Why the EU’s competitiveness plan is still a work in progress

Good morning. A scoop to start: European officials have discussed a possible restart of Russian pipeline gas supplies through Ukraine as part of a potential wider peace deal with Moscow, officials told the FT, sparking deep condemnation from Kyiv’s closest allies.

Today, I unpack a report from Brussels’ top economic think-tank on the state of the European Commission’s competitiveness plans, and our Netherlands correspondent reports on the Dutch push to tweak EU rules and ease its domestic housing crisis.

Must try harder

A decent start but more work needed: that’s the rough assessment of the EU’s economic reform plans from Bruegel, Brussels’s prominent economic think-tank.

Context: Even before Donald Trump’s election as US president and his pledges to slash regulation and beef up protection for American companies, the EU was mired in a crisis of confidence over its economic competitiveness, as growth has fallen behind the US and China.

Reports released last year by former European Central Bank president Mario Draghi and former Italian premier Enrico Letta described the scale of the continent’s economic woes and proposed how to fix it. Many — but not all — of those prescriptions have been adopted by the European Commission in its 2025-2029 programme.

“The Commission policy platform . . . does not yet add up to a coherent strategy. Critical questions remain unanswered,” write Bruegel’s Jeromin Zettelmeyer and Heather Grabbe in a report released today, previewed by the FT.

A raft of commission proposals, including the “competitive compass” released yesterday, fail to adequately answer questions such as how to shift to green energy without preventing a “collapse of Europe’s energy-intensive industries”, how to marry economic security with foreign policy, and how to cut red tape “without creating environmental and financial risks”, they write.

And then there’s the money.

“Another missing element is a strong, explicit case for adequate financing in addition to the reprioritisation of existing spending,” Zettelmeyer and Grabbe write. “The commission cannot shy away from the fact that any reasonable answer . . . will point to much larger funding needs than the current budget envelope. It will need to make the case and fight for it, but has given no hint so far that it is prepared to do so.”

Trump, they argue, has complicated some issues but not created any new ones.

The more pressing ones created by his presidency include “an accelerated, EU-level approach to defence procurement” and a need to “take a fresh look at how to promote international emissions mitigation after the US withdrawal from the Paris Agreement”.

But the fundamental issues that need fixing are long-standing and homegrown, they point out, not US imports: “There is no contradiction between what Europe needs to do to address its structural problems and what it needs to do to respond to Trump.”

Chart du jour: Money talks

France’s Mistral AI was hailed as a potential global leader in the technology. But it has lost ground to US rivals — and now China’s emerging star.

Gimme shelter

The Netherlands, one of the most densely populated countries in the world, is lobbying Brussels to change the rules so it can squeeze in more houses as prices reach record highs, writes Andy Bounds.

Context: The EU appointed its first housing commissioner last year to deal with the increasingly dire living situation. In 2023, some 16 per cent of the EU population lived in an overcrowded household, and almost 9 per cent spent more than two fifths of their household income on housing, according to Eurostat.

Mona Keijzer, the Dutch minister for spatial planning, told the FT that the country was short of 400,000 homes, and lacked places with affordable rents.

Her solution is twofold. First, the EU should declare housebuilding an “overriding public interest” as it has with renewable energy projects, Keijzer said, adding that this would speed up the planning process and disregard some green regulations that protect nature.

“In Europe, almost every country has the problem of young people not being able to find affordable houses,” she said on a trip to Brussels.

She also asked Dan Jørgensen, the EU housing commissioner, to introduce an exemption from state aid rules for housing subsidies for the middle class, to allow developers to offer houses at mid-market rent. “That’s one of the things I need so it can be feasible to build affordable houses,” Keijzer said.”

A European Commission official said there was already flexibility in environmental rules to allow development, “but they need to be assessed on a case-by-case basis”.

What to watch today

1. Informal meeting of EU home affairs ministers in Warsaw.

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