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Brussels, |
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Brussels Wants a Bureaucracy-Free Single Market. Will the Capitals Follow?
Brussels is urging Europe to shed its layers of red tape and become a true Single Market—one where ideas can be financed and turned into world-class success stories. But isn’t the Commission partly responsible for the very thicket of costly, nit-picking rules that still binds the economy? And will the EU’s 27 governments move quickly enough to break the logjam?
Brussels is asking Europe to cut its well-known red tape and build a true Single Market—one where good ideas can quickly get funding and turn into global successes. In its new plan, the European Commission promises to scrap the ten worst barriers inside the EU, shift most paperwork online, and give fast-growing mid-size companies the same advantages enjoyed by small firms. The dream is big: merge 27 different rulebooks into a single launchpad for the next Spotify or BioNTech.
Yet there’s an awkward truth: Brussels helped write many of the complex rules it now wants to remove. Business leaders across the EU wonder whether the author of today’s forms can really be the one to tear them up tomorrow.
Success will hinge on national governments, not glossy press releases. Trimming permit times, accepting each other’s certificates, and appointing a top “Single-Market Sherpa” all fall to ministries in Berlin, Warsaw, Madrid and the rest. Can these capitals drop their own special rules for the wider good? Their answer will decide whether Europe becomes the easiest place in the world to grow a business—or just another fine idea trapped in its own paperwork.
Yet there’s an awkward truth: Brussels helped write many of the complex rules it now wants to remove. Business leaders across the EU wonder whether the author of today’s forms can really be the one to tear them up tomorrow.
Success will hinge on national governments, not glossy press releases. Trimming permit times, accepting each other’s certificates, and appointing a top “Single-Market Sherpa” all fall to ministries in Berlin, Warsaw, Madrid and the rest. Can these capitals drop their own special rules for the wider good? Their answer will decide whether Europe becomes the easiest place in the world to grow a business—or just another fine idea trapped in its own paperwork.
On 21 May 2025 the European Commission unveiled its new Single-Market Strategy—a package that promises to kill the “terrible ten” barriers inside the EU, digitalise compliance and slice red tape for SMEs by 35 % before 2029.
Brussels believes that a more navigable home market will make Europe the default location for investment. Yet achieving that goal is harder than writing a Communication. From fragmented regulation to tariff wars that tempt companies to friend-shore in Asia, Europe’s competitive landscape is strewn with obstacles.
The Commission is right that the EU’s 450 million-consumer market is one of the world’s great commercial assets. The problem is fragmentation. Internal barriers act like tariffs of 44 % on goods and 110 % on services, according to IMF estimates quoted by Reuters.
For instance, rules on packaging, construction permits or professional qualifications, etc. often change at the border, forcing firms to re-tool offerings or hire local intermediaries.
Brussels’ answer is to codify mutual recognition, modernise sector rules—construction, postal/parcels, business services—and
create national “Single-Market Sherpas” with power to stop new barriers before they appear. The ambition is clear; delivery depends on Member-State politics.
Regulation, energy and skills: the unholy trinity holding back investment
Europe invests less than the United States, especially in equipment and intangibles.
An ECB Economic Bulletin box finds euro-area business investment grew 6.8 % between Q4 2021 and Q4 2024, versus 15.4 % in the U.S.; firms cite onerous regulation, high energy costs, policy uncertainty and skills shortages as the top obstacles. The EIB’s 2024/25 Investment Report echoes that verdict, warning that slow deployment of Next Generation EU funds leaves Europe’s green-tech push trailing the U.S. Inflation Reduction Act. If regulation is a constant headache, the energy crunch since Russia’s invasion of Ukraine has become a migraine—industrial power prices are still 30–50 % above U.S. levels, according to Eurostat data.
That gap eats into margins and narrows the universe of viable projects.
Bureaucracy in comparative perspective
Europe’s red-tape reputation is not just anecdotal.
The World Bank’s new “Business Ready” 2024 survey, which replaces the old Doing Business ranking, shows an average score of 65.5 % for regulations but only 49.7 % for public-service delivery among the 50 economies tested; Hungary and Estonia score well, yet Singapore tops the charts for service efficiency. In other words, having rules on the books is not enough—what matters is how quickly a business can obtain a licence, connect to the grid or clear customs. Asian hubs such as Singapore or Vietnam increasingly market themselves on swift, predictable procedures, a message that resonates when tariff turbulence pushes firms to re-site production.
Permitting gridlock meets the green transition
The drag of bureaucracy surfaces most starkly in energy.
A May 2025 Energy Industries Council (EIC) report warns that Europe’s renewable rollout is slowing because of permitting delays, grid saturation and port bottlenecks.
Offshore-wind developers cite wait times of four to seven years for a single project—long enough for U.S. or Asian rivals to grab market share. The Commission’s forthcoming European Grid Package aims to cap permitting at one year inside “go-to” zones, but national authorities must staff up and streamline digital portals for that target to stick.
Tariff wars redraw the investment map
While Europe wrestles with internal frictions, external shocks are rewriting global supply chains:
In this climate, bureaucracy becomes a tariff multiplier: if a company must pay 30 % to enter the U.S. and wait 18 months for an EU licence, shifting capacity to a low-tariff, quick-permit jurisdiction is a rational hedge.
Europe’s mid-caps at the cliff edge
Brussels hopes a new “small-mid-cap” (SMC) category—firms up to roughly 1,000 employees—will let growth companies keep SME-style reporting relief as they scale. That matters, because the jump from 250 to 251 employees today triggers dozens of extra obligations, from sustainability reporting to works-council elections.
If the SMC fix is watered down in Council negotiations, Europe risks repeating the fate of past initiatives (remember the unused “SME test”?) and losing scale-ups to Delaware or Singapore.
What would make the strategy stick?
Brussels believes that a more navigable home market will make Europe the default location for investment. Yet achieving that goal is harder than writing a Communication. From fragmented regulation to tariff wars that tempt companies to friend-shore in Asia, Europe’s competitive landscape is strewn with obstacles.
The Commission is right that the EU’s 450 million-consumer market is one of the world’s great commercial assets. The problem is fragmentation. Internal barriers act like tariffs of 44 % on goods and 110 % on services, according to IMF estimates quoted by Reuters.
For instance, rules on packaging, construction permits or professional qualifications, etc. often change at the border, forcing firms to re-tool offerings or hire local intermediaries.
Brussels’ answer is to codify mutual recognition, modernise sector rules—construction, postal/parcels, business services—and
create national “Single-Market Sherpas” with power to stop new barriers before they appear. The ambition is clear; delivery depends on Member-State politics.
Regulation, energy and skills: the unholy trinity holding back investment
Europe invests less than the United States, especially in equipment and intangibles.
An ECB Economic Bulletin box finds euro-area business investment grew 6.8 % between Q4 2021 and Q4 2024, versus 15.4 % in the U.S.; firms cite onerous regulation, high energy costs, policy uncertainty and skills shortages as the top obstacles. The EIB’s 2024/25 Investment Report echoes that verdict, warning that slow deployment of Next Generation EU funds leaves Europe’s green-tech push trailing the U.S. Inflation Reduction Act. If regulation is a constant headache, the energy crunch since Russia’s invasion of Ukraine has become a migraine—industrial power prices are still 30–50 % above U.S. levels, according to Eurostat data.
That gap eats into margins and narrows the universe of viable projects.
Bureaucracy in comparative perspective
Europe’s red-tape reputation is not just anecdotal.
The World Bank’s new “Business Ready” 2024 survey, which replaces the old Doing Business ranking, shows an average score of 65.5 % for regulations but only 49.7 % for public-service delivery among the 50 economies tested; Hungary and Estonia score well, yet Singapore tops the charts for service efficiency. In other words, having rules on the books is not enough—what matters is how quickly a business can obtain a licence, connect to the grid or clear customs. Asian hubs such as Singapore or Vietnam increasingly market themselves on swift, predictable procedures, a message that resonates when tariff turbulence pushes firms to re-site production.
Permitting gridlock meets the green transition
The drag of bureaucracy surfaces most starkly in energy.
A May 2025 Energy Industries Council (EIC) report warns that Europe’s renewable rollout is slowing because of permitting delays, grid saturation and port bottlenecks.
Offshore-wind developers cite wait times of four to seven years for a single project—long enough for U.S. or Asian rivals to grab market share. The Commission’s forthcoming European Grid Package aims to cap permitting at one year inside “go-to” zones, but national authorities must staff up and streamline digital portals for that target to stick.
Tariff wars redraw the investment map
While Europe wrestles with internal frictions, external shocks are rewriting global supply chains:
- Trans-Atlantic tit-for-tat: The return of high U.S. tariffs on Chinese goods under President Trump has already prompted tech brands such as Apple, Logitech and SharkNinja to diversify into Southeast Asia and Mexico.
- Factory flights to ASEAN: Industrial-park developers in Thailand and Vietnam report that two-thirds of new tenants in 2024 were relocating from China, anticipating 60 % U.S. import duties.
- Automotive cross-winds: The EU’s own anti-subsidy duties on Chinese electric vehicles—currently under review amid talk of “price floors” instead of tariffs—risk retaliation from Beijing and complicate localisation choices for carmakers.
In this climate, bureaucracy becomes a tariff multiplier: if a company must pay 30 % to enter the U.S. and wait 18 months for an EU licence, shifting capacity to a low-tariff, quick-permit jurisdiction is a rational hedge.
Europe’s mid-caps at the cliff edge
Brussels hopes a new “small-mid-cap” (SMC) category—firms up to roughly 1,000 employees—will let growth companies keep SME-style reporting relief as they scale. That matters, because the jump from 250 to 251 employees today triggers dozens of extra obligations, from sustainability reporting to works-council elections.
If the SMC fix is watered down in Council negotiations, Europe risks repeating the fate of past initiatives (remember the unused “SME test”?) and losing scale-ups to Delaware or Singapore.
What would make the strategy stick?
- One-stop digital filings are only credible if every Member State backs the Single Digital Gateway with real-time, English-language interfaces.
- Mutual recognition with teeth: tie EU funds to the automatic acceptance of professional qualifications and standard certificates.
- Priority green corridors: grant grid-connection priority and accelerated permitting to projects that directly relieve bottlenecks (e.g., battery storage near congested nodes).
- Trade diplomacy: pursue WTO-compatible deals to defuse tariff escalation, while tightening anti-circumvention rules that funnel subsidised goods through third countries.
- Capital-markets union, finally: deeper equity pools would help European innovators finance the compliance costs that still arise—simplification can cut paperwork, but someone must still pay for the lawyers.
The stakes
Europe’s Single Market has weathered three decades of crises, from the eurozone debt drama to the pandemic. Yet the IMF’s “barrier = tariff” metric shows that the cost of intra-EU friction now rivals the external duties Brussels lobbies against. If the new strategy trims even a quarter of that “invisible tariff,” it could add €500 billion to EU GDP over the decade, Commission economists reckon. Fail, and the EU may watch a new wave of projects land where permits clear in months, not years—and where tariff crossfire is someone else’s problem.
Europe has the scale, talent and capital to remain an investment magnet. Whether it will depends on turning today’s deregulatory press release into tomorrow’s default business reality—before tariff wars and nimble competitors make the choice for us.
Europe’s Single Market has weathered three decades of crises, from the eurozone debt drama to the pandemic. Yet the IMF’s “barrier = tariff” metric shows that the cost of intra-EU friction now rivals the external duties Brussels lobbies against. If the new strategy trims even a quarter of that “invisible tariff,” it could add €500 billion to EU GDP over the decade, Commission economists reckon. Fail, and the EU may watch a new wave of projects land where permits clear in months, not years—and where tariff crossfire is someone else’s problem.
Europe has the scale, talent and capital to remain an investment magnet. Whether it will depends on turning today’s deregulatory press release into tomorrow’s default business reality—before tariff wars and nimble competitors make the choice for us.
