The European Commission is poised to unveil its ambitious “Made in Europe” industrial strategy, which could have significant implications for international supply chains and trade relations. Nick Thomas-Symonds, the UK minister for EU relations, has expressed concerns that this initiative may lead to increased costs and unnecessary barriers between the UK and EU member states.
Impending Legislation and Its Implications
The forthcoming legislation from the European Commission aims to prioritise European-manufactured products in public procurement and consumer schemes. This policy is intended to reduce reliance on foreign imports while bolstering local production in key sectors amid an unpredictable geopolitical landscape.
During a recent economic forum in Madrid, Thomas-Symonds cautioned that enforcing strict local content requirements could disrupt the closely intertwined supply chains between the UK and EU. He remarked, “If you had very strict preference requirements, you would risk impacting our deeply integrated supply chains that would create unnecessary barriers to trade in key UK-EU industries and increase costs.”
The potential ramifications of this strategy could particularly affect the supply chains linking the UK and Spain, as Britain is a major investor in the Spanish economy.
Strengthening Ties Amidst Challenges
Thomas-Symonds’ comments come at a time when the UK government, led by Keir Starmer, is actively seeking to enhance diplomatic and economic relations with the EU. Since the announcement of a ‘reset’ deal in May, discussions have revolved around the possibility of negotiating sector-specific agreements that would grant the UK deeper access to the EU single market. However, such initiatives may encounter resistance from opposition parties.
EU leaders recently convened in Belgium to discuss the “Buy European” policy, aimed at safeguarding the continent’s economic future in light of ongoing geopolitical instability. The leaders identified critical sectors for protection, including defence, clean technology, quantum computing, artificial intelligence, and payment systems.
A Competitive Landscape
The EU’s initiative is a response to growing concerns over Europe’s competitiveness, which have intensified following the abrupt loss of Russian gas supplies in 2022. This situation led to soaring energy costs and heightened vulnerability at a time marked by declining investment and increasing regulatory pressures. In this context, the 27 member states are actively striving to enhance Europe’s competitive standing against the US and China, particularly in light of previous tariff policies and the influx of heavily subsidised Chinese goods.
The “Made in Europe” strategy not only encompasses EU member states but also includes members of the European Economic Area—namely Iceland, Norway, and Liechtenstein—while excluding the UK. However, EU officials have indicated that additional “trusted partners” may be considered for inclusion in the future.
Mixed Responses from Member States
The “Buy European” policy has received strong backing from France but has also drawn criticism from other member states such as Italy and Germany. Both nations have expressed trepidation that the proposed rules may be overly restrictive, potentially undermining their globally integrated manufacturing operations, particularly in the automotive sector. Prominent leaders like German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni have advocated for a more deregulated approach within the EU.
The European Commission is expected to release its Industrial Accelerator Act later this month, which will outline specific targets for European content across a range of strategic products, including solar panels and electric vehicles.
Why it Matters
The implications of the EU’s “Made in Europe” strategy extend far beyond trade policies; they have the potential to reshape economic relationships across Europe and beyond. As nations grapple with supply chain vulnerabilities and economic competitiveness, the decisions made in Brussels will not only influence local industries but may also reverberate through global markets, underscoring the interconnectedness of today’s economies.
