Industrial competitiveness of EU member states: some progress made, but many challenges still lay ahead
Member States have made progress in improving the business environment, exports and sustainability. However, many problems still remain.
Member States have made progress in improving the business environment, exports and sustainability. However, many problems still remain. The convergence between industrially most competitive countries and the moderate performers is at a standstill. Moreover, the cost of energy is increasing in almost all Member States, contributing to the de-industrialisation of Europe. Big roadblocks are also access to finance and a drop in investment in almost all Member States. For European industry to start flourishing again, the performance of public administration needs to be significantly improved as well.
The main messages to come out of this year’s 2013 Member States Competitiveness Performance and Implementation of EU Industrial Policy report are:
Exports, mainly to the rest of the world, have been the main driver of industrial activity;
Innovation performance has improved since 2008, but convergence seems to have ended since 2012;
Business environment has improved in most Member States but so it has in the rest of the world;
Most Member States have improved the skills base of their workforce.
Investment remains stubbornly unresponsive to policy measures in the EU since the onset of the crisis;
High energy prices pose a significant problem for industries;
Access to finance has deteriorated in many Member States;
For some Member States, improving the efficiency and effectiveness of public administrations is the key to restoring growth.
Implementation of industrial policy
The Competitiveness Report also looks at progress in the implementation of the EU’s industrial policy. In line with the 2012 industrial policy Communication update ‘A stronger European industry for growth and economy recovery1’, the Commission has focused on establishing a broad partnership between the EU, its Member States and industry to set up investments in new technologies. In an effort to achieve this, task forces have been established for each priority action line identified in the Communication. The task forces work on a number of implementation measures which can produce tangible results in each of the priority action lines in the short to medium term.
Measures have been adopted at EU level to facilitate access to finance, access to markets, and human capital and skills development. However, two major factors jeopardise the success implementation of the EU industrial policy, namely:
- Barriers to the internal market, fiscal consolidation, bank deleveraging and low demand;
- Low level of investment, partly due to economic and political uncertainties.
Performance in Member States
The updated industrial performance scoreboard looks at Member States’ industrial performance in five key areas: innovation and sustainability; business environment, services and infrastructure; public administration; finance and investment; and skills.
To facilitate analysis and comparison between Member States, the report has used cluster analysis to group Member States in three groups:
The consistent cluster performs well in all areas of competitiveness. This cluster consists of Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, the Netherlands, Spain,2 Sweden and the United Kingdom.
The moderate cluster performs well in some competitiveness areas but face difficulties and deterioration in others. This cluster consists of Cyprus, Greece, Italy, Malta, Portugal and Slovenia.
The catching-up cluster are Member States that are significant challenges in many areas, but are quickly improving. This cluster consists of Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.