About this Series

This article is part of a multi-part series examining how Europe’s competitiveness compares with China, what structural imbalances have emerged, how these shape geopolitical realities, and what priority agenda Europe must pursue to restore strategic strength. The series concludes by assessing Europe’s actual priorities and policy actions, comparing them with the ideal agenda identified earlier. Each instalment builds on the previous one to form a coherent and comprehensive framework for understanding Europe’s competitive position in the world economy.

What We Learned from Parts 1, 2, 3 and 4

Part 1 established the analytical framework required to compare Europe and China across productivity, industrial scale, systemic competitiveness, and strategic autonomy. Part 2 applied this framework and revealed a widening structural imbalance: Europe retains scientific and high-value industrial strengths, while China dominates large-scale manufacturing, clean-technology supply chains, and cost competitiveness. Part 3 showed how these asymmetries translate into geopolitical leverage and strategic constraints, limiting Europe’s autonomy in a more contested world. Part 4 uncovered the underlying causes of Europe’s weaknesses—fragmentation, underinvestment, regulatory complexity, energy and infrastructure disadvantages, demographic pressures, and erosion of manufacturing depth. Together, these parts demonstrate that Europe’s competitiveness challenge is systemic, multidimensional, and increasingly geopolitical, requiring not incremental adjustments but a strategic transformation.

About This Part

In this fifth part, we outline the Priority Agenda Europe Needs—a normative blueprint for restoring competitiveness, strengthening strategic autonomy, and rebuilding industrial capabilities. This agenda is not a prediction or a description of current EU policy (that will follow in Part 6). Instead, it identifies the structural interventions required to confront Europe’s weaknesses head-on and reposition Europe as a competitive, resilient, technologically sovereign actor in a rapidly shifting global landscape.

1. Introduction: Europe Needs a Strategic Economic Project

Europe stands at a pivotal moment. The global industrial landscape is evolving faster than at any time since the post-war era, with China and the United States making aggressive, coordinated moves to secure technological and industrial leadership. Europe, by contrast, faces stagnating productivity, shrinking industrial capacity, and rising strategic dependencies.

To reverse these trends, Europe must articulate a strategic economic project: a multi-decade transformation that addresses underlying structural weaknesses and builds the foundations of long-term competitiveness.

The priority agenda outlined here centres on seven pillars that Europe must address simultaneously. Each pillar targets a systemic weakness identified in earlier parts of the series, and together they form an integrated pathway toward renewed competitiveness.

2. Pillar 1 — Make Big Bets: Scale Up Strategic Industries

2.1 Strategic Focus Over Diffusion

Europe must resist the temptation to spread resources thinly across many initiatives. Instead, it should concentrate efforts and capital on a limited set of strategic sectors that underpin economic and geopolitical power:

Semiconductors (equipment, design, fabrication)
Batteries and electric mobility
Clean-tech manufacturing: solar PV, wind, heat pumps, electrolysers
Artificial intelligence, quantum technologies, and compute capacity
Biomanufacturing and advanced materials
Industrial automation and robotics

These sectors shape global value chains, determine future energy systems, and influence geopolitical leverage.

2.2 European-Level Industrial Projects

Strategic industries require scale, and only the European level can provide it. Europe should develop:

coordinated industrial development programs,
EU-level co-investment mechanisms,
megaproject permitting frameworks,
shared R&D and prototyping infrastructure,
cross-border industrial clusters.

Success in these sectors demands the cohesion and ambition of a single industrial actor—not 27 loosely aligned ones.

2.3 Speed as a Competitive Factor

Europe must treat time-to-market as a strategic variable. China’s ability to deploy industrial capacity in months has become a major competitive advantage. Europe must shorten:

project permitting cycles,
funding disbursement processes,
regulatory approval times.

Competitiveness today is determined not only by what Europe builds, but by how fast it builds it.

3. Pillar 2 — Mobilise Capital at Scale

3.1 Create a Deep, Unified Capital Market

Europe requires a fully integrated Capital Markets Union to mobilise private investment for deep-tech and industrial transformation. Key priorities include:

harmonising insolvency and securities laws,
enlarging cross-border investment channels,
enabling pension funds to invest in growth sectors,
reducing risk-weight capital constraints for strategic sectors.

3.2 Strategic Public–Private Investment Vehicles

Europe should establish:

a multi-hundred-billion-euro EU Industrial Transformation Fund,
significantly expanded European Sovereign Tech Fund instruments,
EU-backed guarantees for semiconductor fabs, clean-tech gigafactories, and high-performance computing centres.

These vehicles must operate with speed, clarity, and risk tolerance—not traditional bureaucratic rhythms.

3.3 Improve Risk Appetite

Europe’s financial culture is conservative. To compete globally, Europe must encourage:

greater tolerance for industrial risk,
faster scale-up financing,
more aggressive commercialisation of research.

Without risk, there is no innovation; without innovation, no competitiveness.

4. Pillar 3 — Make Regulation Pro-Speed and Pro-Innovation

4.1 Outcome-Based Regulation

Regulation should target results rather than prescriptive inputs. Europe should shift toward frameworks that:

encourage experimentation,
allow regulatory sandboxes,
support innovative business models,
reduce administrative burdens for strategic sectors.

4.2 Strategic Permitting Reform

Permitting times for industrial sites, renewable energy, and infrastructure must fall dramatically. Europe should introduce:

“Strategic Project Status” designations,
guaranteed permitting deadlines,
one-stop-shop administrative interfaces.

4.3 Reduce Fragmentation

For industry to scale, Europe must harmonise:

data policy,
energy market rules,
environmental permitting processes,
product standards.

Fragmentation is the enemy of competitiveness.

5. Pillar 4 — Restore Energy and Infrastructure Competitiveness

5.1 Competitive Energy Pricing for Industry

Europe needs a long-term energy competitiveness plan combining:

expanded renewables,
enhanced storage and flexibility,
next-generation nuclear (where politically viable),
grid modernisation,
cross-border energy integration.

A competitive economy cannot rely on structurally higher industrial energy prices than global rivals.

5.2 Infrastructure for a New Industrial Era

Europe must develop:

strategic industrial corridors,
gigafactory-ready industrial zones,
fast-build logistics infrastructure,
robust digital and AI compute infrastructure,
hydrogen, CO₂, and heat networks.

Industrial competitiveness is built on physical and digital infrastructure that is modern, abundant, and easy to access.

6. Pillar 5 — Build a Talent, Skills and Migration Strategy

6.1 Skills for Industrial and Technological Leadership

Europe must overhaul education and training systems to meet the needs of strategic sectors:

more STEM graduates,
revitalised vocational apprenticeships,
lifelong digital and AI upskilling programs,
targeted industrial technician training.

6.2 A Strategic Migration Framework

Europe must intentionally attract global talent by creating:

simpler visa pathways,
EU-wide talent mobility schemes,
competitive residency programs for high-skilled workers.

6.3 Retaining Talent Within Europe

Talent must be incentivised to stay through:

competitive wages,
vibrant innovation ecosystems,
access to capital and entrepreneurial networks.

7. Pillar 6 — Secure Supply Chains and Strategic Autonomy

7.1 Diversify and Reshore

Europe must reduce single-country dependency in:

critical raw materials,
battery materials,
solar components,
semiconductors,
pharmaceuticals.

This requires reshoring select stages of production and diversifying global inputs.

7.2 Build Domestic Capabilities

Key actions include:

supporting extraction and processing projects,
scaling recycling capacity,
establishing long-term public-private offtake agreements,
investing in circular industrial systems.

7.3 Manage Strategic Risks Proactively

Europe must develop:

strategic stockpiles,
early-warning dependency monitoring,
supply-chain resilience stress tests.

Strategic autonomy is not autarky—it is resilience.

8. Pillar 7 — Strengthen Governance and Execution Capacity

8.1 Empower European-Level Action

Europe requires new governance tools for industrial competitiveness, including:

greater qualified majority decision-making in strategic economic areas,
EU-level industrial policy mandates,
a strong Competitiveness Commissioner with cross-cutting authority.

8.2 Create Execution Machinery

Europe needs delivery-focused structures:

an EU Industrial Delivery Unit,
transparent key performance indicators,
annual competitiveness scorecards.

Strategy without execution is aspiration.

8.3 Ensure Policy Continuity

Industrial renewal requires 20–30 years of consistent policy direction. Europe must insulate industrial strategy from political and fiscal volatility.

Conclusion

The seven pillars outlined here represent the minimum viable strategy for restoring Europe’s competitiveness in an age of geopolitical and technological upheaval. Europe must act with purpose, speed, and scale—qualities that have not traditionally characterised its economic governance but are now indispensable.

The challenge is systemic; so must be the response.

In Part 6, the final part of this series, we will map this ideal agenda against Europe’s actual priorities and actions, assessing where the EU is aligned with what is needed—and where the gaps remain substantial.

Europe vs China: Competitiveness in a Changing World — Part 5: The Priority Agenda Europe Needs