Europe’s Competitiveness Crossroads: Can Political Unity Overcome Structural Hurdles?

The Draghi Wake-Up Call: A Continent at a Turning Point

When Mario Draghi presented his groundbreaking competitiveness report, he delivered more than just policy recommendations—he issued a stark warning about Europe’s future relevance. The former European Central Bank president challenged EU leaders to embrace coordinated industrial policy or accept permanent secondary status behind global powers. One year later, Europe stands at a critical juncture, balancing ambitious decarbonization goals against the practical realities of 27 sovereign nations attempting to move as one.

The Draghi Wake-Up Call: A Continent at a Turning Point
The Sovereignty Agenda: Born from Crisis, Forged in Unity
The Competitive Trinity: Reindustrialization, Openness and Decarbonization
The Regulatory Maze: Europe’s Greatest Challenge and Secret Weapon
The Implementation Imperative: From Consensus to Action
The Infrastructure of Integration: Building Cross-Border Solutions
A Continent at the Crossroads: Stability Versus Stagnation

The Sovereignty Agenda: Born from Crisis, Forged in Unity

European Commission Executive Vice-President Stéphane Séjourné acknowledges the transformative impact of recent shocks. “There were two major economic shocks that shaped this new way of thinking,” he explains. The COVID-19 pandemic exposed dangerous dependencies in international supply chains, while Russia’s invasion of Ukraine revealed Europe’s energy vulnerability. Rather than crippling the bloc, these crises sparked what Séjourné describes as “a real change of mindset” throughout EU institutions., according to recent research

The response has been remarkably swift in some areas. “In less than two years, we reduced dependence on gas for electricity generation from over 50% to under 10%—a record pace,” Séjourné notes. This accelerated transition demonstrates Europe’s capacity for rapid adaptation when political will aligns with necessity., according to recent innovations

The Competitive Trinity: Reindustrialization, Openness and Decarbonization

Europe’s strategy rests on three interconnected pillars that might appear contradictory at first glance. The EU aims to simultaneously pursue reindustrialization, maintain global trade openness, and achieve rapid decarbonization. According to Séjourné, this triple objective represents not just climate policy but a comprehensive economic vision. “Our decarbonization strategy will help steelmakers, chemical plants and vapor-crackers modernize their production systems to be more competitive worldwide,” he asserts., as detailed analysis

This approach marks a distinct departure from American energy policy. “Europe simply doesn’t produce enough oil or gas,” Séjourné explains, making reduced strategic dependence an inherent competitive advantage. The €450 billion annually spent on energy imports could instead fuel European innovation and infrastructure.

The Regulatory Maze: Europe’s Greatest Challenge and Secret Weapon

Perhaps the most significant barrier to European competitiveness lies in its own bureaucratic complexity. The theoretical single market, built on four freedoms of movement, remains hampered by 27 distinct legal and regulatory regimes. The Commission’s proposed solution—the ’28th Regime’—aims to create a harmonized EU-wide framework that would allow companies to operate across borders with “one legal representative, one accountant, one company status throughout Europe.”

Yet in this perceived weakness, Séjourné identifies a surprising strength. “In the U.S., everything can change after an election. In Europe, we may move slower at first, but once the system is in place, it’s stable.” This regulatory predictability, he argues, provides Europe with a crucial advantage against American volatility and Chinese scale, offering investors long-term certainty that facilitates major capital commitments.

The Implementation Imperative: From Consensus to Action

The growing consensus around Europe’s competitive challenges hasn’t yet translated into comprehensive execution. As Séjourné acknowledges, the real test lies in transforming technical reforms into tangible reality. This requires unprecedented coordination across member states to eliminate national barriers sector by sector—a process demanding significant political capital from leaders facing domestic pressures.

European business leaders have amplified the urgency. In a recent meeting brokered by the World Economic Forum, executives from companies including SAP and IKEA emphasized that Europe’s competitiveness now depends on execution speed rather than new policy declarations. The message was clear: ambitious rhetoric must quickly yield to concrete results.

The Infrastructure of Integration: Building Cross-Border Solutions

At the heart of Europe’s competitive revival lies what might be termed ‘necessary integration.’ Decarbonization demands new energy grids and supply chains that transcend national borders, requiring both cross-border financing and unprecedented institutional trust. “The Commission’s role is to give coherence to this mix by building cross-border infrastructure,” Séjourné explains, pointing to efforts to create electricity networks that flow freely between countries according to production and demand.

This vision extends beyond energy to encompass digital infrastructure, transportation networks, and research collaboration. The European Commission’s innovation initiatives represent part of this broader ecosystem approach to competitiveness.

A Continent at the Crossroads: Stability Versus Stagnation

Europe’s promise of regulatory stability could become either its greatest asset or its fatal flaw. In a decade defined by global shocks, the value of predictability cannot be overstated. Yet this very stability risks becoming stagnation if not paired with sufficient agility. The EU must demonstrate it can maintain its reliable framework while adapting to rapid global changes.

Séjourné remains optimistic about this balancing act. “Europe is not just a beautiful idea; it’s a powerful and stable economic space,” he reflects. The coming years will test whether this stability can evolve into dynamic competitiveness—whether Europe can harness its collective political energy not just to preserve what exists, but to build what must come next.

The Draghi report ignited the conversation, but the true measure of Europe’s political will won’t be found in commission reports or executive declarations. It will reveal itself in the complex, unglamorous work of regulatory harmonization, cross-border infrastructure development, and the daily decisions that either build competitive advantage or perpetuate fragmentation. Europe possesses the vision and the resources; the question remains whether it can muster the consistent political unity to transform potential into prosperity.