Competitiveness Compass initiative for the EU

On the 29^th of January, the European Commission presented an EU Competitiveness Compass, an initiative providing a framework to steer the Commission's work during this mandate and boost competitiveness.

The three core areas of the Competitiveness Compass, based on the Draghi report, are: 1) closing the innovation gap, 2) a joint roadmap for decarbonisation and competitiveness, 3) reducing excessive dependencies and increasing security. These points are complemented by five horizontal enablers, such as simplification, lowering barriers to the Single Market, promoting skills and quality jobs.

The most relevant actions for SMEs under this initiative are as follows:

• reduction of reporting burden, with at least 25% for all companies and at least 35% for SMEs. These targets should refer to the costs of all administrative burdens, and not only reporting requirements. The goal is to reduce around EUR 37.5 billion of recurring costs until the end of the mandate. Dedicated measures for SMEs will aim to meet the 35% target. This will start with the first of a series of Simplification Omnibus packages. The first Omnibus will, among others, cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy (publication scheduled for 26 February 2025)
• a new definition of small mid-caps aiming to benefit this category from tailored regulatory simplification in the same spirit as SMEs (26 February 2025)
• a new SME and competitiveness check in impact assessments will become a stronger filter for new initiatives, also assessing the expected effects on cost differentials compared to international competitors. Greater attention will be paid to assessing the costs of proposed delegated and implementing acts, when relevant.
• a 28th legal regime, which will simplify applicable rules and reduce the cost of failure, including any relevant aspects of corporate law, insolvency, labour and tax law (Q4 2025 – Q1 2026)
• a dedicated EU Start-up and Scale-up Strategy to address the obstacles that are preventing new companies from emerging and scaling up (Q2 2025)
• a European Innovation Act to promote access of innovative companies to European research and technology infrastructures (Q4 2025 – Q1 2026) & a European Research Area Act (2026)
• a White Paper on the Future of European Defence aiming to integrate EU industrial capacity and establishing a Single Market for defence and improving access to finance for SMEs with the aim to increase scale, reduce inefficiencies and promote interoperability (Q1 2025)
• making standard-setting processes faster and more accessible, in particular for SMEs and startups (2026)

If you wish to receive any additional information about the Competitive Compass, please contact Jonathan McDade, SFA Public Affairs Lead - Tel: 01 605 1688 or Email: jonathan.mcdade@sfa.ie.