Brussels, 11/09/2014 (Agence Europe) - Despite current economic difficulties, the manufacturing industry of the EU has competitive advantages which should be put to better use to boost growth. In order to avoid a stagnation in growth, the 28 EU member states must immediately take decisive measures to resolve each of the familiar problems: stagnating investment, limited access to funding, inefficiency in public administration, access to third markets, a lack of innovation and high energy prices. These are the conclusions from the two reports produced by the Commission in 2014 on the industrial competitiveness of the EU, which were unveiled by European Commissioner for Industry Ferdinando Nelli Feroci on Thursday 11 September.
Performances vary widely between the member states. Four groups have emerged: - highly competitive countries improving still further (the Netherlands, Germany, Denmark and Ireland); - highly competitive companies, but in stagnation or in decline (Belgium, the United Kingdom, Austria, France, Italy, Luxembourg, Sweden and Finland); - countries with modest but improving levels of competitiveness (Estonia, Lithuania, Spain, Latvia, the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Greece); - and countries with modest and stagnating or declining levels of competitiveness (Slovenia, Bulgaria, Croatia, Malta and Cyprus).
Overall, the competitive advantages of the EU in the manufacturing sector have not changed: highly qualified labour force, strong local content of goods for export and comparative advantages related to the complexity and high quality of the products. The member states have also been implementing a range of strategies to increase competitiveness since the crisis began in 2008. However, ongoing shortcomings will call for the capitals to take far-reaching measures in key areas.
In order to boost industrial competitiveness and internal demand, investment is needed in all sectors of the economy of the EU, the only region of the world where investment has fallen everywhere and to such a high degree, compared to the United States and the Asian economies, Nelli Feroci stressed.
Access funding must also be improved, particularly for SMEs and start-ups, which face more hardships in obtaining bank loans than larger companies, even though their financial results are the same. The situation is of greatest concern in Spain, Greece and Ireland. “An extra €225 billion is needed between 2014 and 2016 to fund these investments. We are working with the EIB on ways of improving access to funding. However, we are awaiting the results of an implementation of banking union”, the commissioner explained.
Innovation, and bringing to market the results of R&D, must also be improved. “Innovation has a positive impact on employment: a 1% increase in sales of innovative products can bring about similar growth in employment levels”, Nelli Feroci said.
Improving the quality of administrative performance is also vital. Many member states need to cut the cost and uncertainty businesses face in their dealings with the public administration. The cost of tax mechanisms in terms of money and time, corruption and the inefficiency of the legal systems are the greatest obstacles to the growth of companies. Most member states also need to take account of the effects on competition of rules and legislation in other areas.
A level of accompaniment is required to support the internalisation of SMEs. The Commission has suggested executing policies targeting the corporate environment as regards access to capital, skills, support innovation and measures to reinforce productivity.
Lastly, industrial competitiveness is suffering as a result of gas and electricity prices, which are higher in the EU than in many other economies. Improvements made in terms of energy efficiency have failed completely to balance out the negative effect of the price hikes. The setting in place of a competitive single energy market and diversifying sources of energy are therefore essential.
These reports will feed into the discussions of the Competitiveness Council of 25-26 September and the Commission's recommendations in the process of the European semester. (EH)