(March 23): European Union leaders are expected on Thursday (March 23) to back a revamp of the single market, simplified regulations and other steps to ensure the bloc can compete with the United States and China as an industrial leader in green and digital technologies.

High energy prices and US President Joe Biden's Inflation Reduction Act, which offers US$369 billion (RM1.6 trillion) of green subsidies that often only apply to products made in North America, have raised EU fears of an exodus of European industry.

Europe's competitiveness in relation to the world's two biggest economies has become a major concern 30 years after it created an internal market, which is largely seamless for goods, but falls short for services.

"This failure to complete the single market needs to be addressed," one EU diplomat said on condition of anonymity.

EU leaders, meeting in Brussels from Thursday for a two-day summit, are expected to say the single market is essential to future economic growth, while highlighting areas for improvement.

"The European Council calls for ambitious action to complete the single market, in particular for digital and services," draft conclusions of the summit say.

The draft conclusions also call for progress in areas to improve competitiveness of the European Union beyond 2030.

These include simplifying regulation and reducing bureaucratic burdens, such as by accelerating procedures for granting permits for green or digital projects.

They are also set to urge the completion of a capital markets union to ease access to private investment, more spending on research and innovation and moves to increase the take-up of digital tools across the economy.

One issue of potential division is the extent to which state aid rules should be relaxed to allow public funds to be pumped into clean tech, although leaders are not expected to reach a conclusion on the topic at this summit.