Opinion of the European Committee of the Regions – The future of the Single Market and the EU’s competitiveness
Date: 2024-11-21
Institutions: Commission for Economic Policy, European Committee of the Regions
Subjects: EU financing, EU strategy, European Region, competitiveness, economic and social cohesion, innovation, investment, regional economy, single market








C_202500287EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/287


24.1.2025






Opinion of the European Committee of the Regions – The future of the Single Market and the EU’s competitiveness
(C/2025/287)








Rapporteur
: Martijn VAN GRUIJTHUIJSEN (NL/renew E.), Regional minister of Noord-Brabant





POLICY RECOMMENDATIONS

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

On strong, innovative and resilient regions in the European Union









1.


underlines that the fundamental goals of the European Union include the promotion of prosperity, ensuring the rule of law, equality, freedom, peace, and democracy within a sustainable environment, echoing the vision outlined in the report by Mario Draghi; stresses that these values must be the foundation upon which EU policies are continued to be built; underlines in this context the urgent need for the EU to define its common goals for the future and for its Member States to agree on the means to achieve them;












2.


asserts that the EU must lead in crucial technologies in order to position itself as a global front-runner when it comes to innovation, productivity, and decarbonisation of pivotal technological fields; therefore, applauds Draghi’s bold vision, particularly the ambition of strengthening the EU’s role in key global industries such as computing and AI, clean technologies, the automotive sector and building up capacities in defence and resilience;












3.


urges Europe to adopt a more assertive approach in global markets, actively defending its interests; recommends taking the necessary steps to protect Europe’s strategic technologies from unfair subsidy systems and being prepared to respond when faced with unfair competition from outside the EU and initiatives that threaten the EU’s fundamental goals and values;












4.


advocates for adaptable policies based on the unique circumstances of regions and Member States; while keeping regions at the core of the management of relevant EU funds; recognises the need to distinguish between providing structural regional reinforcement and stimulating innovative growth; believes that customisation of approaches based on technological neutrality and regional capacities will allow for more effective and equitable development and prosperity for all; considers active subsidiarity the appropriate method to make sure EU-wide rules that aim to strengthen the single market, as echoed in the reports by both Enrico Letta and Mario Draghi, are well tailored and implemented efficiently;












5.


emphasises the importance of setting high standards at European level while ensuring that implementation remains the responsibility of Member States, regions and cities, since this approach will elevate the EU while allowing for local accountability and ownership of results;












6.


recommends that the European Commission increase its efforts to oversee the proper implementation of policies and regulations across Member States; calls on the European Commission to enhance ex-post control, ensuring compliance while reducing ex-ante administrative burdens and improving the business environment; urges the Commission to ensure that these efforts align with the principles of the Green Deal, focusing on regulatory frameworks that also support green investments and sustainable economic development, while reiterating that the Green Deal must go hand in hand with economic competitiveness; regrets the negative effects of the growing number of EU legislation on European businesses and competitiveness; reiterates the call by the Draghi report that before adopting new legislation, the Commission should conduct a systematic assessment and stress-testing of all existing EU laws and regulations at the start of each mandate;












7.


calls for a renewed focus on transformative innovation, encouraging regions and cities to adopt advanced technologies and practices at varying speeds, supporting the regions most capable of leading the way in innovative practices, while providing structural reinforcement to those that need more time to catch up;












8.


believes that the current investment in research and innovation (R&I) is not sufficient; calls for increased investment in the relevant EU technologies focusing on competitiveness, benefitting all EU regions directly and indirectly, while also focusing policy instruments on maximising impact in specific regions; believes that these investments should contribute to European cooperation, as ecosystems function more effectively when they do not stop at internal borders; sees an advantage in this approach, since it would reduce the need for additional contributions to the EU budget by fostering self-sufficiency among Member States;












9.


emphasises that, if the European Union cooperates effectively and unites around common goals, it has the potential to become the world’s leading economic power; warns that this requires a coordinated effort across all levels of governance, with a focus on long-term strategic planning; therefore, urges EU leaders to take much needed steps toward increasing competitiveness and productivity in all of the EU’s territories and calls for a transformative change of mindset to achieve this, including in Member State capitals and in local and regional authorities; is convinced that growth is compatible with achieving the green, clean and digital transitions via clean innovative technologies;












10.


proposes a balanced trade-off where the EU’s institutions focus on ensuring fair competition, establishing firm regulations, and making significant investments to enhance European competitiveness, while regions and cities pledge to take responsibility for implementation; adds that this approach would foster shared responsibility and collaboration across levels of governance; calls upon the Member States to join this pledge of the regions and cities;





On a competitive and future-proof European Union









11.


welcomes the momentum created by the appointments of Enrico Letta and Mario Draghi as authors of two landmark reports containing coherent and clear messages to EU leaders, and appreciates their efforts to contribute to improving Europe’s future; strongly hopes the severe diagnoses of the state of the EU’s single market, its position in the world and the impending demographic changes in the European population will create the necessary sense of urgency to enhance the EU’s competitiveness and single market;












12.


reiterates that each region in the European Union has unique talents and assets; stresses the need for a technology neutral approach and providing the right tools to allow these regions and cities to excel, thereby fostering regional specialisation and contributing to the overall competitiveness of the EU;












13.


urges the European institutions to set clear, ambitious goals for competitiveness and innovation; clarifies that, in addition to fostering competitiveness across the EU according to regional strengths, competitiveness policies should also concentrate on achieving excellence in the regions and industries most capable of driving forward innovation; in this context, expresses its support for the Strategic Technologies for Europe Platform;












14.


warns that economies of scale will be crucial if the EU wants to build up its defence industry and increase its renewable energy capacities, to sustain competitiveness with affordable energy; accordingly, in addition to boosting renewable energy production, underlines the potential of next generation low impact nuclear solutions and other renewable energy technologies to increase the EU’s energy resilience and independence and to meet its decarbonisation objectives; calls attention to the need to expand grid and energy storage capacity in order to facilitate energy security and resilience for all regions in the EU;












15.


supports EU funding for all regions, where resources are distributed in regions and cities to maximise their impact; asserts that a well-designed policy instrument focused on competitiveness should benefit all EU regions in order to keep the EU’s principle value of equality in place;












16.


urges Member States to agree on sound financing for innovation investments and an efficient governance to go with it, which should also include the involvement of local and regional authorities in the design and implementation of the proposed Competitiveness Action Plans;












17.


agrees that further integration of financial services and of the capital market and banking services, and the creation of a Capital Markets Union, would be beneficial to the EU’s competitiveness, as this could lead to mobilising much needed private money towards innovation;












18.


supports collaboration between highly innovative regions, such as those involved in the European Semiconductor Regions Alliance (ESRA) and Vanguard initiative; proposes a change in the current system of Interreg programmes to allow for more cooperation between excelling regions with a focus on international breakthrough innovations. This includes supporting innovations that can drive transformative change and streamlining funding especially for startups and scaleups;












19.


recommends strengthening early collaboration with private companies in the innovation process to speed up the development and market introduction of new technologies; suggests adapting financing systems and creating new financial instruments to foster the growth of scale ups and future ‘European champions’, including support for Important Projects of Common European Interest (IPCEI) and Eureka initiatives;












20.


supports the advocacy of the Draghi report to refocus the work of the EU, prioritising policies and actions where the EU has the greatest added value; believes that this will lead to greater autonomy for Member States, regions and cities, allowing them to tailor European policies and goals to best fit their operational practices and the dynamics of their region, while holding them accountable for results; calls for this to be accompanied by increased efforts and expanded authority for the European Commission in the area of ex-post control;












21.


challenges the European institutions to focus on critical sectors outlined in the Draghi report; emphasises the importance of focusing on control points of the global economy, therefore prioritising technologies such as (next generation) semiconductors and artificial intelligence, as well as innovations from industries where Europe has particular strengths such as clean technologies, the automotive and pharma sectors, which are essential for Europe’s global leadership, rather than diluting its impact by spreading resources across a wider array of technologies;












22.


acknowledges the EU’s need for large investments in key sectors and the interaction and possible tension between State aid and competitiveness; supports the analysis that one of the EU’s major handicaps is the lack of sufficient private and public funding mobilised towards the development of innovative companies as well as the scattering of available funding across different sources; recalls that local and regional economies are the first to cope with the consequences – including within Member States – of inefficient State aid policies which distort the market and do not include criteria that make up for the natural and geographical disadvantages of some regions to enable them to compete on an equal footing; regrets the single market’s level playing field is under pressure from within the EU because of Member States pursuing short-term individual interests through often uncoordinated measures such as unjustified cross-border trade barriers, massive subsidies for national industries, and catering for vested interests; highlights the particular situation in border regions, which are especially dependent on open borders and the free movement of persons and goods in the single market;












23.


calls for large and sustained investments in physical infrastructure such as electricity grids, railway networks, and EV charging stations; acknowledges that a lack of such investments in the past has contributed to the EU’s current competitiveness challenges, as existing infrastructure has been insufficiently maintained and essential new infrastructure has not been deployed at an adequate speed or scale;












24.


emphasises that the interoperability of infrastructure and the standardisation of technical requirements are essential for future productivity within the single market; notes that a coordinated European approach is crucial for the transformation of the European energy and transport sectors towards climate neutrality; stresses that regional cooperation is critical to ensure political backing for cross-border infrastructure from all relevant Member States;












25.


stresses that competition policy should guarantee that the single market not only defends strong and incumbent businesses, but also promotes innovation and removes entry barriers; agrees with the Draghi report that competition policy should be embedded in a European industrial strategy and should therefore allow more public support that is compatible with the single market’s level playing field; also agrees that merger and anti-trust decisions should not exclusively be driven by short term consumer interests, but should take into account the broader long-term consequences for the EU’s strategic autonomy;












26.


emphasises finding a balance between fair competition and necessary investments and public subsidies to ensure long-term EU competitiveness; notes Draghi’s recommendation to reshape cohesion policy as part of a broader effort to meet strategic EU goals; argues that it is essential to provide more resources to transformative innovation and structural regional reinforcement; is of the opinion that this reshaped cohesion policy should lead to increased funding for cohesion policy; underlines that the EU’s future State aid rules should be more single-market friendly and address State aid shopping and make sure that public money is geared towards helping the EU to achieve strategic economic goals; therefore, encourages the instrument of derisking to attract increased private investment and encourages the expansion of forms of innovation which qualify for IPCEIs;












27.


not only welcomes Letta’s and Draghi’s calls for simplifying and speeding up ICPEI procedures, as those could help steer public money towards strategic investments such as energy and digital infrastructure, but also urges the EU to update all State aid regimes to prioritise public funding for private companies and projects that advance the single market, contribute to environmental sustainability or support regional economic resilience;












28.


highlights that research, innovation and commercialisation are the primary drivers of productivity growth, particularly at this moment in the adoption of artificial intelligence (AI); states that regions and cities can take a leading role in this by fostering AI adoption at a local level; in this light welcomes the report’s focus on skills since the impact of AI in Europe has so far been labour-enhancing rather than labour-replacing; recalls that the EU’s competitiveness will also require further efforts to close the skills gap and train the EU’s (future) work force, among other things for digital, green and clean industries; calls for a robust financing of AI projects at all levels and suggests that current initiatives financed under the Digital Europe Programme such as European Digital Infrastructure Consortia (EDIC) and European Digital Innovation Hubs (EDIH) be continued and reinforced in the MFF post-2027;












29.


recalls that Europe’s competitiveness is also affected by its dependency on critical raw materials from abroad and that, while the Critical Raw Materials Act is a step in the right direction towards a circular economy, the EU needs a truly overall circular strategy to reduce its external vulnerabilities and increase its strategic autonomy in all stages of supply chains through diversification of supply chains, fostering the circular economy and reducing raw material demand through innovations in material efficiency and circular product design;





On creating a stronger single market with regions and cities









30.


strongly believes that upcoming single market reforms should transpire assertiveness and is convinced the single market’s size, rule-based level playing field and governance stability are unique strengths upon which the EU can build its future competitiveness;












31.


stresses that recent disruptions have exposed the fragility of our single market and have created an undeniable urgency to modernise and update it, so as to make it fit for future challenges; underlines also that the territorial impact of these disruptions has varied considerably between the Member States and regions, and calls for the Commission to strengthen the economic resilience of EU regions alongside competitiveness; refers in this context to the CoR opinion on Strengthening local and regional economic resilience (1);












32.


welcomes the Draghi report’s strong references to subsidiarity as a tool to lighten the regulatory burden on entrepreneurs and small businesses, and to the ‘active’ exercise of this EU principle; as well as the references to the need for real administrative simplification; encourages the EU institutions to embrace this approach and calls for these recommendations from the Draghi report to be embedded in the active subsidiarity approach the Committee has called for; opposes regulatory ‘goldplating’, stressing that unnecessary additions to EU legislation in many cases create burdensome complexities, hinder competitiveness, and undermine the efficient implementation of European policies across regions;












33.


points out that regions and cities are the EU’s hives of research and innovation, benefiting from diversity and creativity, entrepreneurship and collaboration; therefore, takes note of the reflections on adding a 5th freedom to the single market consisting of research and innovation notes that many regions still lack a focus on valorisation, while this can be hugely beneficial for the structural reinforcement and innovative potential of the entire single market;












34.


supports the so-called ‘28th regime’ and calls on EU policymakers to use this approach broadly, to allow companies and workers to easily navigate the single market across Member States’ borders, and to simplify and speed up regulatory procedures, but points out that this also requires better alignment and harmonisation of the supervision of such regimes to avoid fragmentation via the back door;












35.


agrees with Letta and Draghi that the single market should be at the heart of efforts to enable frictionless cross-border activities, which has already been acknowledged in the Internal Market Emergency and Resilience Act as a particular necessity in order to ensure that the single market continues to function in future crisis situations; calls on the European Commission to step up its efforts to make the single market a reality for SMEs and not just for major companies; points out that access to the single market not only entails reducing trade obstacles, but also requires taking down entry barriers that developing companies, notably startups and scaleups, face, often because of a lack of available investments;












36.


stresses the need to preserve the EU’s social model while enhancing economic competitiveness and resilience; agrees with the Draghi report that a European approach to competitiveness must ensure that productivity growth and social inclusion go hand in hand; reiterates that, therefore, all workers must have the right to education and retraining to be able to adapt to the challenges of rapid technological changes and sectoral transitions;












37.


supports the objectives of Letta’s new freedom to stay concept, meaning that the single market should cater for everyone and also benefit those who do not plan to move out of their region, and sees cohesion policy and services of general interest as the right policy tools to achieve those objectives; notes that an effective policy requires a focus on structural economic reinforcement of depressed areas; calls on the European Commission to develop policy on how to reconcile the freedom to stay with regions experiencing natural population decline, and to prioritise structural regional reinforcement, which will contribute to retaining and attracting young people in those areas;












38.


notes that the current enforcement efforts of the European Commission have failed to abolish major unjustified single market barriers; therefore, urges the European Commission to dedicate more of its resources to the systematic removal of single market barriers and enforcement of single market rules;












39.


stresses that the fragmentation of patents in the single market also stands in the way of intellectual property development; considers that innovation therefore needs not only increased investment in R&I, but also an EU-wide intellectual property strategy;












40.


sees a major role for regions and cities in helping create and implement a truly innovation- and business-friendly regulatory environment for their workers, start-ups and scale-ups, SMEs and entrepreneurs; therefore, supports and stands ready to contribute to initiatives that can help speed up and simplify permitting procedures such as a coordination of permitting at EU level to facilitate the rollout of strategic infrastructure;












41.


recognises the potential of adaptive and creative policy-making through instruments like regulatory sandboxes, where businesses can test innovative products, services, or business models under relaxed regulatory oversight, to help stimulate experimentation and innovation on a local scale, and sees an important role for local and regional law-makers in helping develop this concept;












42.


reiterates the importance of a unified Europe, stressing that this is essential to make the EU the largest and most competitive trade bloc in the world;












43.


stresses the importance of engaging and involving citizens across regions and cities in the EU to be able to fundamentally strengthen the EU’s competitiveness and future direction.






Brussels, 21 November 2024.


The President


of the European Committee of the Regions

Vasco ALVES CORDEIRO
               





(1)  Opinion of the European Committee of the Regions – Shock-proofing European regions: Strengthening local and regional economic resilience in the strategic evolution of the Single Market (OJ C, C/2024/7061, 4.12.2024, ELI: http://data.europa.eu/eli/C/2024/7061/oj).


ELI: http://data.europa.eu/eli/C/2025/287/oj
ISSN 1977-091X (electronic edition)