- The EU needs faster growth. Productivity has stalled, energy prices remain high, and the bloc’s biggest economic asset – the single market – is incomplete. With the US and China both intervening in trade, protecting demand, and investing heavily in industrial capacity and innovation, the EU risks falling further behind. Europe cannot afford another decade of drift.
- This paper sets out a reform agenda that can deliver growth within today’s political constraints. It builds on the recent reports by former Italian prime minister Enrico Letta and former ECB president Mario Draghi, but focuses on reforms that member-states are more likely to agree to – and which could start delivering results within this legislative cycle. The EU should prioritise four areas:
- Smart regulation: Too much recent EU regulation has prioritised political signalling while there has been too little attention given to the potential impacts of poorly designed regulation on economic growth. The Commission should refocus regulation on deepening the single market, not pre-emptively harmonising emerging sectors or acting as the world’s first mover. That means:
- Cutting overlap and inconsistencies – especially in digital regulation – through a coherent ‘omnibus’ clean-up.
- Reasserting the subsidiarity principle to allow regulatory experimentation between member-states – to help identify the most efficient way to regulate – and avoid locking in bad rules.
- Using self- and co-regulation more often to give firms flexibility in meeting policy goals, especially when trying to reconcile prescriptive rules like the bloc’s data protection laws with the deployment of new technologies like AI.
- Taking a tougher line on member-states that fragment the single market by gold-plating or misapplying EU law.
About the author:
Aslak Berg is a research fellow at the Centre for European Reform focusing on trade policy, international economics, regulatory policy and regional integration.
Elisabetta Cornago is assistant director of the Centre for European Reform, where she works on EU energy and climate policy from an economics perspective.
Zach Meyers is an associate fellow of the Centre for European Reform where he works on EU competition and industrial policy, particularly in the digital sector, and economic regulation.
Sander Tordoir is chief economist at the Centre for European Reform. Sander works on eurozone monetary and fiscal policy, the institutional architecture of EMU, European integration as well as Germany’s role in the EU.