EU leaders will assemble in Belgium on February 12 for a competitiveness summit intended to address long-standing concerns about weak productivity and strategic dependencies across the bloc. The gathering is widely expected to focus on setting a political course rather than approving specific legislation, according to Deutsche Bank economist Marion Muehlberger.
Muehlberger said the summit should aim at reviving the Single Market and securing a political compromise on the "broad direction of travel," while formal decisions are slated for the March 19-20 EU Council meeting. She warned that political execution risks remain sizeable as the bloc moves from strategies toward concrete laws.
The debate has taken on added urgency after former European Central Bank President Mario Draghi cautioned the EU to implement reforms quickly or face what he called a "slow agony." Muehlberger described progress to date as largely incremental: last year was dominated by strategies and action plans, while 2026 is expected to deliver more substantive legislative measures.
A number of high-profile proposals are on the horizon. Muehlberger lists the Industrial Accelerator Act, the Innovation Act, and the 28th Regime among items due for consideration. These proposals aim to bolster industrial capacity, ease scaling hurdles for companies, and streamline the regulatory environment for businesses operating across member states.
Strategic autonomy is expected to be a central fault line. A leaked draft of the Industrial Accelerator Act reportedly contemplates local content requirements in public procurement and targeted subsidies for sectors including steel, cement, aluminium and clean energy technologies. The same draft also includes a 49% cap on foreign direct investment in certain emerging strategic sectors and would make joint ventures mandatory in which EU firms hold at least 51%.
Member states differ on how far to go. France is described as more supportive of such measures, while Germany and the Nordic countries prefer limited, short-term "buy European" interventions confined to a narrow set of strategic sectors, according to Muehlberger.
Removing obstacles within the Single Market is another priority. The European Commission has begun addressing the 10 most harmful barriers identified last year and plans further legislative initiatives on harmonised product rules, public procurement and antitrust procedures. Efforts to reduce regulatory burdens are gathering momentum: 10 omnibus packages are estimated to cut compliance costs by roughly 13 billion euros per year.
On the innovation front, proposals expected by March 18 include a European Innovation Act and the 28th Regime, which are intended to facilitate scale-ups and introduce a "once only" digital company registration process to be completed within 48 hours. A Scaleup Europe Fund is also planned to back larger funding rounds in strategic sectors.
Other agenda items include a potential delay to the phase-out of free CO2 allowances, efforts toward a Savings and Investments Union, and further measures on defence readiness. Part of the defence agenda is the rollout of the 150 billion euros SAFE loan programme, scheduled to start in March.
Despite the ambition of these proposals, Muehlberger emphasized that significant political execution risks remain. Major reforms will require alignment among the European Commission, the Council and the Parliament, while many of the core levers for competitiveness policy continue to rest with national governments.
Key points
- Summit on Feb. 12 will set political direction on competitiveness, with formal decisions expected at the March 19-20 EU Council meeting.
- Major legislative proposals anticipated this year include the Industrial Accelerator Act, Innovation Act and the 28th Regime, plus measures to streamline Single Market rules and cut red tape.
- Potential "Buy European" measures could target sectors such as steel, cement, aluminium and clean energy technologies, while a Scaleup Europe Fund and digital registration reform aim to support business scale-ups.
Risks and uncertainties
- Political execution risks are substantial - reforms need cooperation between the Commission, Council and Parliament, and many competitiveness levers remain under national control.
- Diverging national positions could limit the scope of measures - France is more supportive of robust local content and FDI limits, whereas Germany and Nordic countries favor narrower, short-term interventions.
- The timing and implementation of planned proposals and programmes, such as the SAFE loan rollout and legislative packages, remain contingent on political agreement at later meetings.