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The EU will strengthen competitiveness

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Italy’s former Prime Minister Enrico Letta is behind a recent report on the EU’s internal market. Together with EU President Charles Michel, he is advocating for the creation of a capital market union. Photo: AP / NTB

Of NTB | 18.04.2024 18:13:51

Policy: – We need a new boost for competitiveness in Europe, said EU President Charles Michel on X/Twitter after the summit ended on Thursday afternoon at 5.30pm.

Among other things, he promises massive investments and less bureaucracy.

The investments will both take place through a common capital market union and the European Investment Bank, according to Michel.

Thus, it appears that the EU countries finally agreed on a common platform for the free flow of capital.

The EU’s economy is increasingly lagging behind the US, which attracts new investment with juicy tax cuts and subsidies.

It has to end, the leaders of the EU countries agree, though. But when it comes to how it should be done, opinions differ.

In addition, the EU must strengthen security and build steam in the defense industry, secure money for Ukraine and appease the Union’s angry farmers.

Where will the money for all this come from? No one has an answer to that question yet.

At the EU summit, a report from Italy’s former Prime Minister Enrico Letta about the EU’s internal market starting point.

A little later this year, a report on the EU’s competitiveness is expected from another Italian ex-prime minister and former head of the European Central Bank, Mario Draghi.

He believes that extensive changes are necessary, including far more harmonization of regulations and less bureaucracy, and that areas such as energy, telecoms and finance are integrated into the internal market.

One of the most controversial topics was the proposal to create a capital market union, which, among others, EU President Charles Michel has stepped into the breach.

– This is absolutely fundamental, Michel said on the way to the summit.

Now it seems that he has brought the rest of the EU with him.

Countries like France and Germany are for it. They believe that a common financial platform is the only way to compete with the United States.

But a number of smaller countries, such as Ireland and Luxembourg, were initially opposed.

As home to many European companies, the two countries have little appetite to cede authority in this field.

How will the EU assert itself in the competition with the US and China? That was the big question at the EU summit on Thursday.

The economic realities are challenging to say the least: The green and digital shift will involve investments in the tens of billions of dollars in the years to come.

In the report, Letta points to major shortcomings in the internal market. It comes at a cost in the form of less economic growth, which in turn deprives the EU of economic muscle.

At the heart of the argument was the fact that such a union would shift power and authority from the member states to the Paris-based EU agency European Securities and Markets Authority (ESMA).

(© NTB)

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