After Europe’s long stagnation, a debate is emerging on how industrial capacity could be reconstructed. The article reviews current EU policies and provides the rationale for a new industrial policy at the European level. Such public action could help address current macroeconomic, industrial, innovation, cohesion and environmental problems and would be crucial for the recovery of countries of the “periphery” that have been hit hardest by the crisis. A range of proposals for organising, implementing and funding a new industrial policy – focusing on selected economic activities - are presented, combining action at the European, national and local levels.