Latest / Espresso Briefings by BusinessEurope / From Diagnosis to Delivery, Reform Barometer 2026

Transcript

From Diagnosis to Delivery, Reform Barometer 2026 · Espresso Briefings by BusinessEurope

• 0:03
  SPEAKER_01: Welcome to Espresso Briefings by Business Europe.
• 0:06
  SPEAKER_01: Timely insights and expert perspectives served in short, sharp episodes to fuel your thinking.
• 0:14
  SPEAKER_01: Hello, my name is Alan Sherlock.
• 0:16
  SPEAKER_01: I'm acting director of communications here at Business Europe, and you're very welcome to this new episode of the Spresso Briefings.
• 0:22
  SPEAKER_01: Today we're looking at Europe's competitiveness through the lens of Business Europe's latest reform barometer.
• 0:28
  SPEAKER_01: The findings show that while political ambition on competitiveness has increased, delivery remains too slow, and structural barriers continue to hold back productivity, innovation, and growth.
• 0:38
  SPEAKER_01: This comes 18 months after the publication of the Draghi Report, which helped crystallize the diagnosis of Europe's challenges.
• 0:45
  SPEAKER_01: That diagnosis is now widely shared.
• 0:47
  SPEAKER_01: The real question is whether Europe is delivering.
• 0:50
  SPEAKER_01: Delay, I'm delighted to be joined by Marcus Beyer, Director General at Business Europe, to walk us through the key messages of this year's barometer and what they mean for Europe's competitiveness agenda in 2026.
• 1:02
  SPEAKER_01: Marcus, great to have you back on espresso briefings.
• 1:05
  SPEAKER_01: Before we move into the substance of the reform barometer, can we just take a quick moment and you to explain to me exactly what the reform barometer is?
• 1:13
  SPEAKER_00: Well, good morning, Al.
• 1:14
  SPEAKER_00: Good morning, everybody.
• 1:14
  SPEAKER_00: Well, the reform barometer is our annual assessment of Europe's competitiveness.
• 1:20
  SPEAKER_00: So in other words, that's where we benchmark Europe's competitiveness towards the world based on the feedback we get from our members.
• 1:29
  SPEAKER_00: And I think that's very important to add, let's say, the company perspective to what on official level is the European Commission's European semester.
• 1:39
  SPEAKER_00: So we publish this once a year, benchmark European competitiveness to the world.
• 1:43
  SPEAKER_00: And this year, for the first time, we do not only publish the long version, we also publish the key messages, which I have just presented in what is called the macroeconomic dialogue on political level.
• 1:55
  SPEAKER_00: And I can say it was very well received.
• 1:57
  SPEAKER_01: Okay, great.
• 1:57
  SPEAKER_01: We've two products in the market.
• 1:59
  SPEAKER_01: Now we've the reform barometer and then the explainer document, which might make what is quite a dense document a little bit easier to digest, really useful to have.
• 2:06
  SPEAKER_01: If we look at some of the top line as to what the barometer is telling us, essentially we're seeing that there is an improvement in sentiment for EU policy, but still companies don't feel enough change on the ground.
• 2:19
  SPEAKER_01: What do you believe are the main reasons for this gap between ambition and delivery?
• 2:25
  SPEAKER_00: Well, I think it's important to underline that our members are fair.
• 2:28
  SPEAKER_00: They acknowledge, and 60% of our members say they have a more positive view of the competitiveness relevance stance of the European Commission at the time being.
• 2:40
  SPEAKER_00: So this means they acknowledge first positive steps.
• 2:43
  SPEAKER_00: But then, of course, what they also say is that it does not yet reach uh companies on the ground.
• 2:50
  SPEAKER_00: And that's very important because it will only really count when it reaches companies on the ground.
• 2:55
  SPEAKER_00: So, and therefore, we have called our call for the leaders' retreat in Alpenbeesen from ambition to delivery.
• 3:02
  SPEAKER_00: And that's of course the same call we have now for the upcoming European Council in March.
• 3:06
  SPEAKER_00: And as you have mentioned, the key messages, I mean, this one we called it from diagnosis to delivery.
• 3:12
  SPEAKER_00: So it's all about delivery.
• 3:14
  SPEAKER_00: What is the reason?
• 3:16
  SPEAKER_00: Well, I mean, I think part is slow implementation, but part is that we simply need to go faster and get the things into the market.
• 3:24
  SPEAKER_00: So, so to bring one example, I think on simplification, first positive steps have been taken.
• 3:30
  SPEAKER_00: Omnibus one is now in the official tribunal of the European Union.
• 3:34
  SPEAKER_00: At the same time, a lot remains to be done.
• 3:37
  SPEAKER_00: As far as Omnibus One is concerned, we still need to get the delegated act on order.
• 3:41
  SPEAKER_00: This will come in June.
• 3:43
  SPEAKER_00: And second, I mean, we know that the promise of the president of the Bing Council, Ursula von der Leyen, and we very much acknowledge and welcome this, is to reduce the regulatory burden for companies by 25% in this institutional cycle.
• 3:58
  SPEAKER_00: So this means we need to go on ambitiously.
• 4:02
  SPEAKER_00: We have made concrete proposals, 138.
• 4:05
  SPEAKER_00: 7 to 8% have now so far been taken up by existing omnibuses.
• 4:10
  SPEAKER_00: So there's ample additional opportunity.
• 4:14
  SPEAKER_00: And I would say there's also ample additional necessity to simplify in order to get anywhere close to the minus 25%, which are promised, and I think which will be necessary.
• 4:23
  SPEAKER_01: There's a real through line, I think, from the from ambition to delivery document as to what we're seeing within this reform barometer.
• 4:30
  SPEAKER_01: To pull out one of the top-line messages, we're seeing from the barometer that the EU investment environment remains somewhat stagnant.
• 4:39
  SPEAKER_01: What are businesses telling us about the main obstacles they face in this regard?
• 4:44
  SPEAKER_01: What are we hearing from members and from companies?
• 4:46
  SPEAKER_00: Well, first, I mean, that's the other side of the coin.
• 4:49
  SPEAKER_00: I mean, as I said, 60% of our members acknowledge that the Commission is now more wary towards competitiveness needs, and that's positive.
• 4:58
  SPEAKER_00: But 80% of our members say, besides that, it's not reaching companies on the ground, that the investment conditions, the investment quality of the investment location in Europe has either stagnated or even deteriorated.
• 5:11
  SPEAKER_00: So we have this gap, which again says we need to deliver.
• 5:15
  SPEAKER_00: And what is the main point?
• 5:16
  SPEAKER_00: Why do companies tell us they do not invest in Europe?
• 5:19
  SPEAKER_00: So again, it's a regulatory burden.
• 5:21
  SPEAKER_00: This is why I continue to underline it's very important to continue to go on here.
• 5:27
  SPEAKER_00: Companies still tell us that they're drawing legislation, and we also know there's still a lot in the pipeline.
• 5:32
  SPEAKER_00: So we need to make sure that what is coming is uh mitigated and that what is existing is simplified.
• 5:40
  SPEAKER_00: Then, of course, we have the cost of energy.
• 5:41
  SPEAKER_00: I mean, this is beside regulatory overburden the biggest one.
• 5:45
  SPEAKER_00: This has already been an issue, of course.
• 5:47
  SPEAKER_00: I mean, before the latest turmoil we see in the Middle East, and of course, I mean, geopolitical situation is adding to this uh situation.
• 5:57
  SPEAKER_00: Then, of course, we see labor shortages.
• 6:00
  SPEAKER_00: This is why, of course, it's very important to upskill and reskill.
• 6:04
  SPEAKER_00: We see a significant fragmentation in the single market.
• 6:08
  SPEAKER_00: I mean, if we compare this globally, the intra-EU trade is just 20% as a proportion of the GDP.
• 6:15
  SPEAKER_00: The intra-US trade is 70%.
• 6:17
  SPEAKER_00: So if we would move in this direction, of course, uh we could come way more strong on our home ground.
• 6:25
  SPEAKER_00: And of course, there's also a significant lack of capital.
• 6:31
  SPEAKER_01: To pick up on something that you mentioned there, it's been again a real through line for ambition to delivery for the barometer.
• 6:36
  SPEAKER_01: Energy prices continue to weigh heavily on European industry unquestionably.
• 6:41
  SPEAKER_01: What does this barometer document reveal further about this challenge and potentially what needs to change within this space?
• 6:48
  SPEAKER_00: I mean, first it confirms it's still a big obstacle to investment in many sectors, and that industrial electricity prices and natural gas prices are way higher than for our major competitors, notably the United States and China.
• 7:03
  SPEAKER_00: Second, and that's a new aspect here, that even before the situation in Iran and Middle East, we had a growing concern about price volatility for two reasons.
• 7:13
  SPEAKER_00: First, I mean, uh now there's more LNGs, so liquified natural gas, uh, which is subject to higher volatility.
• 7:23
  SPEAKER_00: And second, uh per se something positive, that we have a growing share of renewable energy in the market.
• 7:29
  SPEAKER_00: But of course, also renewable energy has a tendency to add to price uh volatility.
• 7:36
  SPEAKER_00: So in the short term.
• 7:37
  SPEAKER_00: So this is two aspects where our members underline that this is a headache.
• 7:42
  SPEAKER_00: What we need is mechanisms to reduce the volatility, which of course has become more difficult now with the global situation.
• 7:50
  SPEAKER_00: And second, to really seize all opportunities we have to reduce the cost of energy.
• 7:55
  SPEAKER_00: And this goes from power purchasing agreement to contracts for difference, two very tangible actions which are discussed now.
• 8:02
  SPEAKER_00: And let me very much underline the ETS reform, the reform of the emission trading system.
• 8:08
  SPEAKER_00: We as Business Europe support the emission trading system to continue to play a role because it's a market-based instrument.
• 8:17
  SPEAKER_00: But we also very much underline the system needs to be reformed because it's not in its current form sufficiently responding to companies' competitiveness needs.
• 8:28
  SPEAKER_00: So, therefore, we need to reform it in key points.
• 8:30
  SPEAKER_00: We have made very concrete proposals.
• 8:32
  SPEAKER_00: It's very technical, just to mention the most important ones.
• 8:36
  SPEAKER_00: Linear reduction factor, we need to get out of the end game 2040 because this is already blocking investments now.
• 8:42
  SPEAKER_00: Free allowances, one of the few things we have to reach the bottom line of cost in companies.
• 8:48
  SPEAKER_00: We need to pause and rethink the phase of free allowances and the market stability reserve.
• 8:55
  SPEAKER_00: I mean, this was designed for surpluses.
• 8:57
  SPEAKER_00: We now need to redesign it to work for a scarce situation to keep the markets liquid.
• 9:02
  SPEAKER_01: Sometimes I think we have to be a little bit technical as much as we try and avoid it, but to provide real-life solutions to some of these issues, we we need to give into that sometimes.
• 9:10
  SPEAKER_00: I'm afraid this whole system, the emission trading system, is super technical.
• 9:14
  SPEAKER_00: So this is why we made very clear proposals where it's necessary to change on technical level to improve the cost situation for campus.
• 9:22
  SPEAKER_00: It's unavoidable in this regard.
• 9:24
  SPEAKER_01: If we look at another theme, I guess, with within the barometer and something that we're saying is productivity gap between the US and the extent to which there's no sign of that narrowing.
• 9:35
  SPEAKER_01: What do you believe are the structural factors behind this?
• 9:38
  SPEAKER_01: And how concerned do you believe policymakers should be?
• 9:42
  SPEAKER_00: Well, you are right to underline that one of the headaches is that the productivity gap, especially towards the US, is growing.
• 9:49
  SPEAKER_00: So it has still been growing in our last barometer.
• 9:51
  SPEAKER_00: And that's a headache because it's the main driver that we have been missing out over the last 30 years.
• 9:56
  SPEAKER_00: The reasons behind, of course, I mean, there is a weak productivity performance in in mid-tech manufacturing sectors, which is one reason.
• 10:04
  SPEAKER_00: But I think a very important reason where we need to take care of is that we have simply a slower diffusion and adoption of new technologies, including AI.
• 10:15
  SPEAKER_00: So this is why we so forcefully underline that we need to now, we have worked five years on a lot of regulation here.
• 10:23
  SPEAKER_00: Now is the moment where we need to simplify and stabilize and implement the regulation on artificial intelligence to create the stable regulatory framework and the foreseeability for companies in order to have them invest in artificial intelligence in their processes, because this is a main source for the productivity gains we cannot miss.
• 10:48
  SPEAKER_00: And the last point is of course, we have a certain gap also in RD investment.
• 10:53
  SPEAKER_00: I mean, we have a fragmentation in public ID investment, and we have not enough RD investment from the private sector due to the fact that the framework is not always there, and therefore we see uh some RD investment also happening outside Europe.
• 11:08
  SPEAKER_00: So, this is where we again need to improve the framework conditions and in order to make sure that more of this private investment in ID is happening in Europe.
• 11:16
  SPEAKER_01: Clearly identifying solutions, which I think is a useful any time that we put something like this out into the world.
• 11:21
  SPEAKER_01: One more theme uh that that I might just ask you to comment on but before we conclude.
• 11:26
  SPEAKER_01: Access to finance and growth capital has been a major theme with within the prometer this time around.
• 11:31
  SPEAKER_01: How do you believe that this is holding back innovation?
• 11:34
  SPEAKER_01: And indeed, what role could the savings and investment union play in this as a solution?
• 11:40
  SPEAKER_00: Well, we are very strong supporters of the savings and investment union because it's obvious that we lack access to finance, we lack especially gross capital.
• 11:49
  SPEAKER_00: This is a key constraint also for innovation in Europe, and specifically long-term, what they call long-term patient capital is not sufficiently available.
• 11:59
  SPEAKER_00: So we need to overcome the fragmentation we have in the European capital market, we need to mobilize European savings in order to, I mean, first get the better return on investment for the for the people who save the money, but second, also to boost our economy.
• 12:15
  SPEAKER_00: But having said this, of course, this has to do with, I mean, having common rules on supervision, on listing rules, on market infrastructure and so on.
• 12:25
  SPEAKER_00: But it also has to do with all the other points I've mentioned to improve the investment conditions overall, because otherwise the mobilization of the capital will also not work.
• 12:34
  SPEAKER_01: Right.
• 12:34
  SPEAKER_01: I suppose as we wrap up, Marcus, one of the really important things about this document is it is not just about diagnosis.
• 12:40
  SPEAKER_01: Within the document, we offer solutions as to how some of these issues can be addressed.
• 12:44
  SPEAKER_01: So before you go, if you had to highlight two or maybe three policy actions for policymakers in 2026 to really move that dial from diagnosis to delivery, what would they be for you?
• 12:55
  SPEAKER_00: I could come with a much longer list.
• 12:56
  SPEAKER_00: I'll focus on sweep, which of course means not everything is covered, but let me call on certain top three.
• 13:01
  SPEAKER_00: So, first, we need to continue to go on with simplification.
• 13:04
  SPEAKER_00: I mean, that's very clear.
• 13:05
  SPEAKER_00: This is not a sufficient condition to produce growth, but it's a necessary precondition because our companies still tell us they are drawing in regularly.
• 13:15
  SPEAKER_00: Second, we need to amplify the impact of the single market.
• 13:19
  SPEAKER_00: I mean, that's not only the crown rule.
• 13:22
  SPEAKER_00: This is where we have a lot of potential.
• 13:24
  SPEAKER_00: The author of the report, Enrico Leta, basically said we had the common market, then we had the single market.
• 13:31
  SPEAKER_00: Now we need to move to one market.
• 13:33
  SPEAKER_00: And I would agree.
• 13:34
  SPEAKER_00: But of course, it's not only about, let's say, the headlines, it's very much about what we do.
• 13:38
  SPEAKER_00: We need to get rid of what the Commission calls the terrible 10.
• 13:41
  SPEAKER_00: We need to make sure that we are not going backwards, like in the last years.
• 13:45
  SPEAKER_00: And let me mention one thing.
• 13:46
  SPEAKER_00: I mean, we think the 28th regime is a smart concept to be able that we have small and medium-sized high potential companies which can scale in Europe.
• 13:56
  SPEAKER_00: So that's what we want.
• 13:57
  SPEAKER_00: The third point is cost of energy, of course.
• 14:00
  SPEAKER_00: I mean, I mentioned a couple of things we need to do.
• 14:03
  SPEAKER_00: Let me underline once again the most urgent thing, the one where we can rapidly have a certain impact on the bottom line of cost of companies, is certainly DTS reform.
• 14:13
  SPEAKER_00: And here we need to get our act together.
• 14:15
  SPEAKER_01: Indeed, Marcus, thank you for your time today as we look at the reform barometer.
• 14:19
  SPEAKER_01: There's excellent insight within the document, but equally as well, really positive actions towards change.
• 14:24
  SPEAKER_01: For anybody interested in reading both the full document and the explainer document, you'll find it at businesseurope.eu.
• 14:30
  SPEAKER_01: And if you enjoyed this episode of Espresso Briefings, don't forget to subscribe wherever you get your podcasts.
• 14:35
  SPEAKER_01: We'll be back soon with more insights on the developments shaping European business.
• 14:39
  SPEAKER_01: Thanks for listening and see you next time.