EU heads of state have pledged to accelerate reform of the bloc’s single market, seeking to close widening gaps with the United States and China across capital markets, industrial policy, and regulatory agility.
Meeting at an informal summit in Belgium, leaders agreed to fast-track measures aimed at reducing fragmentation within the EU’s internal market of 450 million consumers. The commitment follows mounting concern that Europe’s productivity, innovation output, and investment mobilisation are lagging behind global peers.
European Commission President Ursula von der Leyen said the Commission would present a detailed action plan in March to implement the agreed reforms. Leaders endorsed work on simplifying regulation, deepening capital markets integration, and reviewing competition rules to enable European businesses to scale more effectively.
A renewed push for a Capital Markets Union — now framed within a broader “Savings and Investment Union” — was central to discussions. EU officials estimate that around €10trn in household savings remain largely parked in low-yield bank accounts across the bloc. Policymakers argue that better integration of capital markets could redirect that capital into growth sectors including technology, energy transition, and advanced manufacturing.
Regulatory reform and strategic autonomy —
Alongside financial integration, leaders addressed regulatory complexity and industrial competitiveness. German Chancellor Friedrich Merz warned that over-regulation risks weakening Europe’s global position, while French President Emmanuel Macron argued that the bloc must act more decisively to compete with heavily subsidised US and Chinese industries.
Discussions also touched on the possibility of prioritising European suppliers in certain public procurement decisions — a proposal sometimes described as a “Buy European” approach. The idea reflects growing pressure within member states to respond to US industrial policy and China’s state-backed manufacturing expansion. However, divisions remain over how far the EU should move toward strategic preference measures versus maintaining open trade principles.
Energy costs were repeatedly cited as a structural disadvantage. Industrial electricity prices in parts of Europe remain significantly higher than in the US and China, placing pressure on manufacturing competitiveness. While leaders acknowledged the issue, no concrete mechanism to reduce price disparities was agreed at the summit.
Differences also persist over financing. Some member states oppose joint borrowing or expanded common debt instruments to fund industrial initiatives, limiting the scope for large-scale collective investment.
The renewed emphasis on single market reform comes amid broader debate about Europe’s long-term economic model. Despite its scale, the EU’s internal market remains fragmented in areas including financial services, digital infrastructure, and capital allocation. Cross-border business expansion can still encounter regulatory inconsistencies that raise compliance costs and slow growth.
The Commission’s forthcoming March proposals will determine whether political consensus translates into operational change. For European businesses, progress on regulatory simplification and capital market integration could materially affect access to funding, cross-border expansion, and competitive positioning in high-growth sectors.
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