European policymakers say they want competitiveness. They say they want simplification. They say they want to revive Europe’s industrial base in a world of intensifying global competition.
Yet once again, the European Commission has delivered the opposite.
The proposed Industrial Accelerator Act (IAA) is presented as a bold response to geopolitical tensions, supply-chain vulnerabilities, and the need to decarbonise European industry. But behind the language of resilience and strategic autonomy lies something far more familiar: another dense layer of regulation, reporting requirements, and administrative oversight.
Europe is being offered an industrial accelerator that will primarily accelerate bureaucracy.
A Weak Industrial Record – and the Wrong Diagnosis
The proposal starts from the premise that Europe’s industrial base requires stronger political management. But the data suggest a different diagnosis.
According to Eurostat, industrial production in the EU grew by an average of just 0.6% per year between 2000 and 2024 – a remarkably weak performance for a continent that once dominated global manufacturing.
The picture becomes even more uneven when looking across countries. While Ireland recorded annual industrial growth of 5.6% and Poland 4.9%, several major European economies stagnated or declined. Industrial production fell on average by 1.1% per year in Italy and 0.9% in Portugal over the same period.
Europe’s challenge is therefore not a lack of industrial policy. It is a lack of industrial dynamism.
Yet instead of addressing the structural causes of weak growth – fragmented markets, regulatory complexity, and barriers to scale – the Commission proposes to deepen regulatory intervention in industrial activity itself.
Industrial Policy by Paperwork
The preamble of the Industrial Accelerator Act reads like a catalogue of political ambitions: reducing dependencies, strengthening strategic sectors, accelerating decarbonisation, and reshaping value chains.
These objectives sound appealing. But they also reflect a deeper shift in European economic governance – away from consumers and producers, and towards administrative steering of the economy.
Companies will be expected to document supply chains, demonstrate compliance with evolving criteria, restructure production networks, and align operations with strategic priorities defined in Brussels. Annexes I to IV of the IAA proposal read less like an industrial strategy and more like a compliance manual for a centrally managed supply chain, detailing how projects qualify as “strategic” and what criteria authorities must verify.
Each requirement may appear manageable in isolation. Taken together, however, they create something very different: an industrial framework in which competitiveness increasingly depends on regulatory compliance rather than market performance.
The consequences are predictable.
More paperwork. More compliance costs. More legal uncertainty. And ultimately less investment.
Ironically, while European policymakers regularly criticise China’s state-directed industrial policy and the politicisation of business decisions there, proposals like the Industrial Accelerator Act would move Europe in a similar direction – toward a system in which government administrations increasingly steer supply chains, technologies, and investment decisions through command-and-control regulation rather than market signals.
The Fantasy of Engineering Economic Structure
One sentence in the proposal reveals the deeper ambition behind this approach. The Commission states that the Industrial Accelerator Act aims to ensure that by 2035 manufacturing represents 20% of EU GDP.
This is an extraordinary claim.
It assumes that governments can deliberately engineer the sectoral composition of an advanced economy more than a decade into the future. In reality, the share of manufacturing in GDP reflects complex structural forces: technological change, productivity growth, global value chains, and evolving consumer demand.
In most advanced economies, manufacturing’s share of GDP tends to decline over time not because industry disappears, but because productivity improvements in manufacturing are faster than in services. A smaller share of GDP often coincides with higher industrial productivity and rising living standards.
Trying to administratively restore a particular manufacturing share therefore risks misunderstanding the dynamics of modern economies.
Industrial competitiveness cannot be legislated into existence through sectoral quotas.
Europe Is Looking Backwards
Ironically, Europe’s own industrial data already show where the future lies.
Between 2000 and 2024, pharmaceutical production in the EU grew by an average of 5.7% per year, while computer manufacturing expanded by around 2% annually.
At the same time, traditional sectors such as wearing apparel declined by an average of 5.3% per year.
In other words, the sectors driving industrial growth are precisely those based on innovation, advanced technology, and global integration.
Yet much of Europe’s industrial policy debate continues to revolve around subsidies, local content requirements, and “Made in Europe” preferences aimed at protecting existing industries rather than enabling new ones.
This is not forward-looking industrial policy. It is economic nostalgia.
Meanwhile, the World Moves On
While Europe debates command-and-control regulation, its competitors continue strengthening the foundations of industrial competitiveness.
China combines low labour costs and other inputs with a vast domestic market and rapid improvements in human capital and technological capabilities. The United States relies on something different but equally powerful: a large and deeply integrated domestic market and massive private-sector – not government – investment in technology.
Both jurisdictions benefit from unified markets, largely common languages, and comparatively much more aligned legal systems at home, allowing firms to operate at scale across their domestic economies. Companies can grow large at home before competing globally.
Europe, by contrast, still operates as a fragmented regulatory landscape of multiple legal regimes, languages, and administrative systems. Confusing tax systems, alongside relatively high tax burdens, further complicate cross-border business activity – making it far harder for firms to scale across the Single Market.
Structural disadvantages cannot be regulated away. Piling on more rules, more bureaucracies, and more compliance regimes does not create competitiveness – it entrenches the very weaknesses Europe needs to overcome.
Europe increasingly competes with a different formula: more regulation, more coordination, and more bureaucracy.
This is not how global industrial leadership is achieved.
The Hidden Cost: Taxpayers – and Businesses
Industrial policy frameworks rarely acknowledge their full economic cost.
Monitoring compliance, verifying supply chains, evaluating projects, and enforcing regulatory obligations requires large administrative systems within governments. These bureaucracies must be staffed, funded, and maintained – ultimately at the expense of taxpayers.
But the burden does not stop there. Companies operating in sectors targeted by the proposed Industrial Accelerator Act would also face substantial compliance costs. Documenting supply chains, demonstrating conformity with regulatory criteria, preparing certification procedures, and navigating approval processes all require additional personnel, legal expertise, and reporting systems.
These requirements are not merely administrative exercises. They are directly tied to the proposed Act’s core policy instruments – public procurement decisions, preferential funding programmes, and direct subsidies for industries and products deemed “strategic”. Firms would have to invest significant resources simply to qualify for government-supported programmes.
In practice, these programmes concentrate heavily on large, capital-intensive sectors such as steel, cement, chemicals, aluminium, batteries, hydrogen technologies, renewable energy equipment, and carbon-capture projects. While politically prominent, these industries represent only a very small part of Europe’s industrial future.
Many of the most dynamic sectors of the modern economy – including software and digital platforms, artificial intelligence, biotechnology, advanced semiconductors, robotics, and medical technologies – rely far less on subsidy programmes and far more on innovation, access to talent and capital, and the ability to scale across large integrated markets.
The costs imposed on these mature industrial sectors – many of which are no longer at the technological frontier of the global economy – inevitably ripple through the wider economy. Firms pass compliance burdens on through higher prices, reduced investment, and slower innovation.
In the end, Europe’s industrial strategies are financed twice – first through public spending to administer and fund them, and again through the higher costs and lower competitiveness they impose on the companies they are meant to support.
Europe’s Real Problem Is Institutional
Europe does not suffer from a shortage of industrial strategies. It suffers from a shortage of economic integration.
Despite decades of Single Market legislation, companies still face fragmented regulations, inconsistent enforcement, and barriers that prevent them from scaling across borders.
Adding more legislation does not solve this problem. In many cases, it makes it worse.
What Europe needs instead is institutional reform.
One promising approach is “Competitive Harmonisation”, allowing coalitions of willing Member States to align rules and create deeper zones of economic integration inside the Single Market.
Another lesson comes from the United States, where commercial law is coordinated across fifty states through instruments such as the Uniform Commercial Code, enabling firms to operate across a vast market under largely consistent legal frameworks.
These approaches expand scale, reduce legal complexity, and strengthen competitiveness.
Europe Must Change Course
Europe cannot regulate its way back to industrial leadership.
The continent’s industrial slowdown is unmistakable in the data – and it has been decades in the making, particularly in Western Europe’s largest economies.
The answer cannot be more European bureaucracy.
If policymakers truly want to strengthen European economies, they must focus on the fundamentals: economic freedom, deeper legal market integration, and fewer barriers to scale.
Until that happens, Europe’s industrial accelerators will continue to accelerate bureaucracy rather than competitiveness.