The EU places significant emphasis on finalizing the integration of its domestic market
The European Union (EU) is facing a crucial moment as its leaders grapple with the challenge of removing the persistent obstacles that hinder the full potential of the European Single Market. With a combined value of around 18 trillion euros and 450 million consumers, the Single Market enables the free movement of goods, services, people, and capital within the European Union, accounting for 60% of the Union's trade.
Paolo Guerrieri, a Guest Professor at Sciences Po in Paris and Scientific Advisor to the Institute of International Affairs, has stated that now is the perfect time for the EU to focus on removing the remaining obstacles and making the most of its single market. The escalating trade wars and increasing protectionism make it crucial for the EU to address the obstacles in its single market, according to Guerrieri.
The current obstacles hindering the full potential of the European Single Market are primarily fourfold: persistent regulatory barriers and fragmentation, weak enforcement and compliance, labour market and skills barriers, and political and institutional challenges.
To overcome these challenges, a dual approach is required. First, there is a need for better enforcement of existing rules to ensure consistency and reduce fragmentation effects. Second, strategic harmonisation, coupled with political will, is necessary to overcome fragmentation and regulatory complexity.
The strategy involves facilitating cross-border access to essential services and goods such as medicines, preventing unfair practices, and simplifying free movement. The EU is also considering targeted harmonisation in key sectors, particularly services and regulated professions, while managing politically sensitive fields through gradual, coordinated approaches.
The European Commission is also considering implementing rigorous cost-benefit analyses of EU regulations to limit unnecessary documentation and reporting requirements, helping businesses, especially small and medium-sized enterprises (SMEs) and startups, reduce compliance costs.
Moreover, the EU is aiming to improve mutual recognition of professional qualifications and eliminate unjustified restrictions on cross-border professional services to facilitate labour mobility. The EU is also addressing skills shortages through targeted education/training policies and labour market reforms.
The strategy is supported by reports from Enrico Letta and Mario Draghi. However, it is important to note that the strategy does not involve any explicit mention of advertisements.
National governments are to blame for the 30-year delay in completing the single market, as they continue to erect non-tariff barriers to free trade within the EU. Compensation payments for sectors likely to be negatively affected are indispensable to maintain the support of European citizens for this key project to secure European prosperity.
In essence, unlocking the Single Market’s full potential demands a dual approach combining better enforcement of existing rules with strategic harmonisation, coupled with political will to overcome fragmentation and regulatory complexity. The future of the European Single Market lies in the hands of its leaders, who must resist the pressure to erect protectionist barriers within the block and focus on deepening the single market to potentially double its benefits.
The finance business is crucial for the EU in unlocking the full potential of the European Single Market, as it involves facilitating cross-border access to essential services and goods like medicines, preventing unfair practices, and simplifying free movement. To achieve this, a dual approach is necessary, including better enforcement of existing rules and strategic harmonization to overcome fragmentation and regulatory complexity.
To help businesses, particularly small and medium-sized enterprises (SMEs) and startups, reduce compliance costs, the European Commission is considering implementing rigorous cost-benefit analyses of EU regulations. Furthermore, the EU is aiming to improve mutual recognition of professional qualifications and eliminate unjustified restrictions on cross-border professional services to facilitate labor mobility.
