Competitiveness of EU companies is crucial for recovery

The European Commission presented its eagerly awaited proposal for a post COVID-19 crisis EU recovery plan. It is based on a new recovery instrument called Next Generation EU with a suggested budget of EUR 750 billion, with the budget for the future Multiannual Financial Framework 2021-2027 set to increase to EUR 1.85 trillion. The new instrument will be based on 3 pillars, namely supporting Member States in investment and reforms, kick-starting the economy through incentives for private investment, and addressing the lessons learned from the crisis.

To support investment and reform, the Commission is proposing a new Recovery and Resilience Facility with a budget of EUR 560 billion. Support will take the form of grants (up to EUR 310 billion) and loans (up to EUR 250 billion). The Commission also decided to increase the budget for the Just Transformation Fund by EUR 40 billion, and EUR 55 billion will be set aside for a new REACT-EU initiative to support cohesion policy. The Commission reiterates that economic recovery should be based on green and digital transitions, with the Green Deal for Europe being the cornerstone of the process.

European business organisations welcomed the package presented by the Commission, acknowledging especially the focus on boosting investment. According to EUROCHAMBRES, the EU has a crucial role to play in the response to the crisis and underline that time is of the essence right now. Therefore, they call on the European Parliament and the Council to approve the package as soon as possible so that the support gets to European businesses in time to avoid collective redundancies and business closures.

BusinessEurope welcomes the strong focus on green and digital transitions as well as strengthening of the key industrial value chains. In its view, the re-launching and modernisation of Europe’s economy must go hand in hand with the support of the European industrial base.

Vladimír Dlouhý, Deputy President and Chair of the Sustainable Europe Committee of EUROCHAMBRES, says the Commission’s proposal contains some promising financial incentives and ask for their swift implementation and for environmental targets that are realistic and achievable by entrepreneurs who are slowly recovering from the COVID-19 crisis. To achieve a sustainable economic recovery, companies need support in the short term and legal and planning security in the medium and long term. Supporting growth and recovery is necessary in all the EU Member States, given the goals that each Member State has to meet, especially in the area of the green transition. The best way to respond to the crisis is to further enhance the Single Market which is the engine of the growth for the whole EU.

As Jaroslav Hanák, President of the Confederation of Industry of the Czech Republic mentions, the recovery plan lacks the emphasis on reduction of regulatory burden, which is enormous for European industry. Also, the Commission shouldn’t forget to further support the ambitious trade policy that will allow companies to penetrate new markets outside the EU, increase their competitiveness and create new jobs. Furthermore, some ideas presented by the European Commission need to be further clarified, for example the idea of new own resources that would contribute to the budget.

According to Czech business organizations, the new own resources shouldn’t mean additional taxation and burden on European companies. The EU will become stronger by supporting the competitiveness of its companies and therefore the EU mustn’t implement any initiatives that would jeopardise it.