The Foresight Report is an annual publication by the European Commission. The document’s purpose is to give a broad overview of the direction the EU is heading, describe the central problems that must be overcome, and provide insight into the EU’s place in an ever-evolving global political landscape.
The significance of this report cannot be understated, especially as we near the end of one Commission and the next fast approaches. These series of annual reports act as a one-stop-shop for what the EU has identified, roughly speaking, as its priorities for the years ahead, and they are known to feed into the establishment of future European Commission work plans that concretely detail the actions and legislative proposals that could solve the challenges. In this sense, the Foresight Report is one of the first real indicators of what is to come and allows companies and associations to begin preparing their political advocacy strategies on identified topics.
Like those from the last few years, the 2023 Foresight Report names the EU’s greatest ambition and challenge as to achieve the transition to climate neutrality and sustainability, but in a manner which guarantees the EU’s open strategic autonomy and long-term competitiveness in global markets. Or in other words, the EU doesn’t want to settle for being just another climate-neutral economy; it wants the EU to be a global leader among next-generation net-zero economies.
Given this grand ambition, the Foresight Report discusses several key social and economic challenges facing the EU which must be overcome. The first challenge outlined by the report is the changing geopolitics of the world as it shifts away from globalisation and towards a multipolar and protectionist order. While this will undoubtedly impact trade relations and market access, the EU is most concerned about the reduced willpower to tackle global issues, such as climate change or the energy transition. These are problems that require unified solutions, which will be more difficult to achieve in an increasingly politically fragmented world.
The second challenge identified is the necessity of restructuring the EU’s economic models and marketplaces to guarantee long-term sustainability. This is more than having a balanced book of Co2 emissions; It’s about shifting production methods and consumption patterns to become a genuinely circular economy that efficiently repurposes its waste materials and minimises the usage of non-renewables and non-recyclables. It also refers to other kinds of sustainability, such as the economic robustness of supply chains. The Covid-19 pandemic was a wake-up call to many sectors that they ought to have more significant priorities than chasing ever-cheaper industrial inputs. Instead, the EU economy must take the time to prepare for future global shocks by diversifying where the EU purchases from and ensuring that the EU has its own production capacity of strategic and necessary resources. Since the pandemic, the EU has bolstered its emergency preparedness and response toolbox.
Between the market re-designs, the scale of the energy infrastructure that needs to be implemented, and the training required for workers to use that new equipment, the Green Transition is not cheap. As such, the report highlights ongoing and increasing pressure to ensure sufficient private and public funding for sustainability, which includes calls for a more efficient tax framework and public spending. The demand for skilled workers is increasing with the Transition, as many of the next-generation technologies being deployed to reach critical environmental targets require technical and soft skills that were unheard of a decade ago. To name just a few of the factors that need to be balanced; increasing labour market participation among citizens, en masse retraining of skilled workers whose productivity would otherwise fade as carbon-intensive industries are phased out or their skills are replaced by automation, and focusing on the skills of the future so that what we are teaching the next generation in schools today will still be valuable in decades to come.
The Foresight Report warns of increasing cracks in the social cohesion of the EU, which can threaten trust in governments and reduce public confidence in the viability or necessity of the transitions. The report details that the inclusive well-being of citizens must be central to the transitions so that people do not feel socially excluded. Citizens must feel as though their concerns are being heard and taken on board throughout the transition that may see new mines or recycling plants opening in their local area. Ensuring that the benefits of good jobs and low-cost energy reach the citizens is crucial for reinforcing support for the transitions.
Finally, the report points to the values of democracy being under threat in both Europe and the wider world. Within the EU, the report notes increasing levels of political discontent and disenfranchisement towards national and EU governments and the principles of liberal democracy at large. Many factors are at play here, from citizens feeling like they have less of a political voice now than any time before in recent history to the polarisation of political debates and the rise of mis- and disinformation, particularly on social media. All of this is occurring against the backdrop of the lowest global levels of democracy since 1989. The EU’s response to these challenges is to double down on the privileges that ought to come with democracy, such as increased inter-generational citizen engagement with political decision-making, thereby displaying its value. One cited example is to re-assess the ‘social contract’ between governments and their people, which by and large is no longer fit for purpose, as it was based on work patterns and lifestyles that have changed over the decades.
From this report, we can understand that the EU is further intensifying its efforts to meet its climate goals, particularly in a way that allows the bloc to thrive on the global stage and is supported back home by its population. The development and roll-out of green and digital technologies will remain critical to achieving those targets, as will upskilling workers to meet new technical demands. Any business contributing to these transitions, such as reducing costs, developing novel training platforms or improving resource or operational efficiencies, will have significant opportunities in the current political climate. All sectors are expected to play their part, and no region is to be left behind. If you or your business wants to learn more about ongoing and future EU policies and legislation that will impact you, we welcome you to get in touch.