Von der Leyen puts competitiveness and resilience at heart of EU agenda

European Commission President Ursula von der Leyen has put competitiveness, a stronger Single Market, artificial intelligence and greater industrial resilience at the centre of her 2026 State of the Union address, while warning that Europe’s trade imbalance with China has reached a “tipping point”.

“The state of our Union is the strongest it has ever been. The state of our Union can also feel as precarious as it has ever been.”

She said both statements reflected the “exceptional times” Europe is navigating, adding that Europe had chosen to forge its own path and that “a stronger, independent Europe is now emerging”.

Against this backdrop, the Commission’s agenda places renewed emphasis on strengthening European competitiveness, removing barriers to growth and investment, harnessing emerging technologies and reducing strategic dependencies – priorities with implications for Europe’s asset, equipment and auto finance markets.

Competitiveness and Single Market reform

Von der Leyen put competitiveness at the centre of the Commission’s economic agenda, highlighting the importance of enabling European businesses to operate, invest and expand more easily across borders.

“When we took office, we put in place a bold plan. To build an economy where innovation and energy flow across borders. Where companies compete and grow across Europe, and savings finance our future.”

She said this approach reflected the recommendations of the Draghi and Letta reports, adding: “And together we are delivering.”

The Commission intends to complete what it describes as the “historic overhaul” of the Single Market by next year through its One Europe One Market Roadmap. It also announced a pact against “gold-plating”, aimed at demonstrating its commitment to simplification, alongside a new Banking Package focused on simplification and tackling fragmentation.

For asset and equipment finance providers operating across Europe, further Single Market integration and reduced regulatory fragmentation could have implications for cross-border funding and investment, as well as the ability of lenders, lessors and their customers to expand across multiple jurisdictions.

China trade imbalance reaches ‘tipping point’

Von der Leyen also used the address to warn about the growing imbalance in Europe’s economic relationship with China, linking it to pressure on European manufacturing and industrial competitiveness.

She said the EU’s goods trade deficit with China had reached around €1 billion a day in 2025, describing the imbalance as having reached a “tipping point”.

“Some say the second China shock is looming. But it is already here,” von der Leyen said, arguing that its effects could already be seen in communities and factories and were contributing to deindustrialisation in Europe’s industrial heartlands.

While stressing that it remained in both Europe and China’s interests to find a solution, she signalled that the EU was prepared to act if progress was not made.

The comments are particularly relevant to Europe’s automotive and equipment manufacturing sectors, where competition from Chinese producers and dependence on Chinese supply chains have become increasingly important considerations.

Notably, however, von der Leyen did not specifically refer to the EU’s countervailing tariffs on Chinese-made electric vehicles in this part of the address. Her comments focused instead on the broader trade imbalance, industrial competition and Europe’s strategic dependencies.

Critical raw materials and the EV supply chain

That concern over strategic dependencies extended to Europe’s reliance on China for critical minerals, particularly rare earths. Von der Leyen said Europe needed to urgently procure and build up reserves, linking this directly to the Commission’s plans for a new European Corporation of Critical Raw Materials.

The organisation will be tasked with obtaining and stockpiling materials Europe needs for “electric cars, chips, batteries, cleantech, defence and more”.

The proposal reflects the growing importance of supply-chain resilience as Europe seeks to strengthen its automotive, battery, technology and advanced manufacturing industries.

For vehicle and equipment manufacturers – and the finance providers supporting investment in those assets – access to critical raw materials is increasingly important as electrification and digitalisation increase demand for batteries, semiconductors and other strategically important components.

For auto and equipment finance providers, the wider EU-China relationship therefore has implications beyond trade policy itself. Changes in European manufacturing capacity, vehicle and equipment supply, component availability and the location of production can ultimately influence the assets entering finance portfolios, their pricing and potentially their future values.

AI opportunities for transport and advanced manufacturing

Artificial intelligence also featured prominently in the address, with von der Leyen highlighting both its economic potential and the need to manage the risks associated with its development.

“I am an optimist that AI has the potential to benefit humanity – if we get it right. But as with any powerful new technology, AI comes with a balance of possibilities and risks.”

She added that without addressing those risks, Europe would not be able to unlock AI’s possibilities.

Of particular relevance to the asset and equipment finance sectors, the Commission plans to present what it describes as “game changing initiatives” in November for high-value sectors where industrial AI has significant potential and Europe has access to the necessary data.

The sectors identified include transport and advanced manufacturing, alongside health, agri-food, defence and space. Member States, MEPs, industry representatives and entrepreneurs will be invited to participate.

The proposals could prove significant for equipment and auto finance as AI becomes increasingly embedded in industrial machinery, manufacturing processes, vehicles and fleet operations, as well as the systems used by finance providers themselves.

The Commission also plans to bring together leading frontier AI laboratories and continue work with international partners on areas including model evaluation, verification and early warning.

Climate transition remains on course

Von der Leyen also reaffirmed the EU’s commitment to its climate objectives, despite acknowledging the challenges involved in the transition.

“Of course, the transition is complex. And we will need to adjust and learn along the way. But there is no doubt: Europe can, must and will stay the course on our climate targets.”

She warned that Europe is warming at twice the global rate and said the summer months had been the hottest on record.

For asset, equipment and auto finance providers, the continued commitment to the climate transition is significant. Decarbonisation is likely to require sustained investment in electric vehicles, charging and energy infrastructure, lower-emission machinery and new manufacturing technologies, creating financing requirements while also presenting challenges around technological change and asset values.

The Commission announced several measures intended to improve Europe’s resilience to the physical consequences of climate change. These include a Climate Resilience framework, identifying 100 of Europe’s most vulnerable territories, and a Climate Insurance Alliance intended to address the insurance gap.

A European Water Initiative will also seek to improve risk management, with the Commission specifically highlighting the importance of water to farmers and industry.

Investment in infrastructure and strategic assets

The Commission’s drive for greater European resilience also extends to infrastructure and international trade routes.

Von der Leyen said Europe could no longer assume that the existing rules-based international system alone would protect its interests, arguing that the EU needed to “urgently reimagine our partnerships” and build global coalitions supporting resilience and democracy.

Among the initiatives announced was investment in the Middle Corridor connecting the South Caucasus and Central Asia directly to the European market, with the ambition of diversifying routes, tripling trade flows and reducing freight transit times by 2030.

Investment in transport and logistics infrastructure has relevance for the equipment finance market, particularly where expansion requires financing for commercial vehicles, material handling equipment, rail assets and other machinery supporting supply chains.

The Commission’s security proposals could also create demand for strategically important equipment and infrastructure. A proposed European Instrument for Strategic Enablers would cover capabilities ranging from air and missile defence to strategic transport, space and cyber systems.

Competitiveness takes centre stage

Taken together, the economic and industrial elements of the 2026 State of the Union point towards an EU agenda increasingly focused on the relationship between competitiveness, investment, technology, industrial capacity and economic resilience.

For Europe’s asset, equipment and auto finance sectors, the significance will ultimately depend on how the initiatives announced by von der Leyen translate into legislation, investment programmes and changes to the Single Market.

Greater market integration could make it easier for finance providers and their customers to operate across borders, while the Commission’s focus on critical raw materials could strengthen supply chains supporting electric vehicles, batteries and advanced equipment. At the same time, von der Leyen’s warning over the EU’s trade imbalance with China highlights the growing competitive pressures facing European manufacturers.

The identification of transport and advanced manufacturing as priority sectors for industrial AI also signals further technological change in many of the assets that lenders and lessors finance.

Von der Leyen’s central economic message was one of strengthening Europe’s ability to invest and compete while becoming more economically independent.

As she said at the outset of the address: “In this world, Europe has chosen to forge its own path. And a stronger, independent Europe is now emerging.”