16 February 2024
On Wednesday 14 February 2024, the European Commission published the new Annual Single Market and Competitiveness Report. Through the nine competitiveness drivers identified in the EU’s 2023 “Long-term competitiveness” communication (functioning of the Single Market, access to private capital, public investment and infrastructure, research and innovation, energy, circularity, digitalisation, education and skills, and trade and open strategic autonomy), the European Commission’s report details the competitive strengths and challenges of the EU Single Market.
While it is too early to establish stable trends, the report notes that nine KPIs have improved against five that have declined; three are stable, and two do not yet have new data. The report concludes that public investment has recovered from the low levels after the financial crisis, partially thanks to the Recovery and Resilience Facility, while private investment remains high. It also points to public procurement as an instrument to strategically support our green and digital transitions.
This report was published ahead of Mr Mario Draghi and Mr Enrico Letta’s reports on the Future of European competitiveness and the Single Market, respectively. Three insightful pieces of work will provide the Council, the European Council, and the EU Commission with data and input to promote the Single Market and the EU's competitiveness.
Contact: Benoît Cassorla
On Thursday 15 February 2024, the European Commission published its Winter 2024 Economic Forecast, analysing the evolution of the economic situation in Europe and proposing projections for 2024 and 2025.
This latest Economic Forecast highlights that the EU economy has entered 2024 on a weaker footing than expected. It revises growth in both the EU and the euro area down to 0.5% in 2023 (from 0.6% projected in the Autumn Forecast) and 0.9% (from 1.3%) in the EU and to 0.8% (from 1.2%) in the euro area in 2024. In 2025, economic activity is still expected to expand by 1.7% in the EU and 1.5% in the euro area. Inflation is set to slow down faster than projected in the autumn.
Last year, growth was held back by the erosion of household purchasing power, strong monetary tightening, the partial withdrawal of fiscal support and falling external demand, leading to weak prospects for the EU economy. Economic activity is, however, expected to accelerate gradually this year, with real wage growth and a resilient labour market supporting consumption. Investment is also set to benefit from a gradual easing of credit conditions and the continued implementation of the Recovery and Resilience Facility.
The decline in headline inflation in 2023 was faster than expected, driven mainly by declining energy prices. In the near term, however, the expiry of energy support measures across Member States and higher shipping costs following trade disruptions in the Red Sea are set to exert some upward price pressures.
This forecast is surrounded by uncertainty amid protracted geopolitical tensions and the risk of further broadening the conflict in the Middle East. Domestically, risks to the baseline projections for growth and inflation are linked to whether consumption, wage growth and profit margins underperform or outperform expectations and how high-interest rates remain. Climate risks and the increasing frequency of extreme weather events also pose threats.
Contact: Guilllaume Afellat
On Wednesday 14 February, the European Parliaments and the EU Council negotiators agreed on the guidelines for the EU’s plan for a Trans-European transport network (TEN-T), including railways, roads, inland waterways and short sea shipping routes connected through ports and terminals across the EU.
The European negotiators - led by MEPs Barbara Thaler (EPP, AT) and Dominque Riquet (Renew, FR) and the Belgian Presidency of the Council, agreed to set a specific focus on intermodal transport undertaken primarily by rail, inland waterways or short-sea shipping. Based on new rules, this will be reinforced by electrified railways in the core TEN-T network, running at 160 km/h for passenger rail and 100 km/h for freight and crossing internal EU borders in less than 25 minutes on average by the end of 2030. According to the agreed text, EU countries committed to complete a comprehensive network by the end of 2050, focusing first on eliminating bottlenecks and missing transport links.
Having a well-interconnected Europe is vital for SGI railway operators. Greening the economy will be majorly encouraged through the transport sector and the associated shift of traffic from road to rail and public transportation. A modal shift from road to rail creates high-quality rail and public transportation jobs. Since traffic in the EU internal market will grow in the coming years, it is important to invest enough in expanding new routes, automation, and digitalisation.
Contact: Henriette Gleau
On Saturday 10 February, negotiators from the Council and the European Parliament reached a provisional political agreement on the proposed reform of the EU’s economic governance framework. The main objective of the reform is to ensure sound and sustainable public finances while promoting sustainable and inclusive growth through reforms and investment.
The Council and Parliament agreed to maintain the reform’s overall objective of reducing debt ratios and deficits in a gradual, realistic, sustained and growth-friendly manner while protecting reforms and investment in strategic areas such as digital, green, social or defence. At the same time, the new framework will provide appropriate room for counter-cyclical policies and address macroeconomic imbalances. The agreement also maintains the obligation for member states to submit national medium-term fiscal structural plans.
The Commission will submit a ‘reference trajectory’ (previously called ‘technical trajectory‘) to member states where government debt exceeds 60% of gross domestic product (GDP) or the government deficit exceeds 3%. The reference trajectory will indicate how Member States will, by the end of a fiscal adjustment period of four years, put government debt on a plausibly downward trajectory or stay at prudent levels over the medium term.
The provisional agreement contains two safeguards: the reference trajectory must comply with the debt sustainability safeguard to ensure a decrease in debt levels and the deficit resilience safeguard to provide a safety margin below the Treaty deficit reference value of 3% of GDP to create fiscal buffers.
Based on the reference trajectory, Member States will then incorporate the fiscal adjustment path, expressed as net expenditure paths, into their national medium-term fiscal structural plans. Consequently, the plans, including the net expenditure paths, must be endorsed by the Council. The agreement provides that a control account will record deviations from the country-specific net expenditure paths.
Contact: Guillaume Afellat
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