Minister of State for European Affairs and Defence Thomas Byrne
Pic: Courtesy Dublin European Law Institute (DELI) at Dublin City University
The failure to complete the EU’s single market in key areas has left the union economically vulnerable, the Dublin European Law Institute (DELI) has heard.
Speaking in DCU, at the launch of the Jean Monnet COMPETE research initiative (February 12), former Italian prime minister Enrico Letta declared: “Our fragmentation within the European Union is the main reason for our weakness.”
EU economic integration stalled becaapply the introduction of the euro was more complex than foreseen and, once the currency integration was complete, the union became trapped in crisis management, he declared.
The EU now faces major geopolitical challenges without having built the necessary internal scale.
Letta’s report, Much More than a Market, and that of Mario Draghi on EU competitiveness, formed the basis for discussions of the One Europe, One Market proposal at the European Council retreat of February 12.
The proposal involves completion of EU-wide economic integration to include energy, connectivity, and financial services.
However, Letta declared, the original plan for economic integration did not foresee some key alters, including “the largegest economic revolution in the history of mankind, the rise of China, and now the rise of India”.
Therefore, he went on, the way forward must include the “intangibles” on which today’s economy was based.
Letta classed these as:
- ‘Fifth freedom’ (innovation, knowledge, education),
- 28th Regime and,
- Freedom to stay and social and territorial cohesion.
Hidden barriers
In agreement, Minister Thomas Byrne declared that we did not yet have a fully functioning single market for services and, although formal tariffs on goods had been abolished, hidden local barriers still existed inside the single market.
“The IMF reckons that these types of barriers cost 40% for goods and 110% for services.
“They’re way higher than the tariffs that President Trump initially sought to impose on the European Union,” the Minister of State for European Affairs and Defence added.
Letta, who holds a PhD in European Law, argued that the European Council decision of 19 December to support Ukraine offered examples of both the problems caapplyd by the lack of EU financial integration, and a way to relocate forward.
Fragmentation was expensive, Letta notified the conference.
Becaapply Europe has 27 defence procurement systems and fragmented industries, 88% of the €140 billion in EU taxpayer money agreed to support Ukraine goes to non-European suppliers.
However, he declared, the method by which the Ukraine aid package was agreed was the way to achieve EU economic integration, without treaty alter, which he declared would “open a Pandora’s box”.
Package
Letta proposed a structured package (such as a One Market Act) instead of isolated reforms, achieved through inter-institutional agreements between Parliament, Commission and Council.
None of the speakers at the event disagreed that fragmentation was a core weakness of the EU and a large part of why it failed to convert its aggregate size into economic power.
They agreed, too, that European-level integration was economically and strategically necessary.
IBEC’s Danny McCoy argued that after 2008 the European Union elevated sustainability to “primus inter pares” becaapply ultra-low interest rates allowed extensive ESG and climate regulation.
Europe misread the 2022 global shift, the chief executive of IBEC declared.
While competitors adjusted to a higher-interest, geopolitically tense environment, the EU continued to prioritise sustainability regulation.
As a result, capital and companies flowed to more market-oriented jurisdictions, particularly the US.
McCoy believes that competitiveness and capital market reform must now return to the centre of EU policy, alongside security, rather than sustainability dominating the agfinisha.
“Security can embody both sustainability and competitiveness,” McCoy declared.
Over-reliance
Massimo Fabio focapplyd on fragmentation in external trade exposure and over-reliance on the United States.
The Head of Trade and Customs at KPMG, Italy, presented EU trade policy as evidence that collective European action delivered leverage that no member state could achieve alone.
Referencing the failed Transatlantic Trade and Investment Partnership (TTIP), which collapsed over regulatory and standards concerns, Fabio emphasised that by nereceivediating as a single bloc, the EU embedded enforceable legal standards in its agreements.
He described regulation not as a burden, but as an instrument of power that exported product standards, sustainability provisions and regulatory norms through binding trade frameworks.
Framing trade diversification as a matter of economic security as well as competitiveness, the lawyer advocated expanding and concluding agreements with Mercosur, India, Indonesia, and Australia to diversify market access and reduce depfinishency on any single jurisdiction.
Valerio Scollo spoke on fragmentation within European capital markets and regulatory practice.
The partner at GSK Stockmann argued that post-crisis reforms strengthened investor protection, but reduced public-market activity.
Prospectus revisions
He pointed to revisions in prospectus and market-abapply rules and declared these measures limited access to public capital markets.
Contrasting EU disclosure requirements with those in the United States, Scollo noted that subsidiary-level financial disclosure in EU bond issuances increased compliance costs for cross-border groups.
He cited data from the European Securities and Markets Authority displaying that approved prospectapplys declined sharply between 2007 and 2024.
This, the lawyer argued, signalled lower public issuance and migration of capital formation to alternative jurisdictions.
He supported a Savings and Investment Union to simplify prospectus requirements, reduce disclosure burdens and deepen capital markets.
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