Economic analysis

The European Commission regularly monitors and analyses the functioning of the EU single market for services. This page contains key economic reports and studies which inform the Commission's policies in this area.

Strategic dependencies

On 5 May 2021, the Commission updated the EU industrial strategy to take account of circumstances following the COVID-19 crisis and drive the transformation to a more sustainable, digital, resilient and globally competitive economy.

In this context, the Chief Economist Team did a 'bottom-up' analysis on the trade data of over 5 000 products that the EU imports to identify for which products the EU highly relies on foreign sources. The results point to 137 highly dependent goods in sensitive ecosystems, such as the energy-intensive industries, health, and the ecosystems relevant for the green and digital transformation.

6 in-depth reviews on raw materials, batteries, active pharmaceutical ingredients, hydrogen, semiconductors and cloud and edge technologies accompany this analysis, which provide insights into the origin and impact of those strategic dependencies.

The update also presents the main indicators to monitor the competitiveness of the EU economy including single market integration, productivity growth, international competitiveness, public and private investment and R&D investment.

In a nutshell, the update improves understanding of Europe’s dependencies in key strategic areas and proposes new measures to make the single market more resilient and accelerate the twin transitions.

Supply chain shortages

The recent disruptions in global value chains, in conjunction with new data on inflation, have spurred media concerns about the overall macroeconomic conditions of the economy, supply shortages and bottlenecks in specific sectors.

We are conducting a broad assessment of these recent trends to identify common cyclical and structural factors associated with the observed distress in supply chains.

See: WP3 - “SCAN” (Supply Chain Alert Notification) monitoring system

Analytical underpinning of industrial ecosystems

Industrial ecosystems encompass all players involved in achieving a socioeconomic goal: from the smallest start-ups and largest companies cooperating to satisfy a new market need, research activities supporting industrial innovation, regulators steering economic activity through conducive policies, to the services’ providers and suppliers.

This approach highlights the systemic importance of all the horizontal and vertical links among economic actors. It recognises the importance of activities often considered as ancillary to industry, such as the supply of raw material, research and innovation, the provision of business services, or access to distribution networks. The ecosystem lens allows an exchange on the analysis of the EU economy, its opportunities, challenges and how to boost it, as the EU embarks on the twin green and digital transition.

The May 2021 update of the industrial strategy puts the industrial ecosystems at the heart of the COVID-19 recovery and transformation process. It builds on the flexible ecosystem-based approach outlined in the industry strategy presented in March 2020 as a lens to look at Europe’s economy.

The Annual Single Market Economy Report identifies the following 14 industrial ecosystems

Aerospace & Defence
Agri-food
Construction
Cultural and Creative Industries
Digital
Electronics
Energy Intensive Industries
Energy-Renewables
Health
Mobility-Transport-Automotive
Proximity, Social Economy and Civil Security
Retail
Textiles
Tourism

The report also presents the methodology to construct the data used to analyse industrial ecosystems based on data from Eurostat (national accounts and structural business statistics). The industrial ecosystems represent roughly 80% of the European business economy in terms of value added and employment.

The analytical work on ecosystems, for which the Chief Economist Team is in the lead, follows two broad directions. First, a horizontal and methodological analysis will aim to improve the analytical framework and statistical methodology for measuring and monitoring the performance of ecosystems. Secondly, a series of policy- and ecosystem-specific projects (e.g. dependencies and green transition) will aim to test and apply the ecosystem approach to specific initiatives.

Chief Economists Networks

The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs has set up 2 separate Chief Economists Networks – one with EU countries (CEN-MS) and one within the Commission services (CEN-COM) – with the aim to boost the evidence base in support of the EU’s renewed industry strategy and single market agenda.

The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs' Chief Economist chairs the CEN-MS which comprises chief economists and lead experts of national departments, appointed by EU countries, in charge of industry, competitiveness or economy portfolios that deal with economic analyses.

The CEN-COM is co-run with the Directorate-General for Economic and Financial Affairs and comprises chief economists from the Commission services.

Economic modelling and data analytics

The Chief Economist Team undertakes economic modelling and data analytics on several specific topics and initiatives, including

firm liquidity and insolvency risks
nowcasting of turnover change at the ecosystem level (monthly)
analytics and modelling for a competitive low-carbon economy, with the support of the EC Joint Research Centre
exploitation of several firm-level databases
the CompNet - Competitiveness Research Network

European innovation scoreboard

The Chief Economist team coordinates and guides the European innovation scoreboards (EIS) project, together with the Directorate-General for Research and Innovation, which provides a comparative analysis of innovation systems in EU countries, other European countries, and neighbours.

The project also covers the comparative assessment of innovation performance at the level of European regions under the Regional innovation scoreboard (RIS).

See annual scoreboards below:

2022 European and regional innovation scoreboards.

2021 European and regional innovation scoreboards.

Short-term indicators and key performance indicators

The Chief Economist Team has developed and regularly updates a set of key performance indicators (KPIs) to monitor the industrial strategy and competitiveness of the EU. The Commission first published the set of KPIs in May 2021, under the Annual Single Market Report 2021.

The indicators cover 4 broad topics

Headline indicators, providing an analytic overview of the main trends of the EU economy and benchmarking against other countries
Short-term indicators, to describe the evolution of the COVID-19 crisis and provide a forward-looking analysis
Thematic indicators, which proxy the dimensions of economic resilience, digital transition, climate neutrality and circular economy, single market integration, SMEs, and the international dimension
Indicators by ecosystem, which describe the main features of the ecosystems and their performance

The KPIs address the Council’s request to reflect the EU industrial policy’s objectives in sound indicators. Particularly on industrial competitiveness, industry's contribution to the green and digital transition, the EU's resilience and strategic autonomy, and preserving an open economy.

All the indicators are based on publicly available data. The set of indicators complements other existing monitoring tools used by the Commission and does not aim at replacing them. Its main purpose and benefit is the publication of single document reports on the priority areas for the European industrial policy. Regular reporting based on reliable data sources can help the Commission and EU countries provide timely policy responses in case of identified challenges.

Confidence indicator for industrial ecosystems

The confidence indicator for the industrial ecosystems, updated every month and based on data extracted by the Joint Harmonised EU Programme of Business and Consumer Surveys, provides a timely indication of the state of each ecosystem at the EU level.

See the latest edition of the confidence indicator.

Decomposition of produce price inflation in the euro area

This indicator provides a measure of the relative importance of supply and demand factors in determining the inflationary pressure in the euro area. It refers to producer prices in industry, and is updated each quarter. Based on the methodology by Pasimeni (2022), it combines data extracted by the Joint Harmonised EU Programme of Business and Consumer Surveys and Eurostat.

See the latest edition of decomposition of produce price inflation in the euro area

Reports by external experts

Machine Learning tools for the detection of state aid recipients
Disclaimer: This third-party document and its content represent the views of the authors. The European Commission does not assume any liability for its contents. Only EU legislation published in the Official Journal of the European Union is authentic and produces legal effects.

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