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Europe’s Competitiveness Challenge

Submitted by on 10 Oct 2011 – 12:04

Bendt Bendtsen MEPBy Bendt Bendtsen MEP

Europe is weighed down by public and private debt, and an unwillingness to reform its struggling welfare systems. That is our fundamental challenge. And while many Europeans are still adjusting to a new, enlarged European Union, we have a tendency to believe that Europe’s role as one of the leaders and power houses in the new, global power matrix is somehow given. The last several years have proven that it is clearly not. A new China, a resource-rich Brazil, and an entrepreneurial India are becoming ever more powerful, economically as well as politically.

But the game is far from lost, and if Europe is able to harness the immense know-how and creativity in our populations, and in our small and medium sized businesses, I believe we have a good chance of maintaining a leading role.

Of course there is no one sure medicine to our economic ailment. All of EU, as well as the 27 national governments, are struggling to determine what needs to be done, and how to do it. I know it is on top of the upcoming Danish presidency of the EU.

I would, however, like to point to two particular areas in which the EU already has some advantages, but also a very big potential.

Firstly, Most of the European companies are small and medium sized and many of these have a good growth potential – for some even an immense potential. With the crisis in the Euro zone and the global threat of a double dip, we need to ensure that the fear of risk do not freeze our abilities of working and innovating our way out the recession. Good ideas need capital to turn into innovative start-ups, expand and eventually become innovative products and services that boost our competitiveness. Beyond banks, innovative small companies often get finance from venture capital funds and business angels who recognise a good idea and an opportunity to profit with a good business plan and investment in inventory, staff, etc. However, different rules throughout EU’s member states on taxation and support of these often make old fashion national borders a real problem and discourage investment across borders, meaning our economy loose out on what could have been a significant added value. The US has twice as much venture capital as Europe but it is not the lack of ideas or entrepreneurs that are holding us back -rather rules and bureaucracy. The EU Commission will present a strategy to tackle this later this autumn, a strategy I for one look forward to reading. Europe needs action.

The second competitiveness factor I want to mention is energy efficiency. If we continue on the current path, the EU will be importing more than 70 percent of its energy from third countries. So, in short, this is about investing in a competitive Europe, instead of wasting our money on Russian gas and Middle Eastern oil. Not only is importing energy expensive and environmentally unfriendly, it is also money that could have been spent on education, research, infrastructure, and other important areas. The Commission’s draft directive on energy efficiency proposes many of the necessary measures needed to curb Europe’s dependency on energy imports. The overall binding target, also proposed by my rapport, adopted by the European Parliament in December 2010 is to reduce energy usage in the EU with 20 by 2020. The key word is, of course, “binding”, meaning that the Commission should follow up on the measures taken by the member states at the latest in 2014, and preferably before the entry of a new Commission.

The energy efficiency proposal contains many different concrete proposals, but it is targets like the 3 percent target of refurbishing public buildings that, I believe, will make a tangible difference. It has already proven successful en several member states, increasing local employment, especially among craftsmen, but also production companies specialising in energy efficient products like water pumps, energy metres, and so on.

Europe is facing a challenge, and we have little other choice than to face it heads on. Harnessing the full power and potential of a true internal market for venture capital, and taking the proposed binding targets for energy efficiency seriously are just two examples of what can and should be done.