Transformative AI is rapidly advancing – and so are fears about its risks. While the European Commission in a recent statement insisted that its two-year-old landmark AI Act is “fully fit for purpose”, leading MEPs are demanding tougher rules, including the revival of shelved AI liability legislation, spurred on by OpenAI’s CEO Sam Altman’s public remarks on the need for a liability framework for companies. Yet, access to frontier AI models is not only a safety issue; it is also central to Europe’s sovereignty and competitiveness. Ifo President Clemens Fuest lays out how Europe must play to its existing strengths to develop its own capabilities and avoid falling further behind the US. Our upcoming Annual Conference turns to another crucial dimension of AI: how – together with demographic change – it is reshaping labor markets.
Enjoy the read!
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- Panel A will examine the impact of AI and advanced automation technologies on Europe's industries and workforce.
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- Panel B will explore how to unlock untapped labor potential by fostering more inclusive labor market strategies to future-proof Europe's labor market.
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A high-level keynote speech will be delivered by Stefan Olsson, Deputy Director-General for Employment, Social Affairs and Inclusion at the European Commission.
Confirmed panel speakers include Stijn Broecke (OECD), Maxime Cerutti (BusinessEurope), Clemens Fuest (ifo Institute), Horst Kayser (Siemens), Helmut Rainer (ifo Institute), and Alexandra van der Ploeg (Tent Partnership for Refugees).
The event will take place on November 9, 2026, in Brussels at the Representation of the Free State of Bavaria to the EU.
For more details and the full program, please visit our conference website.
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Participation is free of charge, but registration is required. Please be advised that you will be redirected to the online registration platform of Oxford Abstract, where you need to create an account in order to register for this event.
We look forward to welcoming you to this event.
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Policy Report 59: A Roadmap to Reducing Cost of Failure in Germany: Legislative Agenda, Impact Analysis, Transition, and Senior Workers Employability
When failure comes at a high cost, innovation pays the price. Germany’s tight employment protection laws make dismissals expensive, discouraging risk-taking and disruptive innovation and making firms think twice before hiring older workers. A new Policy Report analyzing 55 major restructuring programs in Germany between 2008 and 2025 – covering 150,000 exits – estimates an average cost of 2.49 annual salaries per employee leaving. It proposes seven targeted reforms, making restructuring faster and more flexible, potentially cutting costs by almost half, from 2.49 to 1.28 annual salaries per exit. To reduce employers’ perceived risk of hiring older workers, it proposes reducing incentives for early retirement and launching a Federal Senior Hiring Risk Pool to offset part of employers’ costs.
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Policy Report 58: When Do Firms Invest Green? Carbon Prices, Uncertainty, and Policy Credibility
Despite a tenfold rise in EU carbon allowance prices since 2017, private green investment in Europe remains far too low to meet the climate targets set by the Paris Agreement. A new survey experiment with 830 German manufacturing firms provides important guidance for the future Emissions Trading System (ETS2). It demonstrates that high volatility of future carbon prices leads firms to delay profitable green investments: High uncertainty suppresses investment just as strongly as higher prices encourage it, with firms favoring green projects once prices exceed the EUR 90–100 threshold.
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Policy Brief 87: Rethinking EU Tariffs on China: Objectives and Trade-Offs
China’s pledge to curb hybrid‑car exports by half has, for now, headed off a looming escalation in the EU-China trade dispute – likely helped by recent French and German pressure for tougher EU trade defenses. But, with China dominating the supply of many critical products, Chinese competition intensifying across core industries, and Europe’s trade deficit widening, calls for new tariffs on Chinese imports are mounting. However, as this Policy Brief cautions, tariffs are no silver bullet and no substitute for strengthening Europe’s long-term capacity to innovate and compete. Instead, the EU should draw on the full range of economic and trade policy instruments and pursue a coordinated approach with international allies.
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Opinion: Europe Is Not Prepared for the Pace of AI Development
While the US commands about 75 percent of global high-end AI compute capacity, EU member states account for just five percent. Yet access to high-end computing power is essential to developing transformative AI and frontier models – the most advanced AI systems – which Europe will need to remain competitive across a wide range of sectors. In his latest EconPol Opinion, Clemens Fuest argues that, despite Germany and the EU lagging behind, Europe has significant strengths to build on: world-class industrial champions such as Zeiss and Trumpf, a strong manufacturing base, and substantial capital reserves. He outlines four policy recommendations for the German government to strengthen the country’s AI capabilities and help Europe compete in the race for AI.
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EconPol Forum 04/2026: Managing the State: A New Look at Bureaucrats and Public Administration
The next edition of our EconPol Forum, due out on October 29, will examine how administrative capacity shapes policy implementation, and highlights its importance for economic growth and innovation. Drawing on evidence from European and global contexts, it explores how to future‑proof public administrations for the challenges ahead. It provides in-depth analyses of key dimensions of state performance, including service delivery, personnel selection, upskilling and knowledge diffusion, management practices, monitoring, funding, and reporting standards for local administrations.
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We hope you enjoyed reading this latest edition of our EconPol newsletter. We’ll be back in December with our next issue.
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