The EU is taking up competition with the US and China

How will the EU assert itself in the competition with the US and China? That was the big question at the EU summit on Thursday.

– We need a new boost for competitiveness in Europe, EU President Charles Michel stated on X/Twitter after the summit ended at 5.30pm.

Massive investments and less bureaucracy are among the things he promises.

Agree on capital market union

The starting point for the EU summit was a report by Italy’s former Prime Minister Enrico Letta on the EU’s internal market.

In the report, Letta points to major shortcomings in the internal market. It comes at a cost in the form of less economic growth, which in turn deprives the EU of economic muscle.

One of Letta’s most controversial proposals is to create a capital market union – a common platform for the free flow of capital.

After several hours of discussion, the EU leaders finally agreed to such a union. The hope is that this will make it easier to raise private capital for large investments.

But how such a union will work in practice is still unclear.

– Strong will

– The important thing is that there is a strong will to make the capital market union a reality, says Sweden’s Prime Minister Ulf Kristersson to the Nordic press.

– But such a union requires a lot of common rules. The system is characterized by overly complicated regulations. Simplifications are needed, he adds.

Thursday’s decision provides a clear direction for the next EU Commission, which will not be in place until the autumn.

But as early as June, the commission will come up with proposals for how much authority a supranational EU agency should get.

No to common tax rules

The countries, on the other hand, turned down the thumbs down for a proposal to harmonize the regulations for corporate taxation.

– Tax must still be a national responsibility. There must be a clear boundary for what the countries are responsible for, and what the EU is responsible for, says Kristersson.

In contrast, the EU countries have agreed to incorporate the telecoms market into the internal market.

A little later this year, a report on the EU’s competitiveness is expected from another Italian ex-prime minister and former head of the European Central Bank, Mario Draghi.

Harsh realities

The backdrop for the summit was the harsh economic realities facing the EU:

* The EU’s economy is increasingly lagging behind the US, which attracts new investment with juicy tax cuts and subsidies.

* The green and digital shift will involve investments in the tens of billions of dollars in the coming years.

* In addition, the EU must strengthen security and build up steam in the defense industry, secure money for Ukraine and appease the Union’s angry farmers.

Where will the money for all this come from?

Kristersson establishes an almost obvious fact:

– If we are to be able to finance this, we need more income, he says.