Brussels, 16 March 2023
Today, the Commission has published two Communications celebrating the 30th anniversary of the Single Market and setting out how to secure Long-term competitiveness of the EU.
The Single Market is undoubtedly the engine of the EU’s society and economy. Further reduction of barriers and integration, especially for services, are essential for the Single Market to remain the key driver of EU’s competitiveness. In the current geopolitical context, the EU is at a make-or-break moment to succeed in the twin green and digital transition and remain an attractive place for businesses.
The long-term view on competitiveness outlines how the EU can build on its strengths and achieve more than merely bridging the growth and innovation gap. A forward-looking, well-defined and coordinated EU framework will foster thriving businesses, able to compete on the global market, with attractive jobs and setting global standards.
Ursula von der Leyen, President of the European Commission, said: “With a war on our doorstep, with volatile energy prices, and massive clean-tech investments worldwide, Europe has to up its game. The Single Market has been our key asset to bring prosperity to our citizens and businesses but also to help us cope with crises such as the pandemic, Climate Change or the economic fallout of Russia’s war against Ukraine. We can be proud of it and we must do our utmost to preserve and reinforce its strength. We must also make sure that regulatory and administrative frameworks are responsive to business needs. In future we will be guided by a series of key performance indicators, which can tell us whether Europe’s economy is really becoming more productive and competitive. Because what gets measured gets done.”
SINGLE MARKET AT 30
Our Single Market is much more than a legal framework or just a market: it is an area of freedom, progress, opportunity, growth, shared prosperity, resilience, and a means of geopolitical projection. With 440 million citizens, 23 million businesses, 15% of global GDP, it is the world’s largest integrated single market area while remaining one of the most outward-oriented.
The Single Market is the EU’s key asset and driver of its competitiveness. For over 30 years, it has helped to improve the life of citizens, made business easier and brought substantial economic benefits by increasing European GDP by 9%. It is also the vehicle for accompanying and ensuring Europe’s green and digital transition. It is the source of the EU’s regulatory, financial and supply chain integration which helps build economies of scale and facilitates businesses to grow. The Single Market is an important factor of Europe’s economic resilience during crises and provides a crucial geopolitical lever that boosts the EU’s standing and influence in the world.
However, the Single Market must continue to adapt to new realities and take account of the changing geopolitical environment, technological developments, the green and digital transitions and the need to boost the EU’s long-term competitiveness and productivity.
A collective effort, based on joint ownership of the Single Market at EU and national level, is required to continue maintaining and deepening it, and harnessing its full potential.
Looking ahead, first and foremost, a renewed focus is needed on:
- Enforcing existing Single Market rules, supported by benchmarks to address the deficits related to transposition and implementation of EU rules;
- Removing Member State-level barriers, in particular barriers to the cross-border provision of services, and in the industrial ecosystems with the greatest economic integration potential (retail, construction, tourism, business services and renewable energy sector).
To this end, the Commission will continue essential cooperation with Member States as part of the Single Market Enforcement Task Force (SMET) and other fora for structured engagement with business stakeholders. The Commission also proposes to set a benchmark on solving a minimum of 90% of cases within 12 months brought to the national SOLVIT centres. The Commission furthermore aims to simplify obligations for Member States to notify national rules and set up national Single Market Offices among different measures foreseen to reduce and prevent barriers in the Single Market.
Furthermore, we must continue to foster the green and digital dimensions of the Single Market as a source of innovation, growth and competitiveness. For instance, the Single Market approach will ensure that the EU maintains its leadership on clean technologies and a competitive edge on decarbonisation. To that end, the Commission is putting in place common EU rules to help businesses embrace the circular economy (e.g. Ecodesign rules for Sustainable Products, Product Passport Initiative), better integrate renewables into the energy system (e.g. New Rules on Electricity Design) and make the most of digitalisation opportunities (e.g. build on Digital Services and Digital Market Acts and create new Data Spaces for health and public procurement).
The Commission will continue to monitor the progress of the Single Market with tools like the Single Market and Competitiveness Scoreboard and Annual Single Market Report. A continued discussion and reflection with and amongst Member States and relevant stakeholders will guarantee that the Single Market keeps delivering and improving life for its citizens.
BOOSTING LONG-TERM COMPETITIVENESS
The European model of economic growth, based on sustainable competitiveness, economic security, open strategic autonomy and fair competition, has been a source of prosperity for the last decades. Strong common EU-level action has boosted economic activity and productivity in the past and can spur competitiveness and prosperity again in the longer-term.
To foster competitiveness, the Commission proposes to work along nine mutually reinforcing drivers to ensure:
- A functioning Single Market by broadening and deepening it and fostering integration of services;
- Access to private capital and investment by deepening the Capital Markets Union and completing the Banking Union, as well as the development of EU tax and financial services regulatory frameworks supportive of businesses;
- Public investment and infrastructure by reforming the European economic governance framework;
- Research and innovation through tax incentives, public-private partnerships and large-scale projects to de-risk investments in innovation, especially in the key areas of clean technology, digital and biotechnology;
- Energy through fast roll-out of renewables, the digitalisation of energy systems and energy storage facilities;
- Circularity by fostering the transition towards a more circular economy in the EU;
- Digitalisation through broad-based take-up of digital tools across the economy and more support for leadership in key digital technologies such as Artificial Intelligence, Quantum Computing, microelectronics, web 4.0, virtual reality and digital twins, and cybersecurity;
- Education and skills by developing and recognising skills as the key to attractive, quality jobs, increasing the participation of women, the young and third country nationals in the labour market, and promoting vocational education and training;
- Trade and open strategic autonomy by continuing to open markets for EU companies through deepening ties with allies and trading partners, preserving fair trade principles and addressing risks in a targeted way.
A set of Key Performance Indicators will track progress towards the targets and ensure the necessary political focus and responsiveness.
A growth-enhancing regulatory framework
Accompanying these nine drivers, as a second leg of action, the Commission will work actively towards a regulatory framework more suited for competitiveness and growth. Complementing the ‘one-in, one-out’ approach and the competitiveness check, this will include a methodology for assessing cumulative impact of policies and a more innovation-friendly approach to regulation. In particular, there will be a new push for the rationalisation of reporting requirements across the EU’s green, digital and economic legislation, with first proposals by the autumn with the aim of a 25% reduction in burden. The Commission will also continue to regularly assess the EU legislation to ensure it remains future-proof and fit for purpose, and to assist Member States in the timely and proper transposition of EU law.
Background
In December 2022, the European Council invited the Commission to make proposals, in early 2023, to ensure EU’s resilience and competitiveness by mobilising all relevant national and EU tools and improving framework conditions for investment.
The European Green Deal Industrial Plan, presented by the Commission on 1 February, was the first response to that call. The proposals released today focus on providing a more supportive environment for the scaling up of the EU’s manufacturing capacity of net-zero technologies and products and critical raw materials, which will be key to enhance Europe’s competitiveness in the transition to a net-zero economy.
This communication complements the Green Deal Industrial Plan with a long-term and comprehensive approach to the competitiveness of the EU, in a key moment when a joint push from businesses and policy makers is needed to put Europe on the right path to the next decade and beyond.
For More Information
- Communication On the Single Market at 30
- Long-term view on Competitiveness
- Questions & Answers
- Factsheet on the 30th anniversary of the Single Market
- Factsheet on the Long-term Competitiveness Strategy of the EU
Quote(s)
With a war on our doorstep, with volatile energy prices, and massive clean-tech investments worldwide, Europe has to up its game. The Single Market has been our key asset to bring prosperity to our citizens and businesses but also to help us cope with crises such as the pandemic, Climate Change or the economic fallout of Russia’s war against Ukraine. We can be proud of it and we must do our utmost to preserve and reinforce its strength. We must also make sure that regulatory and administrative frameworks are responsive to business needs. In future we will be guided by a series of key performance indicators, which can tell us whether Europe’s economy is really becoming more productive and competitive. Because what gets measured gets done.
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The single market is the backbone of the European economy and a source of prosperity and wealth for us. It is an indispensable source. But only a deepened, seamless, strong and well-functioning single market will provide sustainable, long-term growth and productivity. This is key to our future competitiveness.
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Europe has withstood major shocks. Now we need to look at what we need to change to maintain our competitive edge in the longer term – beyond 2030. That means confronting long-standing challenges around productivity and competitiveness. We have identified key areas where we need to focus: from investment and financing to open trade and skills, along with smarter regulation. This is important not only to create future quality jobs and growth but also to make the most of the potential offered by the green and digital transitions. The bottom line is that we want to be leaders in the green industries of the future.
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The Single Market is more than just a free trade area – it is an area of freedom, prosperity and resilience for all. And we are working hard to ensure that it remains so for at least another 30 years!
EU Commission Q&A: Long-term view on competitiveness
Why does the EU need a long-term view on competitiveness?
The EU has quickly reacted to the disruptions caused by the COVID-19 pandemic and Russia’s war of aggression against Ukraine with a common coordinated response, demonstrating that our common strength is greater than the sum of all Member States’ efforts. However, in an increasingly challenging geopolitical context, the EU needs to look beyond crisis management to build a robust and future-proof economy that secures prosperity in the long-term.
In that sense, the long-term view provides a reference for the discussions on the long-term competitiveness and productivity of Europe’s economy leading to the decisions by European business and policy makers on the investments and policies that will shape the EU’s economic future. TheEuropean Council Conclusionsof December 2022 has asked the Commission to present a strategy at EU level to boost competitiveness and productivity.
What is new about this long-term view on competitiveness?
Many EU policy goals, like those in the Fit-for-55 package, REPowerEU and the Digital Decade for the green and digital transitions, have been set for 2030. The long-term view on competitiveness looks beyond that year, proposing several action lines for the EU and its Member States to work through a sustained effort on structural improvements, well focused investments and regulatory measures.
Grounded in the European model for inclusive economic growth, based on sustainable competitiveness, economic security, trade and open strategic autonomy and fair competition, the long-term view aims to provide a forward-looking, well-defined and coordinated EU framework to boost competitiveness, accompanied by a monitoring system to assess progress.
How will the long-term view on competitiveness benefit European businesses and society?
The European model of economic growth has been a source of prosperity for the last decades and EU is one of the three major economic regions of the world. However, the EU is not on par with other parts of the world in terms of productivity growth and innovation, production and adoption of some key transversal technologies.
Looking at the EU’s competitiveness from a long-term perspective is essential for setting the right conditions for European businesses, to flourish and create prosperity in a way fully aligned with the European social model based on equal opportunities for all.
What are the main elements of the long-term view on competitiveness?
The long-term view is articulated around nine mutually reinforcing drivers:
- A functioning Single Market
- Access to private capital and investment
- Public investment and infrastructure
- Research and Innovation
- Energy
- Circularity
- Digitalisation
- Education and skills
- Trade and open strategic autonomy
Accompanying these nine drivers, as a second leg of action, the long-term view proposes to work activelytowards a regulatory frameworkmore suited for competitiveness and growth, suggesting some priority areas.
How is a functioning Single Market related to long-term competitiveness?
The Single Market is the core of the EU’s four fundamental freedoms and competitiveness and will remain so in the future. With a level playing field and a robust competition policy as priorities, broadening and deepening the Single Market, fostering integration of services, is the single most cost-effective measure to secure EU’s productivity.
Why access to private capital and investment is important for EU’s competitiveness?
A competitive economy needs an efficient access to private funding to support the investments that will underpin future growth. Completing the Banking Union and deepening the Capital Markets Union are essential for the entire European economy, as well as the development of EU tax and financial services regulatory frameworks supportive of businesses. Sustainable finance and seed public funds will also play a key role here.
What is the role of public investment and infrastructure?
Public investment is key for competitiveness, through the provision of essential services such as healthcare and education and the funding of large-scale infrastructure in energy, connectivity and transport, for which cross-border and multi-country projects will be needed. It is also essential for crowding in private investment and for stimulating supply chains by increasing demand through public procurement. The European economic governance framework needs to be urgently reformed to ensure debt sustainability and to stimulate growth-enhancing investments.
How does the long-term view address Research and innovation?
The long-term view highlights that the EU needs to increase its investment on Research and Innovation to make good on its commitment to 3% GDP by 2030, and more beyond, and to catch up with the most advanced economies on these fields, as they will determine the competitiveness of tomorrow. Tax incentives, public-private partnerships and large-scale projects will be crucial to de-risk investments in innovation, especially in the key areas of clean technology, digital and biotechnology.
Why energy is one of the drivers in the long-term view?
To maintain its competitiveness, the EU needs reliable and secure supply of affordable energy, with a well-integrated energy market able to resist disruptions. To that end, the fast roll-out of renewables, the digitalisation of energy systems and energy storage facilities will be key for the EU to increase energy independence and progressively reduce the cost differential with other parts of the world.
How can circularity support competitiveness?
A more circular economy can boost competitiveness by decreasing resource dependence and waste and increasing productivity. The Circular Economy Action Plan, the Eco-design rules for sustainable products and the digital product passportwill be key to foster the transition towards a more circular economy in the EU, and with it, more employment and growth.
What is the role of digitalisation in the long-term view?
Digitalisation isone of the foundations of future competitiveness, as an efficiency and innovation booster, and where the EU needs to increase effortsfor catching up and leading globally. Together with investments in safe, secure and sustainable digital infrastructures, more support is needed for key digital technologies such as Artificial Intelligence, Quantum Computing, microelectronics, web 4.0, virtual reality and digital twins, and cybersecurity.
How does the long-term view address education and skills?
Theavailability of a skilled workforce grounded in a European system with equal opportunities and quality employment will be key for a thriving and competitive EU economy. Building on the high-quality education and training system, further effort is needed to develop and recognise skills, to increase the participation of women, the young and third country nationals in the labour market, and to promote Vocational education and training.
How is trade and open strategic autonomy related to competitiveness?
Over the last decades, open trade has made the EU more prosperous, bringing more opportunities for commerce, investment, innovation and productivity growth. In a shifting geopolitical environment, open trade is also key for reducing supply chain dependencies. In that sense, the EU needs to continue working to open markets for EU companies by deepening ties with allies and trading partners, preserving fair trade principles and addressing risks in a targeted way.
How will the regulatory framework be improved?
The quality of public administration and that of the regulatory framework are crucial for the Union’s competitiveness. The EU has one of the most advanced better regulation systems in the world, and the ‘one-in, one-out’ approach and the new competitiveness check are further improvements.
The Communication will work on more rationalization and simplification of reporting requirements for companies and administrations, with a focus on digital, green and economic areas, and with the aim to reduce such burdens by 25%. It also envisages the development of a more innovation-friendly approach to regulation, using regulatory sandboxes and testbeds and incentives-based regulatory models.
The continuous assessment of the EU legislation by the Commission to ensure that it remains future-proof and fit for purpose is also part of this improvement effort, where more attention will be paid to the cumulative impact of policies.
As the proper application of EU law in Member States is key to avoid additional regulatory or administrative burden, improvements can be made also there, relying on the assistance that the Commission provides Member States in transposing EU law correctly, fully and on time.
How will progress be measured?
The long-term view includes a monitoring framework composed by 17 Key Performance Indicators (KPI), selected among the wide range of monitoring instruments existing at EU level for the different policy areas. These indicators are accompanied by their respective targets in terms of values or trends, and together will allow to measure the EU’s improvements in each of the competitiveness dimensions.
The Commission intends to present the update of this indicators on an annual basis in the Single Market and Competitiveness Scoreboard, to inform and prompt discussion on any necessary policy measures at EU level related to competitiveness.
Source – EU Commission