When the EU marked 30 years of the single market in 2023, a report should have been written about it but was not even requested. The core of the unwritten report would have concluded that the EU’s single market is far weaker than assumed and not nearly as ‘single’ as the name suggests. It is full of shortcomings and contains hundreds of barriers and distortions that seriously and detrimentally impact the EU’s ability to stimulate and encourage investment.
This must be addressed by EU policymakers as a matter of urgency. We need immediate and sustained action to deepen and strengthen the single market at the highest political level.
This is why the ‘other’ report that should have been commissioned and written last year is so strategic – even though the term ‘strategic’ is mightily overused in today’s EU. But for the health and dynamism of the EU’s economy over the long term, there is no action more important and more strategic than empowering the single market. It truly is the EU’s trump card in an increasingly unstable and uncertain global order.
The EU could gain as much as 9 % of its current GDP if concrete steps are taken now to empower the single market, tantamount to the current combined GDP of the Czech Republic, Belgium and Ireland. If the EU could induce a greater sense of dynamism via start-ups/scale-ups and a heavier emphasis on R&D and patents, the extra boost in GDP would be even higher.
To achieve this requires real ownership by the EU’s political leadership, however. There needs to be firm action by the European Council right after the start of the new Commission’s mandate and the formation of the new European Parliament (EP) later this summer.
The new CEPS In-Depth Analysis report ‘Empowering the Single Market’ (arguably the unwritten report on the single market that should have been commissioned last year) calls for a medium-term programme that would be decided by the European Council but embraced and implemented by the Commission, in partnership with the EP. The plan would include regular and rigorous oversight to ensure progress doesn’t stall.
At Council level, the troika of national presidencies ought to be as active and enterprising as during the early Delors period (late 1985-1988). There should be a dedicated Commissioner for the internal market, ideally a Vice-President to clearly signal that the single market is a political priority.
The rest of the report’s programme mostly outlines substance rather than institutional issues, with one key exception – enforcement. Infringements are often costly for the single market but hardly so for the relevant Member States, even over a period of several years. Thus, in serious instances, a fast-track procedure or the suspension of a national law should be possible. Finally, the EP’s IMCO committee should have annual single market enforcement sessions, with accompanying reports, and extensive hearings giving consumers, citizens and businesses a clear voice.
The substance of the proposed medium-term programme ought to be ambitious. It must be accepted that, in the short run, some measures are bound to be painful for some, otherwise genuine progress will never be more than piecemeal. The credibility and effectiveness of the programme hinges first of all on services, with two parallel action plans proposed.
The first is about removing barriers and distortions in services falling under the 2006 Services Directive, with an emphasis on professional services, retail (all the way down to the local level) and construction services.
The second is about services falling under dedicated sector regulation, such as rail freight, as well as effective progress in achieving competitive and larger European capital markets – crucial for ensuring EU businesses, including start-ups, can access risk capital. The second plan also stresses the need for the full integration of banking services, the better facilitation of cross-border consumer (and other) finance and for more investment in cross-border interconnectors.
The proposed programme’s credibility would also rest on ending ‘hard fragmentation’, namely consolidating the EU’s telecoms market, stricter rules to coordinate spectrum frequencies between Member States, the fully-fledged Europe-wide operation of air traffic control, and shifting from a myriad of national copyright rules to a single EU copyright regime.
Other significant moves include the Commission abandoning its revised approach to harmonised European standards – this has no useful purpose. Regulating on issues that are better left to diplomacy, which has severe costs for European companies involved in global value chains, also needs to be stopped. And finally, support for EU start-ups must be improved to encourage and stimulate more dynamism in the EU economy.
Make no mistake, all of the above is highly ambitious. Enacting such a far-reaching programme will require much political skill, resolve and capital. But the consequences of not doing it would be far worse.
The EU rests on its single market, its singular crowning achievement. To ensure the EU’s future competitiveness and prosperity, its leaders must act now to truly empower it.
