07 February 2023

EU urgently needs to do its homework on investment conditions in Europe to improve competitiveness and deliver the net-zero transition

The overall competitiveness challenge
Already before the series of crises of the last two years, European enterprises were fighting hard to preserve their competitiveness. Having done their utmost during the Covid pandemic European companies are now faced with the headwinds of the asymmetric shock of the consequences of the war in Ukraine as the rise in energy costs is higher and hitting them harder than their American and Asian competitors. Moreover, incentives and subsidies by some of Europe’s key trading partners are redirecting private investment away from Europe.
European leaders urgently need to improve investment conditions in the European Union to strengthen the competitiveness of European companies, deliver the net-zero transition and give a credible answer to the U.S. Inflation Reduction Act. To be effective, the actions they will define need to be comprehensive. They must address simultaneously the push factors resulting from higher energy and regulatory costs as well as lengthy permitting procedures in Europe and counter the financial pull factor created by the US Inflation Reduction Act.
The European Commission has finally recognised the urgency to address Europe’s competitiveness challenges and the Green Deal Industrial plan for the net-zero age can be a step in the right direction. However, broader efforts will be needed to improve the overall investment and business conditions in Europe.
Addressing discriminatory provisions of the US-IRA
BusinessEurope greatly values the transatlantic relation. Strong EU-US cooperation aimed at reducing the cost of doing business across the Atlantic by easing regulatory burden will facilitate transatlantic trade, investment and help better harnessing the EU-US innovation potential. We welcome the objective and efforts from the US to increase climate ambition and support further investments in clean technologies and solutions through the Inflation Reduction Act. However, we oppose provisions that are discriminatory, go against WTO rules of national treatment and most favoured nation principles. They undermine European interests...

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