This blog is part of the series “Quo vadis Europa?”, hosted by the European Economic Policy program at Polis180.
Can Europe boost competitiveness while remaining open? Why targeted industrial policy, simpler rules and a deeper Single Market need to work together.
A blog post by Ruben Krebs
Europe’s Competitiveness debate
Europe’s competitiveness debate has entered a new phase: Faced with geopolitical constraints, overcapacities, state-sponsored industrial competition from China, fragmented and complex rulebooks, and persistent innovation gaps, the Union and its Member States are under pressure to act. The question is no longer whether Europe needs a stronger industrial strategy but what kind of strategy will work best and make it more competitive in the long run. The Draghi report on European competitiveness, published in 2024, already warned that Europe risks falling behind – due to external influences such as overcapacities by its trade partners, but also because of internal barriers: Fragmented capital markets, weak innovation ecosystems and slower scaling conditions for firms.
The Industrial Accelerator Act and its “Made in EU” logic
Following on its new economic strategy – the Competitiveness Compass – the European Commission proposed the Industrial Accelerator Act (IAA) in March 2026 to reduce dependencies on strategic imports in critical technologies and seize the opportunities for industrial development linked to the green and digital transitions. These goals shall be achieved by strengthening European manufacturing, accelerating decarbonization and fostering demand for low-carbon products manufactured in the EU.
Yet, parts of the IAA raise concerns. Its “Made in EU” logic, particularly origin-based requirements in procurement and support schemes, risks complex application and unduly restriction of supply chains. Depending on how they are developed and applied, they may create high administrative burdens on companies and administrations and move the cursor for the EU economy towards a protectionist stance, to the detriment of open strategic autonomy. While this may benefit some sectors in the short term, it can also increase costs, reduce competition and innovation, and invite trade tensions. A policy brief by Brussels-based think tank Bruegel on the IAA warns that local-content requirements could delay decarbonisation, raise prices for firms and consumers, and create legal risks under WTO rules.
Internal challenges to competitiveness
This matters because the EU’s competitiveness challenges are not only external, but also internal. Many European companies do not primarily ask for protection from unfair competition; they also ask for lower administrative burden and a deeper and better functioning Single Market. Addressing these concerns, the Commission adopted a new Communication on better law-making in April 2026, recognizing that complex legislation, delayed implementation, so-called national “gold-plating” (Member States adding extra national rules or requirements when implementing EU legislation), and fragmented enforcement, weaken the Single Market and undermine competitiveness.
The EU’s simplification agenda
In this sense, the EU’s simplification agenda may be more central to competitiveness than it may appear at first glance. “Simplicity by design”, precise impact assessments, more realistic implementation timelines and cleaning up existing laws to reduce regulatory complexity and fragmentation are not mere bureaucratic exercises. If implemented seriously, they can reduce compliance costs, improve legal certainty and make Europe a more attractive place to invest while complying with Europe’s high environmental and consumer protection standards. The Communication frames simplification as an important channel to support “a highly competitive, innovative and sustainable social market economy”, and the Commission has further committed itself to reducing recurring administrative burdens for businesses by 25%, and 35% for SMEs, through omnibus simplification packages and reviews of EU legislation.
Simplification, Single Market deepening, and industrial policy work better together
The Commission has committed to simplifying public procurement rules while also fostering their strategic use for certain sectors to help create lead markets and reduce dependencies. But Europe should avoid confusing resilience with isolation. A competitive EU economy needs open markets, diversified supply chains and strong domestic capabilities. It also needs rules that are simple enough to understand, predictable enough to invest under, and harmonised enough to reap the full benefits from the Single Market.
The choice is therefore not between regulation and deregulation or openness versus sovereignty. The real challenge is to design regulation that enables firms to compete, innovate and grow in a sustainable manner. The IAA can contribute to these goals if its design is targeted, proportionate and compatible with open trade. Europe must confront unfair competition, but will only become more competitive by removing its internal barriers. If the EU wants to leverage its economic potential, simplification should not be treated as a side agenda. It should be the core of Europe’s competitiveness strategy – together with deepening the Single Market.
Ruben Krebs studied Economics in Osnabrück, Santander, Göttingen and Groningen. In his recent Blue Book traineeship in the Cabinet of Valdis Dombrovskis, Commissioner for Economy and Productivity, Implementation and Simplification in the European Commission, he worked extensively in the simplification part of the portfolio. He is Co-Lead of the European Economic Policy Program of Polis180.
Image via Unsplash
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