Europe’s race for economic self-defense has moved from white paper to red alert. Mario Draghi warned in 2024 that, “for the first time since the Cold War, we must genuinely fear for our self-preservation.” A year later, with Donald Trump’s 15% tariffs on EU goods in force and a deteriorating global backdrop, Brussels is scrambling to convert a decade of stalled ideas into hard law and money.
The stakes are stark. Global trade is slowing. Cheap Russian energy is gone. The EU, Draghi argued, needs to mobilize up to €800 billion a year to restore competitiveness and catalyze innovation. Enrico Letta’s companion review urged a deeper single market, lower decarbonization costs and faster investment in start-ups. Yet member states largely dawdled—until the shock therapy of Trump II, renewed Russian pressure and China’s strategic squeeze forced the issue.
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Inside the bloc, the problem is not only foreign. The European Commission’s “Terrible 10” list spells out the homegrown barriers throttling the single market: from restricted cross-border business formation and noncompliance with EU rules, to limited recognition of professional qualifications, fragmented standards, restrictive services regulations and “territorial supply constraints” that keep prices high. Analysts seized on a damning comparison: persistent internal frictions amount to de facto intra-EU tariffs of up to 110% on services and 65% on goods—eclipsing the very U.S. tariffs that so alarmed European leaders.
The political message from an informal summit at Alden Biesen castle in Belgium was blunt. “We have learned that trade can be used as a pressure tool,” Denmark’s prime minister, Mette Frederiksen, said, adding: “We should not be, and should probably never have been, dependent on others, neither on Russian oil and gas, nor on China in the area of new technologies.” Her coda captured the new orthodoxy: “Buy more Danish, buy more European. The old world is gone, and we have to look with an open mind to the new one.”
Brussels is attempting to translate urgency into a work program. The Commission’s new Competitiveness Compass knits together proposals born of the Draghi and Letta diagnoses: simplifying regulation, pushing the Savings and Investment Union (the rebranded Capital Markets Union), and advancing rulemaking on AI, quantum, cloud and the digital economy, alongside fresh trade efforts with India and Indonesia and a long-delayed EU-Mercosur deal. Business, however, is unimpressed. IBEC, Ireland’s industry body, calls the Compass “strong intent, but insufficient speed and impact,” and urges Dublin to use its upcoming EU presidency to drive single market fixes across the Council and Parliament.
Why does reform crawl? One reason: enforcement fatigue. “Fragmentation and uneven implementation throughout the EU continue to limit crossborder activity and investment,” Commission President Ursula von der Leyen warned EU leaders, citing telecoms, energy, capital markets, company law, research and innovation—“the backbone of Europe’s economic model and its future growth.” The Commission’s infringement proceedings have waned in an era of heightened euroscepticism; officials concede they may need to toughen and accelerate the legal process. Belgium’s prime minister, Bart De Wever, cautioned that capitals risk casting Brussels as the villain for red tape that national authorities often “gold plate.”
Another choke point: finance. Europe is awash with savings but starved of risk capital. The Savings and Investment Union aims to unlock trillions by knitting 27 fragmented markets into a deeper pool for retail investors and start-ups. If consensus stalls, von der Leyen floated “enhanced cooperation” among at least nine willing states to launch phase one by June. The politics are delicate. France wants a single supervisor, a push Ireland and others resist. “We would have concerns about one single authority… because we are a big player,” Irish Taoiseach Micheál Martin said, while signaling a “landing zone” is possible.
National tax and legal patchworks further complicate capital formation. Ireland’s Simon Harris, the tánaiste and finance minister, notes €170 billion sits idle in Irish savings. Banks say it is taxation—not insolvency law—that deters retail investment. “People are still being taxed too much… at 41% on most of these products,” the Banking & Payments Federation Ireland’s Brian Hayes said, arguing the regime even hobbles local purchases of exchange-traded funds.
Corporate plumbing is also up for renovation. The Commission plans a “28th Regime” that would let start-ups incorporate under a single EU legal shell and operate bloc-wide. “Companies will be able to register online within 48 hours using a single, EU-wide company form,” von der Leyen told leaders. Branded “EU Inc,” the optional regime promises easier access to finance and frictionless cross-border operations, with a streamlined wind-down if ventures fail. Labor elements were dropped after unions warned of backdoor dilution of national protections.
The deregulatory drive faces a countercurrent: climate integrity. Energy-intensive industries plead for relief from carbon costs, while NGOs caution against a broad-brush “simplification” that weakens environmental, social and public-health rules. A WWF analysis last fall warned of rewarding firms that dodge sustainability, and delaying action on nature and climate just as the window narrows.
Hovering over all of this is an argument about industrial policy. Paris—and increasingly the Commission—champions a “European Preference” to steer public money toward EU-made electric vehicles, renewables, low‑carbon cement and steel, and to fence off sensitive assets via the coming Industrial Accelerator Act. Germany is wary, and Nordic-Baltic states warn such steps could “wipe out” simplification, choke access to world-leading technologies and push investment away. Ireland, too, has “concerns,” Martin said: Europe needs resilience and fewer dependencies, but “we must protect the open, free trade ethos of the European Union.” Leaders ultimately asked the Commission for an evidence-based list of critical sectors where limited preference could apply—a compromise that hinges on how “evidence-based” is defined.
Dublin’s role will matter. The Irish presidency arrives as the single market roadmap, SIU, EU Inc and enforcement reforms move from concept to code. IBEC urges Ireland to lead on removing cross-border barriers. Yet Dublin declined to join a like-minded push by Estonia, Finland, Latvia, Lithuania, the Netherlands and Sweden—largely over a line backing provisional application of EU‑Mercosur. With trade deals touted as pillars of competitiveness, Ireland’s resistance may be a pebble in the shoe come July.
Europe’s homework after Alden Biesen is formidable: unblock capital, enforce the rules, prune bad red tape without scything climate policy, and decide how far to lean into strategic preference without shuttering the open market that made the EU rich. Energy costs, distorted across borders, remain a structural drag requiring grid and interconnect fixes measured in years, not summits.
But the mood music has shifted. “The situation is even more challenging now,” a senior EU source said. “The speed of actually executing the report now is even more critical.” The real test, after a decade of diagnoses, is whether 2025 becomes the year the single market finally acts like one.
By Abdiwahab Ahmed
Axadle Times international–Monitoring.
