The world’s second largest internal market in transition
On Wednesday 21 May, the European Commission published its Single Market Strategy, which aims to make the EU’s single market simpler, more seamless and stronger. The single market has so far generated an estimated 3-4% of EU GDP, creating 3.6 million jobs. It is estimated that completing the single market could double these figures.
The Commission considers the internal market to be the most important source of EU competitiveness. The current geopolitical situation has further highlighted the importance of a functioning internal market. The Commission’s strategy is strongly influenced by the reports of Enrico Letta, Mario Draghi and Sauli Niinistö.
The first objective of the strategy is to remove the most significant market barriers, which the Commission has identified in its report as ten. This so-called terrible ten group includes, among others, the shortcomings of Member States in the ownership of the single market, the complexity of regulation, the difficulties associated with starting a business and the shortcomings in the recognition of professional skills across Member States. To address these problems, the Commission intends to create a group of Single Market Sherpas, consisting of Single Market experts working under the Prime Ministers of the Member States, who have a cross-administrative role. In addition, the Commission will pilot the 28th legal regime, a set of norms valid throughout the EU, for example in bankruptcy, labour and tax legislation.
In the area of services, the Commission wants to move from a comprehensive approach towards sector-specific measures. Services account for 75% of EU GDP, but the problems of the internal market for services prevent them from exploiting their full potential. Only a small part of the added value created by services is traded between Member States.
The Commission is also working to improve the environment for SMEs in the internal market. It is creating an online tool, available in all EU languages, that will allow SMEs to create an SME ID, which will make it easier to operate in other EU countries. To facilitate the growth of SMEs, the Commission is creating a small mid-cap category for companies that grow beyond the definition of an SME.
The Commission sees the use of digitalisation in the internal market as one of its major development areas. The Commission wants to move from a document-based internal market to a data-based internal market. A concrete measure is the introduction of a digital product passport (DPP), which works using a QR code.
In addition, the Commission’s strategy emphasises the importance of respecting internal market rules. In addition to the dialogue between national internal market commissioners, national legislation should be assessed from the perspective of the EU internal market. National regulations should not create new barriers to the common internal market.
The strategy is part of the European Commission’s goal to deregulate enterprises by 25% and SMEs by 35%. It is also a continuation of the Commission’s Competitiveness Compass, which identifies better use of the Single Market as one of the horizontal enablers towards a more competitive Europe. The strategy can be read in full here.
