Industrial Policy - An EU Response to the Challenge of Competitiveness

On 9-10 February 2023, EU leaders will meet at a special European Council to discuss, amongst other priorities, the competitiveness of the EU economy in the context of stiff global competition from China and the US.  In this Explainer, Alex Conway explores proposals for a set of measures to assist European industries in meeting these challenges. It focuses on the impact of the US Inflation Reduction Act on the pharmaceuticals, semiconductors and the automotive industries in the EU; it analyses the debate in the EU member states on the proposal for an Industrial Policy at EU level to solve the EU’s competitiveness conundrum; and highlights different Member State views on how to fund an EU industrial policy which would benefit all member states, without distorting the Single Market. It concludes with recommendations on the need to balance industrial policy measures with open trade policies to protect the Single Market while avoiding protectionism.