Following in the wake of the Letta report on the Future of the Single Market and Draghi report on the Future of European Competitiveness, the European Commission released on 27 January its Competitiveness Compass - a framework which spans across its entire mandate to mend the competitiveness gap the EU founds itself in compared to the US and Chinese economies. The Compass’ actions are divided into three pillars.

The first pillar of action of the Competitiveness Compass focuses on the necessity to prioritise innovation and ultimately to close the innovation gap. The Compass seeks to bridge this gap through a series of targeted actions. The Start-up and Scale-up Strategy (Q2 2025) will announce actions to support the creation of start-ups and ease conditions for businesses to scale up. This effort will be reinforced by the European Innovation Act (Q1 2026), which will provide innovative companies with access to key tools and resources to enhance their patenting capabilities and overall innovation. Additionally, these businesses will benefit from a harmonized 28th legal regime (Q1 2026) within the Single Market, simplifying regulations and lowering the costs associated with failure. Currently, many innovative cooperatives face difficulties to scale up due to a scarcity of funds and financial instruments adapted to the cooperative model. While the cooperative movement in certain countries has developed alternative solutions, it is time for the EU to step in and provide more adapted funding solutions for actors of the Social Economy Industrial Ecosystem.

The Compass emphasises that the widespread adoption of digital tools, including AI, is essential to future-proof the competitiveness of European businesses. This applies equally to cooperatives, especially the small and medium ones which, like any other SMEs, require support to achieve full digital maturity. In this regard, the Apply AI Strategy is a welcome initiative to accelerate the digitalisation of cooperatives. However, additional efforts are needed to bridge the gap for businesses with lower levels of digital maturity, ensuring that no enterprise is left behind. Moreover, as the Apply AI Strategy seeks to mainstream AI in public services such as healthcare, it is crucial to address the governance dimension of algorithmic tools. Actors with governance models that inherently integrate ethical and inclusive decision-making, such as cooperatives, should be recognized and empowered in this process.

Industrial and service cooperatives have long been at the forefront of digital innovation, making the EU’s commitment to investing in digital infrastructure for AI leadership a welcome development. However, it is essential to ensure that all tools emerging including from AI factories (Q1 2025), the EU Cloud and AI Development Act (Q1 2026), and the Data Union Strategy (Q3 2025) are accessible to all European innovators. Cooperatives, with their proven track record in delivering both social and technological solutions, must be included in this vision to foster a truly inclusive and impactful digital transformation.

While supporting European innovation is key, if the EU wants to ensure a future of industry ‘made in Europe’, cooperatives are its safest bet.

The second pillar of action set out in the Compass is decarbonisation, the shift to clean production and circularity, particularly in light of the high and volatile energy prices in Europe. Tackling these challenges, the Clean Industrial Deal – published on 26 February – is an ambitious initiative boosting energy-intensive industries and promoting clean technology and circular business models, with the aims to accelerate decarbonisation. Furthermore, the Circular Economy Act (Q4 2026) is set to address the use of resources and the reduction of waste. The Affordable Energy Action (Q1 2025) will be designed to address the high and volatile energy prices in Europe, by including measures that aim to ensure that industry and households will have access to low-cost energy. Finally, the Compass also calls for investments in Europe’s energy grids (Electrification Action Plan and European Grids Package, Q1 2026), a vital element in ensuring the transition to affordable, reliable, and low-carbon energy.

The emphasis on lowering energy prices is a positive for cooperatives, while the Clean Industrial Deal, and later on, the Circular Economy Act, could provide a boost for cooperatives active in the circular economy and those active in energy-intensive industries to accelerate their decarbonisation processes. In fact, social economy enterprises, including cooperatives, routinely combine innovation, competitiveness and sustainability, and the integration of circularity in their business model can provide a powerful example to follow. To this end, it is indispensable that cooperatives are taken into account in every step of the way.

The third pillar of the Compass deals with reducing dependencies and increasing the EU’s security to ensure European companies’ economic success and competitiveness. One of the recommendations of the communication under this area is related to tackling unfair competition and levelling the playing field. The Compass recognises the key role public procurement plays in this and proposes the introduction of a European preference in public procurement in strategic sectors, and the simplification and modernisation of the rules in the upcoming revision of the Public Procurement Directives (2026). A significant number of cooperatives are engaged in public procurement, although the current rules, particularly the prominence of awarding contracts based on lowest price, effectively exclude cooperatives, which apply higher social standards, for example, in terms of working conditions or training. We welcome the efforts to modernise the rules of public procurement, however, it is important for these to emphasise quality over price, and thus enhance cooperatives access to public procurement.

The Competitiveness Compass announces cross-cutting horizontal enabling measures to support the pillars. They concern simplification of business administration, the removal of barriers in the Single Market, financing, skills and quality jobs, and better coordination amongst Members States notably through the next MFF.

The EU urges all Member States to simplify administrative procedures at all levels of governance to help businesses access funding and obtain regulatory decisions more efficiently. The Commission is taking the lead with a series of Simplification Omnibus packages, the first of which was revealed on 26 February, aiming to reduce in total the administrative burden it generates by 25% for all companies and, through targeted measures, by 35% for SMEs. This is a welcome initiative, as it would allow smaller cooperatives to allocate more resources to their core activities rather than bureaucratic processes. However, it is crucial that these measures fully include and consider the specific needs of cooperatives, a vast majority of which are SMEs, to guarantee they also benefit from the 35% reduction and are not inadvertently left behind. Furthermore, a new SME and competitiveness check is to be introduced. This could be a valuable opportunity to integrate a "Cooperative Test” to help ensure that policies and measures are sufficiently adapted to the structures and needs of cooperatives, allowing them to fully benefit from the EU’s efforts to enhance competitiveness and reduce administrative burdens.

To finance its plans to boost innovation, the clean transition, digital and tech diffusion across economic sectors, the European Commission’s Compass includes a Strategy on a Savings and Investments Union (Q1 2025), aimed at further integrating national capital markets into a unified European market and boosting private investment in innovative and future-oriented growth sectors. Additionally, the TechEU Investment Program will be launched in partnership with the European Commission, the EIB, and private investors to specifically support businesses engaged in innovative activities. To ensure a future centred not only on profit but on collective prosperity, these funding mechanisms must adopt inclusive criteria that recognize all business models and both technical and social innovation. This approach will ensure that all innovative businesses, including cooperatives, have access to the support they need.

The Competitiveness Compass also calls for expanding and improving the functioning of the Single Market. As laid out in Enrico Letta’s 2024 report, it is high time for reforming the Single Market: while it is one of the core achievements of the EU, there is now a need to continue the work on eliminating remaining barriers and enhancing access to it. The Compass specifically points out the need for further harmonisation measures and simplification, as well as a modernised cohesion policy which would foster competitiveness while not leaving regions and communities behind. To tackle the challenges of the Single Market, the European Commission has announced the publication of a Single Market Strategy (Q2 2025) which will consist of an action plan listing initiatives intended to fully exploit the potential of the Single Market. In the context of a consultation on the Single Market Strategy, CECOP provided detailed recommendations ranging from the review of State Aid rules, the promotion of workers buyouts, and the reduction of administrative burdens, which would all contribute to the better functioning of the Single Market.

As stated by the Competitive Compass, the foundation of Europe’s competitiveness is its people. Cooperatives have embodied this through the application of cooperative principles, yet they continue to face challenges due to skills shortages and the need to reskilling and upskilling of their workforce to tackle the twin transitions. This is why the announced initiatives included in the Union of Skills (Q1 2025) and the Quality Job Roadmap (Q4 2025). It is essential that the Union of Skills addresses the unique needs of all industrial ecosystems, including those from the Social Economy one. Integrating education content on cooperative models, worker ownership, and worker buyouts would be key to unlock the potential of worker cooperatives enabling them to create and preserve quality jobs.

The communication also touched on the next Multiannual Financial Framework (MFF) for 2028-2034, and the use of private investment to complement public funding. Using the example of the successful implementation of the InvestEU Programme, the Compass calls for the mobilisation of further resources of the European Investment Bank. Expanding the scope of funding instruments, simplifying and making them more flexible are favourable, however, at the same time, access to them for social economy enterprises, including cooperatives, should be enhanced.

The European Commission is right when it says that the window of opportunity for restarting the EU’s competitiveness is narrow. That is why, to achieve it, it cannot afford to leave potential unlocked and must involve all economic actors, including industrial and service cooperatives, to ensure its success.

You can find the Competitiveness Compass here.