In an era marked by geopolitical tension, climate urgency, and volatile global markets, the key to Europe’s economic resilience and competitiveness lies closer to home than we might think. It’s not just about national strategies or EU-level policies - it’s about empowering the very places where people live and work: our cities, towns, and regions.

Europe's strength starts at the local level. This is where key infrastructure is built, services are delivered, and innovation takes root. To ensure Europe can stand on its own two feet, we must focus on strengthening these local foundations.

This means more than just investment. It calls for EU-wide strategies that actively boost the capacity of local and regional governments to shape the conditions for thriving markets and dynamic businesses, building resilient local infrastructure, seamless public services, digital and mobility solutions.

Competitiveness begins on the ground

Cities and regions are not passive implementers, they are the engines of transformation. Local and regional governments are responsible for two-thirds of the EU’s public investment growth, especially in critical sectors such as energy, transport, housing, and digital infrastructure. They design the environments where businesses thrive, talent grows, and innovation takes shape.

Strengthening Europe's competitiveness means creating the conditions for long-term, sustainable growth at the local level - through action beyond investment. It demands strategic inclusion. The next generation of EU competitiveness and decarbonisation policies must position cities and regions as co-creators of Europe’s industrial future.

Industrial-urban symbiosis - a system where industries and urban areas collaborate to improve resource efficiency, reduce waste, and enhance sustainability - has emerged as a powerful strategy for sustainable economic development. The opportunity to reduce environmental impact and stimulate innovation is why local governments together with the Coalition for Higher Ambition, an alliance of stakeholders from both businesses and civil society, in calling for a clear and ambitious 2040 EU climate target to provide certainty for businesses and financial markets, de-risking investments, and strengthening Europe’s economic and climate leadership.

The power of public-private-local partnerships in driving climate-aligned industrial competitiveness, was showcased in the Intelligent Cities Challenge Conference & Mayors-Business Forum (March 2025), with 88 cities and over 400 businesses coming together to.​ Cities like Mannheim have already signed over 200 Local Green Deals with businesses to embed sustainability and innovation into everyday economic activity.​

The Fast and Fair Renewables & Grids initiative builds on this collaborative approach between local governments and private stakeholders. Through collaborative efforts, representatives of municipalities, commercial developers, civil society, and energy communities have jointly developed a set of baseline principles to speed up permitting procedures which now limit the EU’s energy transition. The principles touch upon aspects such as meaningful engagement, information sharing, nature-positivity and community benefits.

As Arthur Hinsch, Senior Expert in Sustainable Energy Systems at ICLEI, puts it:

“All sides can finally point to commonly agreed principles on what constitutes a fair way to build, hopefully avoiding the complex disputes that have stalled renewable projects for years.”

It’s a game-changer for the future of Europe’s energy landscape. These actions demonstrate that when cities are empowered and equipped, they can drive significant progress towards a competitive, climate-neutral, and resilient Europe.

The EU Budget: A once-in-a-decade opportunity

In the coming months, EU and national leaders will design the EU’s next Multiannual Financial Framework (2028–2034). This budget will determine the resources available to the EU - and how they are prioritised.

In times of unprecedented challenges - from the war in Ukraine to tensions around trade relations - resources are under pressure. That’s why it is more important than ever for the next EU budget to be a forward-looking investment and implementation tool: supporting competitiveness, sustainability, resilience, and fairness across all regions and for all citizens.

Local governments can play a crucial role in ensuring the budget reaches those who need it most. The EU has already established a strong legal framework for a green and competitive transition. Putting adequate resources behind that ambition will be crucial to implementing that vision on the ground, with and through local governments.

A truly effective next EU budget must:

• Embed a strong place-based approach that supports all territories in their diversity;
• Guarantee direct access to competitiveness and innovation funding for cities and regions;
• Enable joint planning and delivery through strengthened multilevel governance.

These criteria are not an end in themselves, but arise from a core conviction: the EU budget can only deliver for Europeans if it reflects the needs of local governments - because those needs are the needs of Europe’s people and communities.

The path to a competitive, climate-neutral, and resilient Europe starts locally. It winds through our neighbourhoods, innovation hubs, industrial zones, and rural communities. Local and regional governments are partners that - if enabled through the right framework conditions - are crucial for reaching joint EU objectives and delivering better to citizens.

When its cities and regions flourish, Europe flourishes.

Discover more about ICLEI Europe’s position on the EU's competitiveness agenda, the next EU budget and the Clean Industrial Deal. Learn more about the ICC Mayors-Business Dialogue and the joint Declaration here. Check out the Fast & Fair principles here.