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European Commission calls for a focus on industry

31 January, 2014

The European Commission is urging EU member states to recognise the importance of industry for creating jobs and growth in Europe. In a communication called For a European Industrial Renaissance, the EC calls for industrial modernisation by investing in innovation, resource efficiency, new technologies, skills and access to finance, accelerated by the use of EU funds.

The EC points out that industry accounts for more than 80% of Europe’s exports and private research and innovation. Almost every fourth job in the private sector is in industry, often highly skilled, while each new job in manufacturing creates 0.5–2 jobs in other sectors.

European industry also delivers a €365bn surplus in the trade of manufactured goods – generated mainly by a few high-end sectors such as automotive, machinery, pharmaceuticals, chemicals and aerospace.

But the contribution of manufacturing to EU GDP has dropped from 15.4% in 2008 to 15.1% last year, falling far short of the 20% target for 2020 that the EC called for in 2012. Since 2008, 3.5 million jobs have been lost in European manufacturing, and the EU’s productivity is declining, compared to its competitors.

“Europe is still far from the 20% target of industry’s share in Europe’s GDP by 2020,” says Antonio Tajani, the EC’s vice-president with responsibility for industry and entrepreneurship. “That is why industrial competitiveness has to be at the heart of the March 2014 European Council political agenda.

“With today's initiative, the Commission sends a clear signal that urgent re-industrialisation and modernisation of our economy is indispensable if we are to create new jobs,” he adds. “We need a strong commitment at the EU and national level to ensure coherence and prioritisation of all instruments at our disposal. An industrial strategy must encompass many other sectors, as they are increasingly inter-connected and have a major impact on industrial success.”

Two recent EC reports have identified several weaknesses hampering the growth of EU industry:

•  Internal demand remains weak, undermining European companies’ home base and limiting intra-EU trade.

•  Although the EU business environment has improved, progress is uneven with inflexible administrative and regulatory environments, rigidities in some labour markets, and weak integration in the internal market, still holding back the growth potential of firms, especially SMEs.

Tajani: urgent re-industrialisation is essential

•  Innovation and investment levels remain low, holding back the modernisation of the EU’s industrial base.

•  EU firms face higher energy prices than most of their competitors and experience difficulties accessing affordable materials, skilled labour and capital.

To alleviate this situation, the EC has announced a series of priorities, which include:

•  Placing industrial competitiveness at the centre of policy-making.

•  Providing access to financial resources to boost industry. A new financial framework running from 2014­ to 2020 will put at least €100bn of European Structural and Investment Funds at the disposal of regions to finance support for industry and SMEs. This includes investments in six strategic areas for industrial competitiveness, including advanced manufacturing, clean vehicles and transport, bio-based products, and smart grids.

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