On February 12th, EU Leaders gathered for an extraordinary, high-level Retreat at Alden Biesen Castle in Flanders to discuss ways to urgently improve the bloc’s competitiveness. Although there seems to be broad agreement on the need for completing the EU’s single market and reducing the regulatory burden on businesses, there is divergence among Member States on concrete measures and, particularly, the pace of change. It seems then that there is no longer much resistance to a group of Member States moving faster than others under the enhanced cooperation provisions of the Treaty – revealing a Europe of two speeds.
FIPRA conducted an in-depth analysis of the meeting, prepared with the generous inputs of our Partners in France, Germany, Italy, and Belgium, and with insights provided by FIPRA Special Advisor Pawel Swieboda.
- As a whole, the EU is lagging in productivity, which calls for improving the harnessing and investment in frontier technologies, combined with a strong bet on the diffusion of AI. A major prerequisite for this transition is the effective reform of the EU’s capital markets to accelerate access to funding for cutting-edge technology. At the same time, a reformed European financial supervisory authority is needed – one that has real enforcement power.
- France pushed for a reconciliation of competitiveness and security amid tight political and fiscal pressures domestically. And it advocated for a strong but pragmatic European preferencing approach in sectors where Europe still has or can rebuild industrial capabilities. Its call for the mutualisation of EU debt through Eurobonds or similar instruments, however, gained little traction among other Member States, in no small part due to France’s current fiscal and internal governance situation.
- Germany was adamant to counter the French position by strictly rejecting any notion of mutual debt. At the same time, it stressed the need for implementing measures and confirmed it was working on a ten-point plan to advance the all-important EU Capital Markets Union.
- Italy continues to be Germany’s partner for a shared vision of economic and industrial reform. The German-Italian duo seems for the moment to be replacing the traditional “European engine” of Germany and France, in light of France’s domestic challenges and Italy’s relatively strong economic performance.
- Belgium, somewhat punching above its weight, is very much aligned with Germany and Italy, and co-leading, on swift implementation of measures enhancing competitiveness, its open economy, and notably the Port of Antwerp and its industrial clusters under severe competitive pressure from the US, China, and other emerging regions.
- While a German-Italian-Belgian trio has crystallized from the meeting and already before, the dynamic of the Europe of two speeds is first and foremost driven by the Finance Ministers from Germany, France, Italy, the Netherlands, Poland, and Spain.
- The mantra of competitiveness is clearly supported and repeated by all. But implementation promises to be a rocky road, as is shown by the divergence in numerous issues, from debt financing to preferencing to the cost of energy. Although somewhat absent from the Leaders’ discussions and statements, one issue that promises to stir controversy is the degree of reform of the EU Competition Rules and notably whether or not merger regulations should be relaxed to favour the creation of so-called European champions in strategic sectors (for a deeper dive, check out FIPRA Special Advisor and EU Competition expert Bruno Alomar’s reflections).
What does this mean for businesses?
For businesses operating in Europe, the message from this debate is clear: growth will be increasingly policy-shaped and productivity-led. Competitiveness is no longer an abstract objective but a guiding principle translating into concrete choices on AI deployment, industrial policy, procurement rules, capital markets, energy costs, and regulatory simplification – often with different emphases at the EU and national levels.
How do the FIPRA Network & Network partners come into play?
Companies that can align their investment, innovation, and market strategies with these evolving policy priorities will be best placed to benefit from Europe’s push to turn productivity into a strategic asset. This is where the FIPRA Network brings distinct value. With deep expertise in EU policymaking and on-the-ground presence and experience navigating in over 50 countries, FIPRA helps businesses anticipate regulatory and political shifts, engage effectively with decision‑makers, and translate policy ambition into commercial opportunity. By consistently connecting EU‑level strategy with national implementation realities, FIPRA enables clients to navigate complexity, de‑risk investment decisions, and drive sustainable, policy‑enabled growth across Europe.
The FIPRA Network is a collection of specialised public affairs agencies operating globally, each with in-depth knowledge and expertise in specific policy areas where FIPRA is known for making an impact. Network Partners are strategically positioned in over 50 countries across every continent, enabling our clients to tap into their local insights, relationships, and market knowledge.
Want to learn more about the network or this analysis? We’d love to hear from you.
