EU overhauls procurement rules to prioritise innovation and European preference

The European Union is facing a convergence of economic, regulatory, and geopolitical challenges as it grapples with inflation, industrial policy, and border management, while navigating strained relations with key partners. On Friday, European Commissioner Valdis Dombrovskis underscored the importance of Türkiye’s economic reform agenda and disinflation process for the country’s resilience, welcoming its application to join the Single Euro Payments Area (SEPA) during a press roundtable in Istanbul . Meanwhile, EU Industry Commissioner Stéphane Séjourné announced plans to overhaul public procurement rules in September, shifting 30% of evaluation criteria from price to innovation, European preference, resilience, decarbonization, and social clauses to counter unfair competition from China and the United States .

The EU’s industrial strategy shift reflects growing concerns over market distortions. Séjourné emphasized that 30% of procurement criteria will no longer prioritize cost but instead focus on innovation and European preference, with €2 trillion in annual public spending—15% of the bloc’s GDP—at stake . The reform follows criticism that EU rules on misleading discount advertising have inadvertently driven up prices, with a study showing EU retailers raising prices by 1-2% since the 2022 regulation took effect .

Border management remains a flashpoint. Aviation groups ACI EUROPE, A4E, and IATA have urged the European Commission to suspend the Schengen Entry-Exit System (EES) during peak summer travel, citing "severe" operational disruptions and unsustainable pressure on airports and airlines . The system, which requires biometric registration for non-EU travelers, has led to hours-long queues at major hubs, with Fraport CEO Stefan Schulte warning of passenger delays .

Financial regulators are also struggling to keep pace with AI’s rapid evolution. European Central Bank President Christine Lagarde warned that AI poses "major risks," including cybersecurity threats and market volatility, while Bank of England Deputy Governor Sarah Breeden cautioned that autonomous AI could amplify financial instability during stress periods . The EU’s fragmented approach to AI governance risks leaving the bloc behind in investment and innovation, despite efforts like the AI Safety Institute in the UK .

Trade tensions persist, with Brazil denying a deal with the EU over steel import curbs, contradicting Brussels’ claims . Meanwhile, the EU’s rare earth trade rebounded in 2025, with imports rising 17.1% to 15,100 tonnes and exports up 21.1% to 6,700 tonnes, highlighting the bloc’s strategic vulnerabilities in critical minerals .

Political fissures are widening. Bulgaria’s Prime Minister Rumen Radev announced reservations on the EU’s 21st sanctions package against Russia, citing energy security concerns . In the Netherlands, the government will stop automatically accepting Ukrainian conscripts as refugees from next year, a policy shift reflecting growing fatigue over the war’s prolonged impact .

Amid these challenges, the EU is also confronting a housing crisis, with Commission President Ursula von der Leyen pledging EU-wide action to address affordability and supply shortages . The bloc’s ability to balance protectionism, innovation, and geopolitical pressures will define its economic trajectory in the coming years.