EY announces new manifesto to boost EU competitiveness

According to EY research published earlier this year, Foreign Direct Investment (FDI) into Europe declined in 2023, falling by 4% compared with 2022, and dropping to 11% lower than in 2019, just before the COVID-19 pandemic hit. Despite hopes of a post-pandemic bounce back, slow economic growth, spiraling inflation, soaring energy prices and a challenging geopolitical environment caused the first downturn in European FDI since 2020.

The EY manifesto outlines five core priorities that will be crucial for arresting the downturn and helping to ensure Europe's success with 23 targeted policy recommendations, drawing from in-depth surveys and industry insights.

Bogdan Ion, Country Managing Partner, EY Romania and Chief Operating Officer for EY Central and South-East Europe and Central Asia Region: "Competitiveness and innovation are two essential directions in the sustainable development of Romania in the coming years. A European plan that places competitiveness and innovation at the center of priorities represents a catalyst for Romania in accelerating public policies in these critical areas."

The five key priority areas identified in the manifesto are:

1. Boosting international trade and investment

The next five years will see the EU facing a complicated and challenging geopolitical environment, with significant challenges to the international order. While the EU seeks to reduce its external dependencies and pursue strategic autonomy, building close trading partnerships with countries and regions has never been more important. The EY organization makes a range of recommendations focused on sustainable international trade and investment, the rules-based trading system and the importance of trusted partnerships amid growing international competition.

2. Unlocking the EU's competitiveness to deliver sustainable growth

According to the manifesto, competitiveness should be the cornerstone of EU policy. The digital and green transitions should be framed by the EU in terms of competitive advantage rather than regulatory burden. Other issues such as the cost of doing business, should be managed effectively to avoid undermining Europe's attractiveness. The EY organization recommendations included in the manifesto are focused on helping the EU actively demonstrate that it is open for business, simplify tax legislation, help deliver on the capital markets union, strengthen unity through the single market and combat financial crime.

3. Driving the EU's digital transition by innovating with integrity

The rate at which digital technology – including artificial intelligence (AI) – is being developed and deployed is impacting more aspects of EU citizens' lives than ever before. As technological advancements reshape the global economy, there will be new opportunities and new risks. To help make this a reality, the EY organization recommends adopting an approach toward regulation “as little as possible but as much as needed,” while aligning regulation and standards internationally wherever possible, leading the way on developing global verifiable standards, harmonizing data regulation and keeping people safe.

4. Aligning prosperity with sustainability goals

The EU is leading the way toward climate neutrality and a more resilient and circular economy. According to the EY European Attractiveness Survey 2024, 67% of respondents consider Europe better than other regions in supporting their businesses to achieve their sustainability plans. To build on this, the EU should streamline environmental, social and governance (ESG) reporting, incentivize green innovation and catalyze efforts toward net zero through collective action.

5. Championing the EU's commitment to skills and talent

As we prepare for a greener and ever-more digital future, equipping citizens and today's workforce with the right skills is not just a nice-to-have but an imperative for all stakeholders involved, from governments to businesses and civil society, to bolster the EU's competitiveness and resilience. To make this a reality, according to the manifesto the EU should: prioritize attracting, retaining and upskilling AI and green talent; develop a standardized European skills badges framework; and equip future generations with a multifaceted education including sustainability, disruptive technologies and human skills like adaptability and resilience.

Julie Linn Teigland, EY EMEIA Area Managing Partner, says:

“Europe's resilience and growth are not just economic imperatives – they are essential for the wellbeing of all its citizens. As Europe sets ambitious priorities for its future, this Manifesto is a solid framework for EU policymakers to embrace change, drive innovation and foster an environment where competitiveness, security, sustainability and digital transformation are the foundations of a thriving European economy. With the EU striving to enhance its security, achieve carbon neutrality, and lead in AI and data governance, businesses must partner with the public sector to build trust, scale technological advancements, and drive sustainable growth in a way that benefits all stakeholders. Together, we can accelerate Europe's leadership on the global stage, making it a hub of stability, opportunity, and sustainable growth for future generations.”