The European economy is currently facing a long-awaited dynamic recovery. Consumer and business confidence is rising, and industrial production growth is accelerating. Even more encouragingly, the upturn is broad-based, driven not only by domestic consumption, but increasingly also by investment and export stimulus from a growing global economy.
However, these short-term successes should not disguise the long-term challenges facing the European economy. Therefore, the recent economic recovery gives no grounds for complacency. Instead, the opportunity must be taken to improve the potential for sustainable long-term growth in Europe. To do so, significant efforts must be devoted to strengthening the European innovation system. Europe and its policymakers must become more open to innovation and new technologies. Europe should embrace the many opportunities and manage the respective risks rather than banning or restricting technologies pre-emptively. More public and private investment in innovation is needed, and markets for risk capital need to become more efficient.
A positive climate for innovation is even more important in view of the fact that digitisation is currently transforming industrial production processes and business models worldwide. Utilising the great potential of digitisation for higher productivity and competitiveness requires an efficient digital infrastructure and an EU internal market without barriers but with harmonised high standards for data and cybersecurity. Educational systems must respond to the new requirements of digital economies on all levels.
International openness is a further prerequisite for the sustained growth of Europe’s industry, deeply integrated as it is in global value chains. However, public acceptance of globalisation and economic integration are fading. This is reflected in the political arena: Negotiations for a transatlantic trade agreement are stalling, and U.S. tax reform plans even contain significant new trade barriers for multinational players. But we need not look so far from home: European economic integration is at risk as well. European companies lack any orientation on the future relationship with the United Kingdom. Clarification of the conditions for further movement of goods, services, capital and people and on the length of a transition period to any new regime is urgently required to ensure that both the EU27 and the UK remain forceful and integrated players in global markets.
Finally, Europe also needs to champion industrial competitiveness when shaping energy, climate and environmental policies. Europe leads in these respective indicators and can therefore contribute more to global targets by exporting the best technologies rather than by unilaterally increasing domestic targets.
The 2017 edition of the ERT Benchmarking Report presents a comprehensive overview of the European position in the fields of economic performance, trade, digital economy, innovation, energy and climate, and labour markets.
We are confident that you will find it interesting to read.