Taking the Pulse: Can the EU attract foreign investment and reduce dependencies?

The contradiction between the buy European push and the deregulation drive is misguided. There has been no explosion of red tape and cutting back EU climate-related reporting requirements will not fix the deeper problem: Europe’s old growth model, built on external demand, no longer works in a world where the United States is walling off its market behind tariffs and China is running a $1.2 trillion (€1 trillion) trade surplus increasingly concentrated in Europe’s core engineering sectors.

Industrial policy is not a distraction but one of the few levers available to the EU. This means attaching requirements to demand-side incentives—such as the tens of billions euros EU countries already spend on tax deductions for corporate car purchases—that exclude Chinese supply while remaining open to allies. These programs may add some bureaucracy. But the alternative is to let investment drain from Europe’s core manufacturing industries as they shrink under the weight of Chinese distortions.

In cherry-picking a meaningless simplification agenda from the Draghi report, EU leaders ignore its central insight: Europe needs industrial policy to defend its manufacturing base from China, alongside deregulation in tech to allow digital firms to scale. That dual strategy will do far more to attract investment than trimming reporting rules.

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