Prospects for the European Council's Informal Leaders' Retreat on Competitiveness: An Outlook on the European Council's Work on Competitiveness

Key Chapter Title List

1. Background
2. Strengthening the Single Market
3. Developing a Strong Economic Foundation

Document Introduction

Enhancing the EU's competitiveness is a key priority for the European Council during the current legislative cycle. Faced with a complex geopolitical environment where the international rules-based order is increasingly eroded and core alliance relationships are being questioned, Europe must be able to stand firm and self-reliant. As stated by European Council President António Costa, strengthening the Single Market and the EU's economic foundation is an urgent strategic imperative aimed at boosting EU competitiveness and developing its strategic autonomy. On February 12, 2026, EU leaders will hold an informal leaders' retreat in Ardennes, Belgium, which President Costa described as a strategic brainstorming session, dedicated to the issue of EU competitiveness. This meeting builds on a series of previous discussions on the topic and will inform the conclusions of the European Council in March 2026.

This report first reviews the policy background and evolution of the EU's efforts to enhance competitiveness. Both the 2019-2024 Strategic Agenda and the current 2024-2029 Strategic Agenda list a prosperous and competitive Europe as one of their core themes. In recent years, multiple crises (such as the COVID-19 pandemic, Russia's war against Ukraine, and transatlantic tensions) have made this process more urgent. The Versailles Declaration of March 2022 was a milestone in strengthening EU competitiveness. Subsequently, the special European Council meeting in April 2024 proposed a new European Competitiveness Deal comprising nine drivers, and the Budapest Declaration on the New European Competitiveness Deal was adopted at the informal meeting in November of the same year. Furthermore, the report "Much More Than a Market" by former Italian Prime Minister Enrico Letta, released in April 2024, and the report "The Future of European Competitiveness" by former ECB President Mario Draghi, released in September 2024, provided important guidance for policymakers. In October 2025, 19 EU leaders co-signed a letter to President Costa requesting a special meeting in February 2026 to review progress and provide political guidance on all competitiveness areas outlined in the Draghi report.

The report focuses on analyzing the core issue of strengthening the Single Market. The Single Market and its four freedoms are a transformative concept for Europe. In recent years, several member states have actively promoted the further development of the Single Market, including proposing new horizontal strategies, adopting relevant conclusions, and issuing joint declarations. In May 2025, the European Commission released a new strategy titled "The Single Market: Europe's Home Market in an Uncertain World," focusing on seven key areas. In September 2025, European Commission President Ursula von der Leyen announced a Single Market Roadmap until 2028 in her State of the Union address. In his speech to the European Parliament on January 21, 2026, President Costa outlined six ways to deepen and complete the Single Market, including facilitating cross-border business, simplifying rules, ensuring energy security and affordability, and strengthening digital sovereignty. These will be the focus of discussions at the February 12 retreat.

Finally, the report explores related efforts to develop a strong economic foundation. This has been a priority for the European Council since the 2019-2024 Strategic Agenda. Based on the reports by Letta and Draghi, the European Commission has proposed key initiatives such as the Competitiveness Compass and the Clean Industrial Deal. Although some EU economies are performing well, the average level still needs improvement. A core objective of EU leaders is to ensure the EU's industrial renewal and decarbonization, and they have invited the Commission to prioritize the development of a comprehensive industrial strategy for competitive industries and high-quality jobs. Simultaneously, the need to strengthen the defense technological and industrial base has been emphasized. In this context, France promotes the concept of "Buy European" to enhance industrial autonomy, while some small, export-oriented member states hold a more cautious stance. Furthermore, leaders have emphasized the importance of launching a simplification revolution to cut red tape and help EU businesses grow, a topic already discussed in detail at the regular European Council meeting in October 2025.