12. 02. 2026
AUTHOR: Linda Kalcher and Neil Makaroff
This text was originally published by Table.
Historically, when confronted with a crisis, EU leaders have risen to the challenge and united. The sense of urgency overcomes traditional positions and boundaries, resulting in innovative solutions. Leaders set a positive vision with clear deliverables, and the Brussels machinery pushes the accelerator to make it happen. The recovery funds and the unprecedented support for Ukraine are the latest testaments of this ability.
When faced with multiple crises that deeply affect European industry, the leaders have done the opposite. Faced with geopolitical turmoil, tariff uncertainty, and attacks on the Union’s founding principles from both outside and within, many responded with evasive downplaying. Instead of uniting behind a comprehensive vision with clear priorities for boosting European competitiveness, leaders show a lack of imagination and revert to the lowest common denominator: cutting red tape.
More than two years after Draghi was tasked with writing a report on the future of European competitiveness, there is still no solid plan to address volatile, high energy prices, competition, or dependence on China and the United States. Over this period, many of these pressures have worsened rather than receded, a reality that business leaders and trade unions increasingly underline as they recall the urgency of the challenge and point to the lack of tangible progress.
The informal leaders’ retreat on 12 February offers the opportunity to turn the tide, to start treating competitiveness as the crisis it is. Leaders can have a meaningful debate on the fundamentals and tools of an industrial strategy. Only at the leaders’ level can they align on which strategic sectors and value chains they want to strengthen in Europe, driven by competitiveness, security, and employment concerns.
When having such a debate, leaders will inevitably face a series of choices. Do they intend to import digital solutions, defence equipment, health supplies, and cleantech whenever they are cheaper, or to seek greater strategic autonomy and resilience by producing them here? Do they want to prolong dependence on petrostates, which cost the economy €1.8 trillion in oil and gas imports between 2021 and 2024, or choose the path of turning the EU into an electrostate? Do they prefer to let European talents, industries, and workers struggle with unfair competition, or to change the rules of the game and leverage the single market as a powerful industrial policy instrument?
A series of no-regret options emerges when we think through the parameters and tools of an industrial strategy. The first is to leverage the strength of the single market by applying a harmonised ‘Made-in-Europe’ policy to every euro of public spending. It is difficult for companies to scale up, decarbonise manufacturing plants, and innovate in a market with no trading rules. While European battery manufacturers struggle to build a viable business case, it is striking to see governments subsidising the sale of Chinese electric cars with public finance.
A ‘Made-in-Europe’ policy is not closing the single market. It is simply ensuring that taxpayers’ money finances strategic industries locally rather than subsidising imports. Most of the EU’s major trading partners, such as India, China, Brazil and the US, already use national preference policies. A ‘Made-in-Europe’ policy is the security that European innovators and businesses need in the short term to invest, build entire value chains, and create jobs. Europe could never be self-sufficient, but this policy can help it to secure its share of the emerging industrial pie in the electric vehicle and energy sectors.
The second no-regret option is to choose electricity to fuel the European economy. With limited gas and almost no oil reserves, the EU’s long-term economic health will ultimately depend on the power it can produce at home. Shifting cars, heating, and industry to electricity is the most effective way to reduce oil and gas dependence and build a more energy-secure Union. A strong commitment to this pathway can also become an industrial success story. Large offshore wind projects in the North Sea, together with European leadership in key electrotechnologies such as heat pumps, show that we already have all the resources we need to become an electrostate.
EU leaders are facing a genuine moment of decision to solve the competitiveness crisis. Simplification is an absolute necessity when seeking funding or permits for new projects. However, it does not constitute an industrial policy capable of competing with China’s powerhouse or the US’s petrostate ambitions.
On 12 February, EU leaders can either define a strategy that anchors industry, jobs, and innovation in Europe, or confirm that competitiveness will remain everyone’s priority and no one’s responsibility.
Photo credit: Bart De Wever, Belgian Prime Minister, Friedrich Merz, German Federal Chancellor, Ursula von der Leyen, and Kyriakos Mitsotakis, Greek Prime Minister (from left to right). European Union, 2026.
