MNI: EU Leaders To Seek To Protect Firms, Build Scale

European leaders meeting this week will discuss how to encourage startups and ease competition rules to help companies gain scale, as well as a more controversial French proposal to favour European companies in public procurement and how to protect strategic industries from ever more ferocious global competition, a senior EU official said on Tuesday.

The EU's "28th Regime" to reduce red tape constraints for smaller business is likely to get a green light, though other proposals may find less favour, the official said, emphasising the informal nature of discussions at the leaders’ retreat in a Belgian castle on Feb 12.

"It's important to make SMEs' and startups' lives easier and so help them scale up throughout Europe,” the official said, adding that some leaders will also argue for easier competition rules to help EU companies build global scale.  

"You will have some member states talking about competition guidelines and how to take the global market more into account [in merger decisions]," the official added.  "The capacity to compete around the globe is important."

A European Preference in public procurement as proposed by French Industry Commissioner Stephane Sejourne will be more controversial, given opposition from industries which have objected to its impact on often complex supply chains, but the official stressed that there was hope to make the proposal more concrete by taking a more "sector-by-sector" rather than an "across-the-board" approach.  (See MNI POLICY: EC Moots Swap Lines In Trade Deals To Boost Euro)

STRATEGIC INDUSTRIES

Protecting certain industries from increasingly intense competition from China and the U.S. is also on the agenda, the official said: 

"We see this not only around innovative industries like digital and AI, but we also see … around more traditional industries which are energy intensive and face high competition like chemicals, steel and aluminium". 

Securing supplies of critical raw materials and enhancing EU payment systems will be another strand in leaders' discussions. 

The official said that calls from French President Emmanuel Macron for more EU borrowing would probably not be agreed at the meeting.  

"The focus at this debate is on freeing up corporate private financing for the economy," the official said.  

The official conceded that while some leaders could raise the issue of increased EU borrowing to finance the bloc's industrial agenda, the issue would be more one for the EU's long-term budget discussions which will continue through the rest of this year.    

"Sometimes things come out of the discussion you do not expect."