By Kate Abnett and Philip Blenkinsop
ANTWERP/BRUSSELS, Feb 11 (Reuters) - The European Union must simplify its regulations to make the bloc more competitive against the likes of the United States and China, European Commission President Ursula von der Leyen said ahead of summits of EU political and business leaders.
EU growth has been persistently lower than that of the United States over the past two decades, with EU productivity and innovation, particularly in fields like AI, falling short.
"Let me take the U.S. example again. One financial system, one financial capital," von der Leyen said on Wednesday. "Here in Europe, we do not only have 27 different financial systems, each with its own supervisor. But also, more than 300 trading venues across our Union. That is fragmentation on steroids. We need one large, deep and liquid capital market."
BUSINESS LEADERS' DEMANDS
Before EU leaders gather in a Belgian castle on Thursday to thrash out how they can compete economically with China and the U.S. as the rules-based world order frays, some leaders including France's Emmanuel Macron and Germany's Friedrich Merz will convene on Wednesday with company chiefs for an industry summit to hear the demands of European business.
Firms including Europe's largest steelmaker ArcelorMittal, building materials firm Heidelberg Materials and chemicals group Solvay will make their pitch for stronger EU action to stem industrial decline.
Among business leaders' asks are that the EU tackle Europe’s high energy prices and step in to stir up demand for low-carbon products.
"The good thing about European problems is that Europe could actually fix them itself if it wanted to. Because a lot is about flexibility, less bureaucracy, more flexible labour laws," Siemens Energy CEO Christian Bruch told Reuters.
EU TRENDING DOWNWARDS?
Industry-commissioned research, published on Wednesday, suggested Europe's economic vital signs are trending downward.
The report by Deloitte found the EU had a clear advantage over international peers in just three of 22 assessed criteria for competitiveness, including use of recycled materials. On energy prices, and the cost to businesses of bureaucracy and other metrics, Europe trailed behind the U.S. and China.
The EU is drafting a law to set "Made in Europe" requirements for goods bought through public contracts, to attempt to reduce its heavy reliance on China for key technologies.
Brussels is also preparing to overhaul its main climate policy, the EU carbon market, which has become increasingly politically sensitive as industries struggle with high energy prices and cheaper imports.
DIVERGENCE OVER STRATEGY
The EU is contending with Donald Trump's trade war as well as Chinese restrictions on exports of critical minerals that the 27-nation bloc urgently needs.
It needs greater wealth to cover decarbonisation and digitalisation and strengthen its defence in the face of a belligerent Russia.
But while all EU countries want a more competitive bloc, they disagree on how to get there.
French President Emmanuel Macron has renewed his call for the EU to embark on more common borrowing to invest at scale and challenge the hegemony of the dollar, as well as pushing the "Made in Europe" strategy.
The approach has split EU countries and alarmed automakers, who get many components for cars from outside the EU.
Germany says the key is to boost productivity rather than build new debt, stressing the need for trade deals.
Former Italian prime ministers Mario Draghi and Enrico Letta, authors of two influential reports in 2024 on the EU's competitiveness challenge and its single market, will attend Thursday's summit.
Letta said his key message would be to commit to a deadline of completing the EU single market by 2028.
"I think that is the only way to respond to Trump and to external pressures that the European Union is under from China, Russia and the U.S. in different ways," he told Reuters.
($1 = 0.8393 euros)
(Additional reporting by Lili Bayer, Sudip Kar-Gupta, Julia Payne, Jan Strupczewski, A Lennon in Brussels, Sarah Marsh and Christoph Steitz in Berlin; Writing by Phil Blenkinsop, Kate Abnett, Ingrid Melander; Editing by Aidan Lewis)
