In an increasingly unpredictable global economic environment, European Union leaders have come to a broad political consensus to promote a 'Buy European' policy that aims to bolster the bloc's strategic industries and restore its competitive position.

During their lengthy talks at the Alden Biesen Castle in eastern Belgium, the 27 heads of state discussed how to protect Europe's industrial foundation in the face of growing economic constraints, geopolitical unpredictability, and escalating rivalry from China and the United States.

EU Moves to Shield Key Industries Amid Economic Strains

Growing concerns that Europe is falling behind in important areas as a result of high energy prices, onerous regulations, and the flood of massively subsidised Chinese goods were the backdrop for the meeting.

Notably, Belgian Prime Minister Bart De Wever emphasised the need for coordinated action by warning that manufacturing closures and dwindling investment were causing an “existential crisis” in several major EU economies.

Moreover, President of the European Council António Costa reaffirmed the need to enhance and protect essential sectors, including space, defence, clean technology, quantum computing, artificial intelligence, and payment systems, stating that there is strong support for applying European preference in these areas in a “proportionate and targeted” manner.

Likewise, European Commission President Ursula von der Leyen announced an action plan to revitalise the single market by March. This plan will aim to simplify regulatory frameworks, reduce administrative burdens, integrate capital markets, and lower energy prices. She expressed urgency, stating that decisive actions from leaders can significantly impact Europe.

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EU Split as 'Buy European' Approach Gains Momentum

The renewed interest in a 'Buy European' approach signifies a change in EU economic strategy, gaining support amidst vulnerabilities such as reduced Russian gas supplies in 2022, heightened trade tensions under U.S. President Donald Trump, and China's aggressive industrial strategy backed by substantial state subsidies.

The European Commission plans to introduce an Industrial Accelerator Act, establishing European content targets for key products, including solar panels and electric vehicles.

France and Germany showcased unity at the summit, with President Emmanuel Macron and Chancellor Friedrich Merz emphasising the urgency of enhancing European competitiveness.

However, divisions persist. Macron pushes for a concentrated European preference strategy in areas such as renewable technologies, chemicals, steel, automotive, and defence, claiming that Europe risks being “swept aside” by unfair global competition.

Merz, on the other hand, advocates for a larger “Made with Europe” approach that includes trusted partners and prioritises deregulation and trade agreements.

The other member states were cautious. Prime Minister Michael Martin of Ireland underlined the need to uphold the EU's commitment to free trade, indicating that discussions over the extent of European preference will go on.

Meanwhile, Germany and Italy have reached an agreement to lessen regulatory burdens, and they are co-hosting a pre-summit conference with Belgium to talk about regulatory changes and industrial revitalisation.

Although von der Leyen acknowledged that reaching an agreement among the 27 member states would be difficult, he expressed willingness to move capital market integration forward through smaller coalitions if needed.

She warned that inaction might lead to increased economic fragmentation and collapse and stressed the need for Europe to remove internal obstacles that stand in the way of its becoming a “true global giant.”

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