A new survey by the European Round Table of Industrialists (ERT) has painted a mixed picture for the EU's economic future.
The report examined key indicators of the EU's economic health and performance, including competiveness, energy, climate change, eSkills, education employment and trade and investment. It offers a series of policy recommendations.
The ERT, whose members represent EU businesses employing almost seven million people, said that Europe needed to be attractive for inward investment if was to maintain its place as an innovative manufacturing base.
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EU GDP for 2015 was expected to be 1.9 per cent, less than those in other major economies such as China, India or the US. Despite this, the bloc remains the world's largest exporter of goods, with almost 17 per cent of world trade.
Chairman of the ERT's Competitiveness Working Group, Kurt Bock, said; "Other regions of the world are already implementing strong industrial policies, including energy and competition policies that serve their strategic interests," he said. "As a result, growth is taking place outside Europe. Political leaders need to take action to ensure that Europe remains a leading business location."
He warned that fragmented markets, complex legal frameworks and high levels of youth unemployment risk undermining the EU's competitiveness. In 2014, almost 25 per cent of under-24s were unemployed; this compares poorly to an OECD average of 16.2 per cent.
The report also raises concerns on education, particularly in the field of ICT skills. It highlights a potential shortfall of up to 825,000 ICT professionals by the end of the decade.
In addition, it highlights a lack of investment in public telecoms infrastructure, which - like youth employment - lags behind OECD average. The ERT would like to see greater public and private investments and more market consolidation in order to keep pace with global competition.
Other challenges include high energy prices across Europe and low investment in R&D. Only three countries - Denmark, Finland and Sweden - meet the EU2020 target of investing 3 per cent of GDP in R&D.
Bock warned that EU policymakers need to be aware of the challenges posed. "Other regions of the world are already implementing strong industrial policies, including energy and competition policies that serve their strategic interests. As a result, growth is taking place outside Europe. Political leaders need to take action to ensure that Europe stays a top business location."
He continued; "Industry remains the backbone of the European economy, notably for exports and R&D. However, a certain number of imbalances could jeopardise this future."