Tapping the potential of the Single Market is urgently needed to secure our future prosperity. Reducing cross-border frictions to trade in both goods and services is a significant task that will require immense political leadership and focus.

Focus has been lacking from discussions on the Single Market in recent months: The Letta Report has some positive ideas in terms of harmonisation of areas such as telecoms, which Member States have jealously guarded for too long, and also better regulation; however, his report also suggests that a progressive expansion of European spending and changes to competition rules to enable the scale up of more European champions may also help to boost Europe’s economy, the latter a proposal also picked up by several of the candidates for the European Commission Presidency including the incumbent President Von der Leyen.  This lack of clarity will cost Europe. We need to focus on strengthening the market and not intervening in it. We need more European champions in Europe but the market should pick them rather than politicians.

The Competitiveness Council Conclusions on the Single Market are similarly mixed. There are some good proposals that we would certainly support, especially the call for a new horizontal Single Market Strategy by June 2025. Member States are also calling out the urgency of harmonizing the Single Market for services, something which is sorely lacking today. Practical mechanisms like Points of Single Contact and the Single Digital Gateway also get a mention but in our view these will need regular evaluation to ensure that they actually deliver tangible benefits for business.

On better regulation, it is encouraging to see the Council pushing the “think small first” principle, and calling for a systematic stock take on the cumulative impacts of new obligations. We further welcome the call for a dynamic impact assessment to clarify political choices, but we would also like to see impact assessments which capture the substantive legislative changes tabled by the Council and Parliament during the legislative process.

Regrettably, the conclusions also call for a more assertive industrial policy. We remain suspicious that this means market intervention and ultimately distortion. Strong companies will emerge from a strong market. State intervention to subsidise the economy at large or adapt competition rules to favour certain companies may provide ephemeral boosts, but will not solve Europe’s problems.

For Europe’s economy to prosper, it must fully commit to pro-competitive policies. A new Competitiveness Deal for Europe has to have as a starting point the notion that there is no competitiveness without competition.