If the last twelve months have taught the European Union anything, it is that it must now stand on its own two feet. As economic pressures mount in an increasingly polarized world order, the EU must breathe new life into its struggling business landscape to strengthen its competitiveness on the global stage.

Given the macroeconomic headwinds the Eurozone is facing, the time for these changes is now. Because, though Trump has just announced a peace deal in the Middle East, international conflicts still loom large and are complicating the economic picture. Inflation is up to 3.2%, and the ECB has just hiked interest rates for the first time since 2023 – which will inevitably compound on organizations’ balance sheets.

The situation is made even more challenging by the fact that the EU is so reliant on its allies. The bloc is often at the mercy of its international partners across areas like defence and energy, but now the transatlantic relationship is beginning to creak, and the international rulebook is shifting faster than ever. The fact is, Europe is stuck – trapped – in the post-World War Two era of globalization, but geopolitics has moved on.

That is why the EU must now look to reform the Commission. It is a lever wholly within its control – one that could both transform its business landscape and strengthen its position as a truly independent global power.

What does that look like? Well, the most important move the bloc can make is to reduce the Commission’s veto powers over mergers and acquisitions, which have deterred commercial growth, and therefore put a dampener on competitiveness, for far too long.

Let me be clear: I do not mean that there should be a repeat of DOGE’s indiscriminate deregulatory agenda, here. Rather, a strategic reduction of the Commission’s size, power, and oversight, and a more business-friendly approach.

Currently, its stringent laws and anti-competition mechanisms impose a clear ceiling on an organization’s growth. While these must exist in some form, the scale of the restrictions no doubt poses a material challenge for any founder starting up or multinational looking to expand its reach, which puts Europe at a massive disadvantage.

Now, I do recognize that the primary intention behind this approach is to prevent a small number of corporations from monopolizing the market and to allow a broader range of healthy competition. But while they may succeed in this regard, there’s no doubt policymakers have taken things too far, cultivating a less robust business environment and hampering global competitiveness.

The change of tack must extend to IPOs, too, which have been struggling for some time and dropped 20% last year. The US, on the other hand, accelerated its IPO market, with some 374 companies accessing its public markets. In 2026 alone we’re seeing mega IPOs from SpaceX, Anthropic, and OpenAI – breaking multiple records and taking the US’s public markets to fresh heights. The EU must tackle this gap, softening regulations around public listings and pushing them through to send a clear signal to the world that it is open for business.

By encouraging business activity in this way, the EU would begin to derisk itself in a fractured world order, weaning itself off allies. That's particularly important across key industries where sovereignty is non-negotiable, including defence, energy, AI and pharmaceuticals.

The next startup that revolutionizes these sectors could be just around the corner. It is more crucial than ever that the EU attracts these companies to innovate, grow, and thrive on the continent, rather than elsewhere.

The same is true of AI and technology which is perhaps the biggest area for potential growth. You only have to look at the US – where these companies account for over a third of the S&P 500’s market value – to see how these companies can be huge drivers of market activity. Such strong performances have undoubtedly helped the US shelter from global headwinds, including high oil prices – and that’s something the EU sorely needs.

It is true that the Union has recently watered down its landmark AI Act, opening the door to further innovation, but it must go much further and much faster if it is to truly reap the rewards. That means stripping back veto powers on M&As and IPOs to encourage activity across the sector and multinationals to view the continent as their second home.

I must also acknowledge that the EU is at least trying to bolster its competitiveness with the recent introduction of EU-Inc – a framework that would help entrepreneurs register their business across all 27 member states. But it’s still in its infancy, and progress is slow. To have any meaningful impact, its development must be seriously streamlined and work hand in hand with regulatory reform.

The bottom line is this: incentivizing business growth and attracting multinationals will be critical to boosting the bloc’s competitiveness on the global stage, particularly in an increasingly fragmented and volatile world order. The bloc cannot afford to rely on its allies so heavily anymore – a truly healthy economy must prioritize growth at home, and trimming the Commission will be vital to keep the EU from flatlining.

   

Yerbol Orynbayev is an economist and former Governor of the World Bank on behalf of Kazakhstan. He served as the Deputy Prime Minister of Kazakhstan from 2007-2013 and Aide to the President on economic policy from 2013-2015. He is known for having steered the nation out of the 2008 Financial Crisis.