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EU’s Competitiveness Compass: A Strategy for Growth and Innovation

Cristina Lefter
Compass showing the way

The European Commission has just unveiled its Competitiveness Compass, a strategic blueprint to bolster the EU’s economic strength over the next five years.[1] This initiative comes in response to mounting challenges, including lagging productivity, global technological competition, and high regulatory burdens on businesses.




Key Challenges Identified According to the Compass


Despite Europe’s robust Single Market and skilled workforce, it has fallen behind in key innovation sectors. The EU struggles to translate research into marketable technologies, while energy costs and regulatory complexity weigh heavily on businesses. Moreover, global players like China and the US have outpaced Europe in several advanced technologies, raising concerns about economic sovereignty.


The EU’s Proposed Solutions


To regain its competitive edge, the Commission sets out three transformational imperatives:

  1. Closing the innovation gap – Enhancing research commercialization, scaling up startups, and fostering cutting-edge sectors like AI, clean energy, and biotech.

  2. A roadmap for decarbonization and competitiveness – Aligning green policies with economic growth, reducing energy costs, and boosting industrial investment.

  3. Reducing dependencies and enhancing economic security – Strengthening supply chains, expanding trade partnerships, and ensuring fair competition in global markets.


The Competitiveness Compass also emphasizes regulatory simplification, a refocused EU budget, and stronger policy coordination among Member States to foster investment and job creation.


What’s Next?


The new Commission aims to translate these proposals into concrete action, with legislative and financial initiatives planned throughout 2025-2026. Businesses operating in the EU should prepare for upcoming policy changes affecting digital transformation, competition law, and industrial support mechanisms.



Stay tuned as we analyze the legal and commercial implications of these reforms!


[1] The document has been published on 29 January 2025 and is available here: https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en

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