A competitive economy creates jobs, raises living standards, and supports public services. EU membership has helped Ireland build this kind of economic model, one that supports fair trade, attracts investment, and provides consumers with high‑quality, competitively priced goods and services.
Ireland benefits from being part of the EU Single Market, and through EU-negotiated trade agreements it also enjoys preferential access to global markets. Together, these advantages create jobs, strengthen innovation, and support sustainable economic growth.
However, Europe now faces a new generation of challenges that will shape its future competitiveness. Global trade is slowing, geopolitical tensions are rising, and technological change is accelerating. At the same time, Europe’s innovation performance is slipping, supply chains are under pressure, and EU economies are too dependent on external partners.
The European Commission is leading the response to these challenges by making competitiveness one of its top priorities for the 2024–2029 mandate. The priority is backed by a major new European Competitiveness Fund and a wider EU investment package totalling around €451 billion. Ireland is also taking decisive steps to reinforce its own competitiveness, while working closely with the Commission and fellow Member States to support Europe’s long‑term stability and sustainable growth.
Europe's sustainable prosperity and competitiveness
Competitiveness Compass
Europe has all the ingredients needed to drive faster, more sustainable growth, including a skilled workforce, world‑class research institutions, creative entrepreneurs, and a dynamic Single Market. The EU also has the world’s fastest‑growing network of trade agreements, now covering more than 75 countries. Yet despite these strengths, global competitors such as the United States and China are growing more quickly.
The Competitiveness Compass is the European Commission’s roadmap for unlocking Europe’s potential and strengthening the foundations of long‑term prosperity. It builds on Mario Draghi’s 2024 report on European competitiveness and Enrico Letta’s report on the future of the Single Market. Both reports identified structural barriers holding Europe back, and the reforms needed to address them. For Ireland, which recorded the fastest GDP growth in the EU in 2025, the Compass provides a framework to strengthen competitiveness in a way that leaves the economy less exposed to the volatility of multinational activity.
The Compass is built around three strategic pillars:
1. Closing the innovation gap: Accelerating innovation by supporting start‑ups and scale‑ups, helping firms adopt technologies such as AI and robotics, and promoting strategic sectors including quantum, biotech, advanced materials, and space.
2. Decarbonising the economy: Making clean, affordable energy a source of European competitive advantage.
3. Reducing dependencies: Diversifying supply chains and reducing reliance on external suppliers for critical materials, clean technologies, energy, and other essential inputs.
“Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness. The Competitiveness Compass transforms the excellent recommendations of the Draghi report into a roadmap. So now we have a plan. We have the political will. What matters is speed and unity. The world is not waiting for us. All Member States agree on this. So, let's turn this consensus into action.” President of the European Commission, Ursula von der Leyen
Supporting these pillars are these five horizontal enablers that turn the roadmap’s vision into action.
• A major drive for simplification to reduce regulatory and administrative burdens.
• A modernised Single Market Strategy to lower remaining barriers.
• Stronger financing through the European Savings and Investments Union.
• A new Union of Skills to promote training, mobility, and quality jobs.
• A Competitiveness Coordination Tool to better align EU and national reforms.
The Draghi report on EU competitiveness
European Savings and Investments Union
The Competitiveness Compass highlights an urgent need to mobilise far more investment to support innovation, decarbonisation, and economic security across the EU.
A significant amount of capital is already potentially available, but much of it is sitting in ordinary bank accounts that offer little return for depositors. In total, EU households hold an estimated €10 trillion in savings, around 70% of which is kept in low‑yield accounts. Unlocking even a portion of this could help households grow their wealth while providing the long‑term investment Europe needs to strengthen its stability, security, technological leadership, and growth trajectory.
The European Savings and Investments Union (SIU) aims to provide citizens with better opportunities to save for a home, invest in their children’s education, put money aside for retirement, or just simply grow their savings. At the same time, it will enable businesses across Europe to access new sources of capital to expand, innovate, and create jobs.
The European Commission adopted its strategy for the SIU in March 2025. The SIU will work by providing:
• Simple products: Low‑cost, easy‑to‑use investment options that help savers move beyond low‑interest accounts.
• Fair advice: Clear, trustworthy guidance to help citizens make informed financial decisions.
• More choice: A broader range of investment options, including long‑term products for education and retirement.
• Less red tape: Removing barriers that complicate cross‑border investment.
• Backing key sectors: Channelling private investment into clean energy, digital infrastructure, and other strategic areas.
In December 2025, the Commission published a Market Integration Package with proposals to unify capital markets, a key prerequisite for establishing the SIU. These measures are now being negotiated by the European Parliament and Member States, with a review planned for 2027.
Ireland is broadly supportive of the SIU and has announced plans for a State‑backed savings scheme of its own. With approximately €170 billion sitting on deposit in Irish banks and financial institutions, there is clear potential to offer citizens more effective ways to grow their savings.
Key EU actions on competitiveness
Europe has long led in industry, enterprise, and innovation, from the Industrial Revolution in the 18th century to overcoming modern‑day crises such as financial shocks, COVID‑19 lockdowns, and recent energy challenges. But maintaining this leadership requires continuous adaptation to new economic and technological realities.
The Competitiveness Compass was the first major initiative of the Commission’s 2024–2029 mandate, and it is accompanied by a range of additional actions designed to strengthen Europe’s competitiveness and long‑term prosperity.
Single Market: The single market has already increased EU GDP by 3-4% and created 3.6 million jobs. Completing it could double these gains. To help achieve this, the Commission proposes sharply reducing unnecessary administrative burdens, particularly for SMEs, simplifying EU law, and introducing a single EU-wide legal status to help innovative firms expand across borders.
EU Inc.: Irish Commissioner Michael McGrath was tasked by Commission President, Ursula von der Leyen, with developing this flagship initiative to simplify the fragmented corporate legal landscape that makes it difficult for companies to expand across EU borders . Launched in March 2026, it features a single set of rules that will make it much easier and cheaper for businesses to start, operate and grow across the EU.
“With its digital-by-default framework, entrepreneurs opting into the EU Inc. proposal will be able to set up a business within 48 hours, at a maximum cost of €100 – fast, affordable, and efficient.” Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection, Michael McGrath.
Clean Industrial Deal: The European Commission has proposed to set a target of reducing EU emissions by 90% by 2040. To support industry through the green transition, the Industrial Accelerator Act, introduced in March 2026, aims to speed up planning, tendering and permits for clean projects. Other priorities include completing the Energy Union, expanding clean‑energy infrastructure, strengthening supply chains for key technologies, and improving cross‑border mobility through a single digital ticketing system.
Affordable Energy Action Plan: Launched in February 2025, the plan outlines eight measures to cut energy bills, accelerate major infrastructure projects, strengthen the Energy Union, and increase the resilience of Europe’s energy system. It is a core component of the Clean Industrial Deal.
Strengthening Skills: To address labour-market needs, the Commission will establish a Union of Skills to improve access to training, reinforce vocational pathways, and promote lifelong learning. The focus is on building capabilities in fast‑growing sectors such as digital technologies, advanced manufacturing, clean energy, and biotechnology. A 2026 Council recommendation urges Member States to prioritise skills and education, especially in STEM fields, which are critical to Europe’s economic resilience.
Ireland’s role in EU competitiveness
Ireland plays a vital role in advancing EU competitiveness by leveraging its strengths in foreign direct investment (FDI), innovation, and support for Single Market reforms. It has launched a comprehensive response to today’s competitiveness challenges, focusing on strengthening research capacity and aligning national priorities with EU‑level objectives.
In September 2025, the Government published the Action Plan on Competitiveness and Productivity, a strategic framework containing 85 actions, including 26 priority measures, aimed at improving Ireland’s long‑term productivity and economic resilience.
The plan is structured around six strategic challenges identified as essential to Ireland’s future competitiveness:
• Strengthening research, innovation, and skills to boost productivity.
• Enhancing international openness by attracting investment, diversifying exports, and deepening Ireland’s role in the EU.
• Scaling more domestic SMEs to reduce reliance on multinationals.
• Improving regulation by cutting administrative burdens and business costs.
• Accelerating infrastructure delivery in housing, transport, and energy.
• Advancing sustainability and balanced regional development.