term of Ursula von der Leyen’s EU Commission being an ‘implementing’ mandate. On the evidence of the communique issued by the ‘Big Three’, there is no wish for EU governments to be more ambitious on decarbonisation.
But ‘implementing’ needs money. Absent from the joint communique was any acknowledgment of the massive investment that will be needed in Europe’s energy, digital and industrial infrastructure. Earlier this week, the European Round Table for Industry, a Brussels-based lobby group, warned that Europe will need to invest €800bn by 2030 in its energy infrastructure alone to meet its ambitious climate goals and keep its industry competitive. That funding is unlikely to come from the private sector alone.
Where the rest of the money will come from is unclear, especially since the EU’s revised fiscal rules are set to make it harder for governments to fund such projects and will, instead, require mutli-billion euro cuts to infrastructure spending.
Compared to that, the three ministers call for the EU to “ambitiously eliminate unnecessary administrative burden to unleash the full potential of European businesses for investment, innovation and growth in Europe,” looks like the lowest-hanging fruit.
Strategic industries
“EU industrial policy should combine a well-targeted support to strategic industries while fostering a high level of competition in the single market and reducing the bureaucratic burden,” they added.
However, there is no detail on how this could work in practice. Le Maire has mooted the idea of a “European preference” in public procurement, which would require 50 percent of the tender to be reserved for European firms. That smacks of US-style protectionism, and like the idea floated several years ago of EU policy actively promoting so-called ‘European champions’ in key industrial sectors, it is hard to see the EU’s more economically liberal governments agreeing to it.
The idea of an EU industrial policy to enable pan-EU co-ordination of economic policy to counter the likes of the United States and China has come back into vogue among policymakers in Brussels.
Von der Leyen’s commission presented an industrial policy in March 2020, just days before the start of the Covid-19 pandemic, aimed at supporting the EU’s green and digital transitions, make EU industry more competitive globally, and enhance Europe’s strategic autonomy.
The blueprint has had mixed success. The suite of laws and policies that make up the EU’s Green New Deal and net zero carbon emissions programmes have positioned the bloc as an international rule-maker.
Ability to act
In a nod to this, Germany’s Habeck spoke of “the bloc’s geopolitical ability to act.”
But while there is probably unanimous agreement among EU states that the bloc should have the ability to act, precisely how it should exercise such powers is more divisive.
As well as on procurement, there have been disagreements between member states on how EU state aid rules should be framed to benefit European firms, and whether the bloc should offer targeted support to key industries.
Bruegel, a Brussels-based think tank has suggested that the commission offer “coordination for competitiveness” to enable EU countries to “cooperate in areas that offer the greatest gains on a sector-by-sector basis, supported by some EU-level funding.”
