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Eisl, A. “For a competitive European industrial policy”, Policy Paper N°304, Jacques Delors Institute, October 2024

The recent shift towards industrial policy in Europe creates tensions with the Single Market and its competition policy paradigm. In this policy paper I argue that only a more European industrial policy will be capable to address the various internal and external economic challenges the EU is facing while also safeguarding the functioning of the Single Market, one of the EU’s key public goods. In order to work, this European industrial policy needs more common financing, common governance mechanisms and capacities, as well as common conditionalities. First, this paper calls for the creation of an EU industrial policy fund whose financing should be based on two pillars, an (1) initial endowment preferably based on common debt and own resources, and (2) arrangements to make the fund self-sustainable over time. These arrangements include an EU state aid contribution and profit-sharing mechanisms. Second, the existing state aid instruments need to become consolidated, simpler, and better integrated. Due to its comparatively European approach, the IPCEI model could serve as a blueprint for the future governance of the various EU industrial policy objectives. To function adequately, any EU industrial policy governance needs to be supported by common capacity building, covering public administrations and private enterprises. Finally, the intelligent and consistent use of common conditionalities is key to ensure that subsidies lead to the achievement of public policy objectives while limiting corporate welfare and state-aid shopping across the EU.