Ministers sketch vague plans for EU ‘industrial policy’

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This article is part of our special report Industrial Policy.

European industry ministers began mapping out a new industrial policy for Europe when they met in Brussels yesterday (1 March), stressing the need for a "coordinated and timely exit strategy" from the economic crisis.

In line with the draft 'Europe 2020' strategy, enterprise ministers – who want a key role in implementing the plan – committed to developing an "ambitious industrial policy" focusing on sustainable growth and jobs.

However, the ministers' plan is relatively thin on detail and touches on well-worn themes of innovation, support for SMEs and eco-friendly growth.

In line with the draft 'Europe 2020' strategy, enterprise ministers – who want a key role in implementing the plan – committed to developing an "ambitious industrial policy" focusing on sustainable growth and jobs.

However, the ministers' plan is relatively thin on detail and touches on well-worn themes of innovation, support for SMEs and eco-friendly growth.

The economic downturn has put the spotlight on the need for modernisation and restructuring, according to a paper released after the meeting, along with greater efforts to support innovation.

Priorities for the new industrial policy will include renewed focus on the free movement of goods, services, capital, labour and knowledge, in line with a revamped internal market.

Ministers restated their commitment to cutting red tape for businesses and stepping up coordination between researchers, industry and the education sector.

However, member states will manage the phasing out of industry support measures at their own pace, taking account of the impact this will have on employment.

It was also noted that the more lenient approach to state aid rules which has prevailed since the outbreak of the crisis is a temporary arrangement adopted as "a short-term response to the present economic difficulties" and will be phased out.

Trading on knowledge and products

The new industrial policy will be heavy on innovation and creating a "knowledge-based economy" but there is also a growing appreciation of the role played by manufacturing industries in creating wealth.

Europe's sluggish recovery to date has been export-led, putting the emphasis on research and intellectual property.

This is reflected in lobbying by European manufacturers, who last week said they hoped for a new partnership between the EU and its major industries to make Europe's economy more competitive.

In its new manifesto, released on Friday (26 February), the Alliance for a Competitive European Industry (ACEI) calls for the creation of a strong, innovative manufacturing base and warns against relying on the services sector.

The ACEI wants the EU to establish an integrated new policy that will allow European industry to realise its potential as a world leader in sustainable and green technologies.

According to the alliance, the main obstacles today are the absence of raw materials in Europe, a lack of skilled workers and the dearth of innovative new products. The group also wants a better export market and less reliance on imports.

ACEI chairperson Teresa Presas said she has high expectations of the new European institutions and hopes for strong leadership – particularly from Antonio Tajani, the new commissioner for industry and entrepreneurship.

Europe's economy has increasingly come to rely on the services sector in recent years, as heavy industry relocates to lower-cost economies. The economic crisis has prompted political and industrial leaders to take stock of such long-term trends amid a growing jobs crisis.

In addition to solving the rising employment crunch, policymakers must grapple with demographic challenges, climate change and global competition for energy and raw materials.

European governments have introduced a raft of measures to prop up ailing industries and protect jobs over the past two years.

However, this level of state intervention has come at a cost and most governments are now running hefty deficits. Business groups want a return to normal market conditions but are urging governments to phase out support measures.

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