Commission actions against internal market infringements fell by 80 per cent from 2020 to 2022 in the first three years of von der Leyen’s term as president, compared with the corresponding period under her predecessor Jean-Claude Juncker. At the same time, companies have reported an increasingly skewed playing field, with varying sourcing prices across countries and local exceptions to European rules, which constitute internal trade barriers at the expense of consumers and European competitiveness.
This comes on top of a consecutive liberalisation of state aid rules over the last few years, which threatens to fragment the Single Market. Germany and France have spent 80 per cent of the 672 billion euros in state aid granted since the Russian invasion of Ukraine, leaving businesses in smaller and fiscally weaker states at a competitive disadvantage. A recent settlement prohibiting the sale of Ukrainian grain in Eastern EU member states has further strained the Single Market.
The Single Market is thus acutely threatened on its 30th anniversary and just a month after a Commission communication celebrating its achievements. The Commission has had to invest significant resources to deal with a set of crises since von der Leyen took office in late 2019. And overall, it has delivered an impressive policy response to the Covid crisis, Russia’s invasion of Ukraine and the competitiveness challenge of the American IRA. But compromising the internal market, which constitutes the backbone of the EU economy, is not something the EU can afford in times of permacrisis.
This is because a functioning Single Market is essential for the EU’s triple transition goals: the green and digital transition as well as the objective to reach greater economic security in an increasingly confrontational geo-economic environment. The Single Market has increased competition, labour specialisation and economies of scale and pushed the efficiency of the EU’s economy to unprecedented levels over the past 30 years. It could facilitate the development of new European industries or value chains, especially in the key green and digital fields in the future.
The Commission should therefore focus its resources on stronger enforcement of Single Market rules across all member states. It should also further harmonise rules in fields where the Single Market has been underdeveloped, particularly in services, energy and financial markets. The liberalisation of state aid should be limited in time and scope, and instead, more European-level financing should be mobilised, which would not undermine the Single Market.