29 Jan 2025
2025 Annual Single Market and Competitiveness Report analyses the strengths & weaknesses of EU economy
On 29 January 2025, the European Commission published the 2025 Annual Single Market and Competitiveness Report analysing the strengths and weaknesses of the EU economy. It provides the analytical context for the Competitiveness Compass. The report tracks the evolution of 22 key performance indicators, such as integration in the Single Market, Research and Development, expenditure and electricity prices.
The main findings of the report are the following:
- The competitiveness of the EU economy faces mounting pressure from several angles, including high energy costs and overcapacities in third countries.
- The Single Market, home to 450 million consumers and 23 million companies, is at the core of the EU's long-term competitiveness. Nevertheless, persistent barriers in the Single Market hold it back from reaching its full potential. Regulatory burden is seen as an obstacle by two thirds of companies.
- Europe boasts stable investment spending, strong research activity and an ample talent pool. However, businesses struggle to scale up, research and development expenditure remains below peers and digitalisation progresses too slowly.
- Europe has a strong industrial base, but high energy prices weigh on its competitiveness. The decarbonisation of industry and energy systems as well as circularity is advancing but should accelerate.
- The EU maintains its position as the number one global exporter of services and number two exporter of goods. Still, strategic dependencies and non-market overcapacities in third countries merit careful monitoring.
In terms of research and innovation, the report finds the follwing:
- While the EU's technological base is more diversified than that of other major economies, it is disproportionally more specialised in less complex technologies than its counterparts.
- Companies and universities face difficulties in initial deployment and commercialisation of their research.
- Venture capital investment has declined from already low levels: from 0.09% of GDP in 2022 to 0.05% in 2023.
- The EU budget has an array of programmes that function as important levers for public and private investments and research efforts.
The full report can be downloaded here: