Piero Cipollone said European firms should capitalise on the Single Market's potential by removing internal barriers to cross-border expansion and business combinations. The 450-million-person market could enable companies to achieve economies of scale, particularly in information technology, finance and automotive sectors, he said.
Reports by Mario Draghi and Enrico Letta have documented how restrictions on the movement of goods and services within the EU prevent firms from expanding and competing with global rivals, Cipollone noted. Removing these barriers would allow European champions to emerge with the scale needed for international competition, he added.
Cipollone said the European Central Bank's role in strengthening competitiveness centres on maintaining price stability, which reduces uncertainty and enables firms to plan. In the face of cost-push inflation from supply shocks, such as energy price spikes, central banks should anchor inflation expectations at the 2 percent target rather than simply raise rates, he said, as the latter could dampen already-weakened economic growth.
Fiscal policy should address temporary external shocks through measures that are "temporary, targeted and limited to whoever really needs them," Cipollone said. Long-term solutions require reducing dependence on fossil fuels and shifting the energy mix toward renewables, he added. Increased renewable energy would lower European firms' energy costs and keep resources within Europe rather than transferring them to oil-producing countries.
Productivity gains are essential for real wage growth and worker purchasing power in the long term, Cipollone said. Competitiveness should be pursued through efficiency gains, not by extending working hours while holding wages flat or by lowering safety standards, he added.
