Bring Europe rapidly back on track for growth with an ambitious and effective long-term competitiveness strategy
BusinessEurope publishes its Reform Barometer 2023
21 March 2023 - Ahead of the Spring European Council on 23-24 March, BusinessEurope presented its annual Reform Barometer - "The EU's global competitiveness under threat".
BusinessEurope President Fredrik Persson said: "The EU has to rapidly bring the European economy back on track for growth with an ambitious and effective long-term competitiveness strategy. Our global competitiveness is under massive threat. Investment is increasingly pushed away from Europe. Foreign direct investment inflows to the EU fell by 66 percent in 2021 compared to 2019, contrasting with a 63 percent increase in the USA during the same period according to the latest BusinessEurope’s Reform Barometer.
The EU industry greatly suffers from deteriorating framework conditions in Europe. Our survey shows that European companies are facing the prospect of long-term energy price rises well above major competitors, as well as a more rapid increase of regulatory burden compared to them. Generous support for industry seen in other major regions, such as the U.S. Inflation Reduction Act, is acting as a significant pull factor to invest outside the EU.
Global competition for investment, employment, growth and technological innovation is decided by an attractive business environment with simple and clear rules. Top priority must be the creation of regulatory breathing space for companies as well as addressing high energy costs by reducing taxes and levies on energy, and a reform of the EU electricity market design.”
Key report findings include:
Around 90% of our member federations consider that compared to our global competitors, the EU investment environment is less attractive than 3 years ago.
- Foreign direct investment inflows to the EU fell by 68 percent in 2021 compared to 2019, contrasting with a 63 percent increase in the US during the same period.
- The number of greenfield investment projects in the EU fell by 15 percent between 2021 and 2022, compared to an 18 percent increase in the USA during the same period.
Almost 90% of members consider energy prices as the biggest challenge to Europe’s investment environment, and the main driver of the EU’s deteriorating competitiveness over the last 3 years.
- Wholesale gas prices increased in the EU by over 1100 percent between 2019 and their peak in 2022, compared to increases of around 200 percent in the USA and 100 percent in Japan.
The regulatory environment is perceived as the second of the top three challenges by almost 60 percent of our members.
- The majority of members consider regulatory burdens to be higher in the EU than in other major developed economies.
- Our members have also noted a decline in the quality of application of EU better regulation tools in recent years.
Please find here the full Reform Barometer 2023 as well as key findings and detailed assessments by national member federations.