03 March 2025 – Europe must compete on its own standards. As the US lowers the bar on human rights and judicial security and the Donald Trump administration focuses on obliterating climate and environmental legislation, there is an opportunity for the EU to lead on a different economic and security model, one that fosters socio-economic and environmental values and attracts talent and resources that are looking for safe harbour.
Complementing green industrial policies with smart labour policies is the win-win Europe should be aiming for, rather than watering down sustainability policies in the name of competitiveness, as was proposed on February 26 in the European Commission’s first “omnibus” package.
To attract global talent and keep its domestic talent, Europe has many cards to play. Research by global human resources consulting company Mercer shows 15 of the top 20 cities in which to live are in Europe. This is based on Europe’s relative outperformance in pollution reduction, people-centric city design, and public services.
While traditionally many young Europeans may have looked to the US as the place to be, the Trump administration may provoke an exodus in the opposite direction from innovative companies and start-ups. The EU should offer these businesses the same warm welcome similar to that offered to financial companies after Brexit.
Safe harbour
Despite criticisms about bureaucracy, part of the attraction of the EU for business is that it provides a safe harbour with, until recently, stable policies and legal certainty.
Instead of removing rules and regulations that protect people and the planet, Europe should be focusing on unlocking its creative and technological potential. Central to this effort is establishing the fifth freedom of research, innovation, data and knowledge, as recommended by last year’s report on the future of the single market by former Italian Prime Minister Enrico Letta.
This requires creating a European knowledge commons — a digital platform providing access to research, data and educational resources investing in cutting-edge public and private research infrastructure, harmonising digital standards, fostering cross-border collaboration to maximise the talent and employment pool, and offering attractive conditions for skilled professionals and entrepreneurs.
Instead of removing rules and regulations that protect people and the planet, Europe should be focusing on unlocking its creative and technological potential.
While cutting regulatory burdens has been singled out by the commission as a priority for boosting competitiveness, the EU would do better to focus on its labour shortages, which are only set to get worse as its population continues to age. Sixty-six per cent of EU companies already see labour shortages as one of their main problems, compared with 33 per cent that say the same thing about regulation.
Recent modelling by European research consortium Project Seer shows more than one-third of jobs created through green industrial policies such as the Net Zero Industry Act are likely to remain vacant due to labour mismatches. This will hamper regional prosperity especially, coupled with weak investment signals towards green entrepreneurial activities.
Instead of protecting incumbent industries and weakening environmental and social protections, Europe should boost its competitiveness by playing to its strengths.
With this in mind, members of the European parliament and EU member states should reject the omnibus proposal in its current form as it would ruin the foundations of sustainable business practices, further weaken corporate responsibility and value chain transparency and due diligence, and widen the information gap rather than simplifying investment decision-making across the single market.
The EU cannot outcompete the US by following Trump’s lead and taking a slash-and-burn approach to the rule of law.
Instead, it must compete and lead on its own terms, embracing its socio-economic and environmental value system and the advantages it brings for business, in particular those ready to innovate and adapt to the demands and realities of a changing world.
First published in Sustainable Views.
