VCI Discussion Paper on Industrial Policy for the European Council
Kickstarting the Industrial Renaissance of Europe
The European Commission wants to increase the share of industry in the European Union GDP. Industry’s competitiveness and ability to innovate are the core elements of an industrial renaissance. But in 2012 the share of industry in GDP further declined. The VCI presents initiatives in six fields, in order to stop the de-industrialisation of Europe and to start its re-industrialisation.
Europe is the birthplace of modern industry. In recent years many EU Member States had a relatively weak growth performance together with politically induced structural changes – to the detriment of industry. Furthermore, at EU level ambitious new political goals – especially in the areas of climate and environmental protection – have overtaken the goal of a strong, prosperous and innovative European industry.
In its Industrial Policy Communication of October 2012, the European Commission became aware of this negative trend and set a new goal: 20 percent of the GDP should be produced in the manufacturing sector by 2020, i.e. 4.5 percentage points more than in 2011. But in its Competitiveness Report of September 2013 the Commission had to acknowledge that the share of industry in GDP was declining even further, namely to 15.1 percent. Obviously, with this decline of industry in many European countries, Europe’s weight in the world economy is declining as well. How can this alarming development be reversed?
VCI suggests initiatives in six topical fields
Industrial competitiveness and the ability to innovate are at the core of an industrial renaissance. VCI proposes initiatives in six fields of activity, in order to put a halt to the de-industrialisation of Europe and to start European re-industrialisation:
- Establish a "Competitiveness Watchdog" for EU initiatives and their implementation in the Member States
- Meaningful assessment of economic impacts for all policy initiatives
- Progressing the European Energy Market
- Gearing up innovation
- Modernising European Infrastructures
- Workshop towards a world without trade barriers
Re-industrialisation needs to build upon industry as a whole. Europe depends on stable value chains to solve the challenges of tomorrow – from basic industries to capital and consumer goods. Needless to say that the strengthening of European industry must not adversely affect the service sector; many services are indispensable for a strong industry.
Strengthening industry is no purpose in itself. Five years after the beginning of the financial and economic crisis, Europe urgently needs higher and sustainable growth with more employment. Europe cannot return to the growth path without a strong industry. Consequently, an industrial renaissance goes hand-in-hand with over-coming the crisis. Therefore, this industrial renaissance needs to be launched without delay.
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