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Newly adopted the EU-wide single market strategy is aimed at making the Union’s trading place more simple, seamless and strong. The Strategy sets out bold actions to reduce existing barriers holding back intra-EU trade and investments, to assist the SMEs to scale up their activities and alleviate businesses by boosting digitalization. The Strategy calls on EU states to do their part in making the EU market the best choice for companies, workers and consumers.
Background
The single market is European-wide “home market”, i.e. the shared space of 450 million people and 26 million businesses. It drives prosperity, protects citizens and workers, and anchors our economy in an increasingly uncertain world.
With a GDP of €18 trillion, it is the world’s second-largest economy and provides the scale, strength and legal certainty businesses need to grow.
The new single market (SM) strategy is the European Commission’s plan to make the single market simpler, seamless and strong – unlocking its full potential for citizens, workers and businesses. It focuses on removing the most harmful barriers, reducing red tape, promoting investment and ensuring fair competition.
The single market has already raised EU GDP by 3-4% and created 3.6 million jobs; thus, completing it could double these gains.
Source and citation from: https://single-market-economy.ec.europa.eu/single-market/strategy_en
Despite progress, however, the SM remains fragmented, preventing businesses and citizens from using its full potential, notes the Commission; thus, recognizing this, the Commission has presented recently a comprehensive strategy to make it easier for businesses to operate and invest across the EU-single market. Helping businesses prosper in Europe will boost Europe’s competitiveness and support our strategic autonomy and security in these uncertain times.
Reference to: https://ec.europa.eu/commission/presscorner/detail/en/qanda_25_1275
New SM-strategy
Since its creation more than 30 years ago, the SM has been a powerful catalyst for Europe’s growth, prosperity and solidarity. With 26 million businesses and 450 million consumers, Europe is the second largest global market today, with a GDP of €18 trillion, accounting for 18% of the global economy.
The new SM-strategy responds directly to a request from the European Council, which in April 2024 called on the Commission to develop a horizontal single market strategy by June 2025. Ministers in charge of competitiveness reaffirmed the call, asking the Commission to present a detailed roadmap of actions with a clear timeline. These requests echoed similar conclusions of reports by Enrico Letta and Mario Draghi in 2024, as well as the Commission’s own 2025 Annual Single Market and Competitiveness Report, which all highlighted that creating a truly integrated Single Market is critical for European competitiveness and resilience.
The Strategy includes proposals to tackle existing barriers in the Single Market, with a focus on the 10 most harmful barriers identified: these barriers reflect the results of dedicated stakeholder consultation which complement other analyses on the Single Market, including the Commission’s own Annual Single Market and Competitiveness report among others.
It also brings a new dynamic into the Single Market for services, by addressing challenges faced by specific services sectors. Furthermore, specific measures are proposed to make it easier for SMEs to operate in the Single Market, while promoting their growth and encouraging scaling up.
Main SM components
New Single Market Strategy focuses on several priorities:
= Dismantling barriers: while recognizing the need to work on removing all barriers, the strategy focuses on removing the 10 most harmful ones reported by businesses – the “terrible ten”: complicated business establishment and operations; complex EU rules; lack of ownership by the EU member states; limited recognition of professional qualifications; lack of common standards; fragmentized rules on packaging; lack of product compliance; restrictive and diverging national services regulation; burdensome rules for posting of workers in low-risk sectors; unjustified territorial supply constraints causing high prices for consumers.
These are the barriers that most hinder the free movement of goods and services and make it difficult for businesses and citizens to fully capitalize on Europe’s Single Market.
They have been identified based on comprehensive stakeholder consultations. Their removal will enhance the free circulation of safe products, the cross-border provision of services and simplified business establishment and operation throughout the EU.
= Bring new dynamism to Europe’s service sector: services make up the largest part of Europe’s economy, but their cross-border trade is stagnating; hence, the strategy focuses on specific service sectors and proposes to: – put forward a Construction Services Act and a new EU Delivery Act to modernise rules both in the construction and in the postal and parcels sector; – facilitate industry-related services such as installations, maintenance and repair services; – support the EU member states in freeing regulated business services from unnecessary regulation. All these actions will complement ongoing initiatives in the energy, transport and financial services sectors, as well as in telecommunications.
= Support SMEs’ development and growth: To help SMEs make the most of the Single Market’s scaling opportunities, the Commission introduces a new definition of small mid-cap companies (SMCs), with fewer than 750 employees and a turnover of up to €150 million or total assets of up to €129 million, extending some of the benefits afforded to SMEs to these SMCs. The Strategy proposes an “SME ID”, an online tool to offer a simple way of verifying SME status. Moreover, the SME Envoy Network will promote measures supporting and facilitating SME activity in cross-border trade.
These new initiatives are published together with the latest Annual Report on European SMEs, which highlights expected growth in SME added value and employment.
= Simplify existing rules and make digitalisation the norm: as part of the Commission commitment to reduce regulatory and administrative burden for businesses, the Commission is also publishing a fourth simplification omnibus package for businesses. The measures cut €400 million in annual administrative cost for companies. Among others, companies will be able to submit documents digitally to comply with obligations under certain EU harmonised product legislation and to provide product instructions digitally rather than on paper.
Moreover, the Commission will also propose implementing the Digital Product Passport (DPP), introduced for the first time in the Ecodesign for Sustainable Products Regulation (ESPR), across relevant existing and new EU legislation. The DPP will serve as a digital container for digital labels, conformity documentation, instructions, manuals and other technical documentation required by EU legislation. The Commission is proposing to do this as part of a revision of the EU product legislation framework (called the New Legislative Framework), adapting existing EU harmonised product rules. Moreover, the European Business Wallet will establish digital identity for economic operators. It will enable sharing verified data and credentials and a legally valid notification channel, enabling seamless interactions with public administrations and reducing the cost of regulatory compliance.
More in the 4th Omnibus: https://single-market-economy.ec.europa.eu/single-market/simplification_en
= Improve joint ownership of the Single Market: to make the benefits of the Single Market more tangible, it is important to increase its joint political ownership with the EU member states. Therefore, the EU states should name a high-level Single Market representative (“Sherpa”) to oversee the application of EU Single Market rules; the member states are also encouraged to prevent Single Market barriers by assessing the proportionality of their draft national measures.
In addition, whilst the EU is and will remain one of the most open economies in the world, global trade has been drastically altered by unfair practices, unjustified tariffs and distortive subsidies of some third countries.
To re-establish the level-playing field and because the Single Market cannot be the export destination of state-induced excess capacity and trade diversions, the EU will make full use, whenever necessary, of trade defence tools (including safeguards) and justified tariffs.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1274