Von der Leyen links EU competitiveness to reduced dependencies

The overarching theme of EU inter-dependence ran through European Commission president Ursula von der Leyen’s ‘state of the union’ speech on Wednesday, as she made a series of notable pledges – including around AI, climate, defence, and trade.

The Commission agenda continues to be shaped by the stark warning, delivered in September 2024 by former European Central Bank president Mario Draghi, of the ‘existential threat’ facing the EU unless it cannot arrest the stagnation it has seen in economic growth. Geopolitical developments since, including in the Middle East, with the disruption to trade that has been entailed, have only served to make the task of delivering EU competitiveness more difficult.

In this vein, von der Leyen has pledged to continue simplifying regulation, pleading with governments across member states not to ‘gold plate’ the EU legislation that is introduced. The need to speed up infrastructure delivery has also been recognised, with the Commission president promising to “put forward proposals to further speed up permitting”. A new banking package will also be brought forward as the Commission seeks to support businesses in accessing the capital they need to grow.

The EU’s dependency on others for fossil fuel imports and critical raw materials also remains in the Commission’s firing line. Von der Leyen said there is a “need to double down on our affordable, homegrown, clean energy” and electrify Europe, to help reduce energy prices for people and businesses. She also pledged to cut down on the time it takes to obtain connections to electricity grids and said the Commission will establish a new European Corporation on Critical Raw Materials to help the EU “obtain and stockpile” the critical raw materials it needs, not only to support industry but to deliver “independence and security”.

Building gigafactories, tech sovereignty and compute capacity forms part of the Commission’s plans for EU inter-dependence, with von der Leyen committing to set out ideas on how to achieve the latter “in a clean and efficient way”. However, she also said focus will also be given to harnessing value from the AI technologies others develop using the “highest-quality data” that EU industry holds. She’s promised to bring forward sectoral initiatives in November, across health, transport, agri-food, advanced manufacturing, and defence and space, with a view to delivering on the potential of “industrial AI”.

Von der Leyen has further committed to an AI-related skills drive in the EU, promising to deliver a new Quality Jobs Act before the end of the year.

The EU’s commitment to climate targets was also reiterated in the speech, with more action pledged to deliver climate resilience. This includes a fresh assessment of “100 of the most vulnerable territories in Europe” and steps to champion climate adaption technologies. The Commission also intends to establish a Climate Insurance Alliance, with a view to private insurers taking on more of the risk associated with climate-related loss.

New partnerships are also on the Commission's agenda. Arguably the most notable is the EU’s offer to Canada of associate EU membership, with von der Leyen seeking to strengthen links established via the comprehensive economic and trade agreement (CETA) the EU signed with Canada a decade ago. According to von der Leyen, the EU imagines cooperating with Canada on manufacturing, technology, defence, energy, critical minerals and batteries, AI, quantum and cyber.

A strengthening of trade ties with countries in the South Caucasus and Central Asia is also planned.

The Commission is also seeking to develop new partnerships within the EU to boost defence and security, with von der Leyen citing an urgent need for EU-wide consensus on response to activity that falls short of “armed aggression but clearly threaten our national security”. She said a NATO-like emergency security protocol should be developed. Von der Leyen has also pledged to develop a new European security strategy and push ahead with plans to create a European Security Council, which could bring EU leaders together with those from Canada, Norway, Ukraine, the UK and others, she said.

In relation to defence manufacturing specifically, von der Leyen said the Commission would seek to work with Ukraine “to develop … an affordable, modular missile-defence system” that would reduce current dependencies on sourcing Patriot interceptor missiles from the US. Funding is also earmarked for a broader programme of joint EU-Ukraine projects, while von der Leyen further pledged to tighten sanctions on Russia through enforcement and closing of “loopholes”.

One imminent initiative business can expect to see from the Commission is a proposed new EU Kids Act – legislation that will address child online safety matters. The proposals are set to be outlined by the Commission tomorrow, with von der Leyen confirming the intention to “take a gradual and differentiated approach” depending on the age of the child. Online platforms will have to “prove that they are safe” before they can allow access to minors, she said, adding that a broader set of proposals designed to address “addictive design” for everyone, not just children, will be brought forward in the autumn via a new Digital Fairness Act.

Actions businesses can take

For businesses, the implications are less about predicting exactly what happens next and more about building resilience to a rapidly changing policy landscape. Whether driven by competitiveness concerns, geopolitical tensions, fiscal pressures or regulatory reform, political decisions are increasingly having a direct influence on commercial outcomes.

In practice, this means strengthening horizon scanning to identify emerging trends earlier, using scenario planning to test strategic resilience against a range of possible futures, and engaging proactively with governments and regulators before policy positions become fixed.

Organisations that treat public policy as a strategic business issue, rather than a compliance exercise, will be better equipped to navigate uncertainty and seize opportunities as they emerge.