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After two centuries at the vanguard of technological development and innovation, in the past two decades Europe has dramatically lost its edge. The US and China are growing faster, putting them in a pole position to create more prosperity and a greener and more advanced digital future, while the EU’s competitiveness continues to fade.
With geopolitics shifting, policymakers in the European Commission and EU Member States have increasingly focused on mapping strategic dependencies, anticipating vulnerabilities, beefing up autonomy, and de-risking. For the business community, however, there must be a balance between these considerations and the promotion of frictionless trade within the EU.
In the past decade, facilitating cross-border business activity across Member States has not been at the forefront of policymakers’ actions. The proper, systematic enforcement of Single Market rules and the full harmonisation of the regulatory framework in key areas such as Environment, Energy, Digital and Telecommunications, Security, Health, Banking, and Capital across the entire EU have been neglected. Obstacles flagged by the business community – including start-ups and SMEs – remain unaddressed, with no straightforward procedure or governance structure to remove them.
As a result, the increasingly complex and fragmented regulatory environment has made it less attractive for all companies to invest and scale up rapidly in the EU. Unsurprisingly, this has led to less foreign direct investment, slower growth and less fiscal space for governments, exacerbating the cost-of-living crisis now felt by many European citizens. A well-functioning Single Market is indispensable to incentivise more investment and innovation in Europe, finance social security, fund quality education, and take additional measures for the climate.
Suppose Europe does not uphold a Single Market that ensures the free circulation of people, goods, services, capital, and data? In that scenario, our continent’s competitiveness will continue to erode, falling behind on the green and digital transitions and risk fewer employment opportunities, and attract less talent, as technological progress accelerates outside Europe. Instead of achieving more Open Strategic Autonomy, the EU will increase its dependence on third countries in all areas where it fails to compete, such as stable and affordable energy prices, or the swift recruitment...
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