EU’S NEW INDUSTRIAL POLICY SET TO FOCUS ON SPECIFIC SECTORS

The European Commission is set to publish an “Industrial Policy Communication Update – a contribution to growth and economic recovery” on 10 October. A long-time defender of open markets and free competition, the European Commission now seems to be changing its tune. The Communication earmarks 6 priority areas for developing European industrials potential, including 3-D printing and electric cars, and indicates that this proactive approach will be extended in future to cover other key areas such as the creative industries, medical devices and security.

The key to the success of such a policy will be funding. The Commission is seeking to boost research funding to EUR 80 billion in the next 7-year budget to invest in public-private partnerships supported through the future Horizon 2020 programme. Risk capital funding from private sources as well as cohesion policy and European Investment Bank instruments are also to be sourced. However, the cash-strapped EU member states are likely to find the Commission’s overall budget proposal of EUR 1 trillion too ambitious. On the other hand, any freeze in the size of the budget (possibly worth a cut of EUR 100 billion) would have a serious impact on the EU executive’s plan for an invigorated industry policy. Much bargaining between different interest groups lies ahead before the new budget is sealed, hopefully by the end of 2012.

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