EU Institutions & Policy-Making

The European Union faces several simultaneous threats to its competitiveness: weakness in the industries of the future, insufficient innovation, expensive energy, the need to green its economy, and geopolitical and trade shifts, to name but a few. The EconPol Europe Annual Conference, on whose proceedings this policy brief is based, focused on three aspects that could make a substantial contribution to securing prosperity in the EU, but are in a lamentable state: they all currently fall far short of their potential. These are the power of the single market, the level of its innovation, and the capacity to defend itself. Both the high-level speakers at the conference as well as EconPol and ifo research make clear that some low-hanging fruit are there for the taking, if only the political will were there, a good dose of national chauvinism could be overcome, and an effective communication campaign were undertaken to explain to voters why some measures are not only necessary, but unavoidable. 

This Policy Report assesses various options for EU climate policy utilizing a quantitative trade and environment model. The authors investigate the EU’s 2030 emission reduction target, evaluate the impact of the newly introduced Carbon Border Adjustment Mechanism (CBAM), and analyze different climate coalitions with the EU at their core, including the recently launched “G7-led Climate Club.” Thereby they assess the impact on both national and global emissions accounting for carbon leakage, on international economic competitiveness and changes in the global market shares of the EU, as well as on aggregate income gains and losses.

The idea of a Banking Union emerged in the aftermath of the global financial crisis. Ten years on, two of its three pillars, the Single Supervisory Mechanism and the Single Resolution Mechanism, have proven to be a success with regard to financial integration and stability. In this Policy Brief, experts from the Deutsche Bundesbank explain why, in times of structural change, it is crucial to complete the Banking Union and advance the Capital Markets Union.

In recent years, the EU has significantly shaped framework conditions in areas such as data protection, consumer health and safety, environmental protection, the supply chain, and antitrust law. However, the EU’s overregulation in some areas is seen not as beneficial, but as a detrimental factor limiting innovation, competition and growth. The EU now needs better, evidence-based regulation ensuring that its legislation is drafted in a transparent and inclusive manner and is as simple and targeted as possible to reduce unnecessary bureaucracy burdens and costs.

Low market integration is a key barrier to European competitiveness in the digital economy. International collaboration of knowledge workers could help realize market size advantage. European digital single market policymaking should address production-side barriers.