The EU’s Comprehensive Plan for Competitiveness, Enlargement, and Sustainable Prosperity in 2025
Brussels, Belgium – August 29, 2025 – As the world grapples with geopolitical shifts, economic uncertainties, and technological disruptions, the European Union is engaged in what has been dubbed a “race to regain” its global standing. This multifaceted effort encompasses regaining economic competitiveness, expanding the bloc through enlargement, bolstering security and defense, and advancing sustainable prosperity amid challenges like U.S. tariffs under President Donald Trump, competition from China, and domestic pressures such as shrinking aid budgets and migration. Drawing from the European Commission’s 2024-2029 priorities, the recent “Competitiveness Compass” roadmap (launched January 2025 based on Mario Draghi’s report), and ongoing enlargement initiatives, the EU’s plan for 2025 is a strategic blueprint to transform vulnerabilities into strengths. This article outlines the key pillars of the EU countries’ collective strategy, highlighting actions, challenges, and timelines as the bloc aims to close innovation gaps, secure supply chains, and foster unity in a divided world.
The Context: Why Europe Must “Regain” Its Edge
Europe’s “race to regain” stems from a recognition that the EU has lagged behind global peers in productivity and growth over the past two decades. According to the Draghi Report on the Future of European Competitiveness (September 2024), the EU’s GDP per capita has fallen 15% relative to the U.S. since 2002, hampered by fragmented markets, underinvestment in innovation, and dependencies on external powers for critical raw materials and energy. Geopolitical tensions – including Russia’s war in Ukraine, instability in the Middle East (e.g., post-Assad Syria and the Gaza conflict), and Trump’s tariff threats (up to 30% on EU goods) – have amplified these issues, risking a 2.1% long-term GDP hit from trade disruptions alone.
The EU’s response is encapsulated in the von der Leyen Commission’s 2024-2029 Political Guidelines, which outline seven priority areas: sustainable prosperity and competitiveness, security and defense, a strong social Europe, quality of life, democracy and values, global partnerships, and enlargement. The January 2025 Competitiveness Compass translates these into actionable measures, emphasizing “simplify, invest, and accelerate” to make Europe the “first climate-neutral continent” while closing the innovation gap. Enlargement, meanwhile, is positioned as a tool for stability, with facilities like the €50 billion Ukraine Facility (2024-2027) supporting reforms in candidate countries. EU leaders, including those from Poland and Denmark (holding the rotating Council Presidencies in 2025), are aligning national agendas to implement this vision, though challenges like fiscal constraints and political divisions persist.
Pillar 1: Regaining Economic Competitiveness – The Competitiveness Compass Roadmap
At the heart of the EU’s plan is the Competitiveness Compass, a five-year framework (2024-2029) to boost productivity, decarbonize industries, and enhance security. Presented on January 29, 2025, it builds on Draghi’s recommendations and guides the Commission’s work, with flagship initiatives set for rollout throughout the year. The Compass identifies three “transformational imperatives”: closing the innovation gap, accelerating decarbonization, and reducing dependencies. EU member states, through the Council, are committed to supporting these via national budgets and the €1.2 trillion Multiannual Financial Framework (MFF) 2021-2027, plus the €800 billion NextGenerationEU recovery fund.
Key Actions and Timelines for 2025:
- Closing the Innovation Gap: Europe lags in venture capital (only 20% of U.S. levels) and fragmented regulations. The plan includes:
- Q2 2025: An EU Startup and Scale-Up Strategy to address barriers for new companies, including incentives for risk capital and simplified cross-border rules.
- Late 2025/Early 2026: An EU AI Plan to launch “AI gigafactories” for training large models, backed by public-private funding, and action plans for quantum, biotech, robotics, and space technologies.
- End-2025: Improved access to innovations from public research, partnering with the European Investment Bank (EIB) to scale AI and quantum firms.
- Horizontal Single Market Strategy: Modernizing governance to remove intra-EU barriers, with a focus on SMEs and standard-setting processes. These measures aim to reignite Europe’s “innovation engine,” targeting a 20% increase in R&D investment as a share of GDP by 2030.
- Accelerating Decarbonization – The Clean Industrial Deal: To achieve 90% emissions cuts by 2040 (proposed for legal binding in 2025), the EU is prioritizing green manufacturing while addressing energy costs (up 30% since 2022 due to the Ukraine war).
- Late February 2025: Launch of the Clean Industrial Deal, offering fast-tracked permits for clean projects, support for energy-intensive sectors (steel, chemicals), and an Affordable Energy Action Plan to lower prices.
- Q4 2025: Industrial Decarbonisation Accelerator Act for extended permitting in transition sectors.
- Tailor-made plans for vulnerable industries, including flexibilities for carmakers facing 2025 CO2 fines.
- €800 billion annual investments (per Draghi) in clean tech, with 30% of EU funds dedicated to climate action. Member states like Germany and France are leading, with national subsidies aligning to EU goals, though “frugal” nations like the Netherlands push for fiscal restraint.
- Reducing Dependencies and Enhancing Security: Amid U.S. tariffs and Chinese dominance in raw materials, the EU will diversify supply chains.
- 2025: New Clean Trade and Investment Partnerships for raw materials, clean energy, and tech from global partners (e.g., Africa, Latin America).
- Review of public procurement rules to prioritize EU-made critical technologies.
- European Savings and Investments Union: New products to channel €10 trillion in household savings into investments, creating a more efficient capital market.
Financing is key: The refocused EU budget will streamline funds, with the MFF 2028-2034 negotiations kicking off in 2025 to cover €800 billion in NextGenerationEU repayments through new own resources (e.g., carbon border taxes).
Challenges include budget cuts in donor countries and resistance from “frugal” states, but consensus among all 27 members underscores unity.
Pillar 2: Enlargement – Expanding the EU for Stability and Prosperity
Enlargement is a cornerstone of the EU’s “race to regain” influence, fostering peace and economic integration in its neighborhood. As of 2025, the agenda focuses on three groups: Western Balkans, Eastern Europe (Ukraine, Moldova, Georgia), and potential candidates like Armenia. The process requires candidates to adopt the EU acquis (35 chapters of laws) and meet Copenhagen criteria (democracy, rule of law, market economy). The EU provides financial support via facilities to aid reforms.
Key Plans and Progress in 2025:
- Western Balkans (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia): All have applied; negotiations are open or advancing. The New Growth Plan (€6 billion, 2024-2027) supports reforms, with a focus on the common market integration. Montenegro and Albania are frontrunners, potentially closing chapters by year-end. Challenges include Bosnia’s ethnic tensions (Republika Srpska’s secession threats) and Kosovo-Serbia normalization.
- Eastern Partners (Ukraine, Moldova, Georgia): Ukraine’s accession talks opened in 2024 despite the war; the €50 billion Ukraine Facility funds stability and reforms (2024-2027). Moldova’s Reform and Growth Facility (€1.785 billion, 2025-2027) supports its EU path post-2024 referendum. Georgia faces hurdles from democratic backsliding. Payments are conditional on reforms.
- Emerging Candidates (Armenia): Parliament approved accession process in February 2025; a roadmap and referendum are planned, driven by tensions with Russia/Azerbaijan.
The EU aims for “results-oriented” enlargement, with youth engagement and civil society involvement to counter euroscepticism (e.g., only 28% in Poland/Cyprus see benefits outside EU). Benefits include Schengen expansion (Bulgaria/Romania full members January 2025) and economic integration, but hurdles like rule-of-law issues in Hungary/Poland slow progress.
Pillar 3: Security, Defense, and Global Partnerships – A Resilient Europe
Security is paramount amid Russia’s war and Middle East instability. The EU’s plan includes building a European Defence Union (EDU) via the Strategic Compass and PESCO (Permanent Structured Cooperation).
- Defense Readiness White Paper (March 2025): Addresses gaps in military mobility, ammunition (2 million artillery rounds target for 2025), and industry fragmentation. Proposes a common defense market, aggregating demand for €20 billion in 2025 support (scaled back from initial plans due to member state resistance). Includes Ukraine integration via joint ventures.
- Global Partnerships: €5.5 billion in African investments (TICAD9, August 2025); Mediterranean focus with a dedicated Commissioner; partnerships with Gulf states for energy/migration. Aid budgets may shrink, but development cooperation links to security (e.g., Global Gateway for infrastructure).
- Ukraine Support: €50 billion facility covers 2025 financing gap; G7 loan involvement. Enlargement ties to stability.
Member states must commit finances (e.g., NATO 2% GDP spending), with Poland/Denmark presidencies pushing dialogue.
Challenges and the Road Ahead
The plan faces hurdles: fiscal pressures (shrinking aid), political divisions (e.g., Hungary’s vetoes), and external threats (Trump’s NATO demands). Yet, 2025 milestones – Clean Industrial Deal (Feb), AI Plan (late 2025), MFF negotiations – offer momentum. As von der Leyen stated, “We have the plan. What matters is speed and unity.” Success could see EU GDP growth at 1.5-2% in 2025, per forecasts, but failure risks further lag.
The EU’s race to regain is ambitious, uniting 27 countries in a shared vision for a competitive, secure, and sustainable future.
For more, visit European-Commission.europa.eu or CGDev.org.