The “diamond” of the EU turns 30

The Single Market is 30 years old. And this is being marked in different ways. The anniversary has been reflected at a number of conferences and high-level meetings held during the Swedish EU presidency.

During the Single Market Forum held in Stockholm on May 2, leading politicians, and business representatives - along with policy experts and representatives from government agencies, the European Commission and the European Parliament - participated in discussions on current conditions for the Single Market and its future.

In an opening panel discussion, Fredrik Persson, President of BusinessEurope, described the Single Market as the ”diamond of the EU”. This description was also echoed by several other panellists, who agreed that the Single Market is vital to the EU’s competitiveness.

The difficulty of describing what the Single Market is actually for to those who do not work with EU issues on a daily basis was something that Jacob Wallenberg, Chairman of the Confederation of Swedish Enterprise highlighted.

“To a wider public, the EU Single Market is an abstract concept. Much needs to be done in terms of communicating what the Single Market is and means, as well as communicating the value of the EU as a whole,” Wallenberg argued.

The EU needs to make itself more attractive to businesses

During the discussions, it also emerged that the wider business community is concerned that if the European business climate is not sufficiently attractive, businesses in Sweden and the EU will look for other parts of the world that offer better conditions.

The situation becomes almost paradoxical because, as more and more people now seem to agree, it is businesses themselves that drive advances in sustainability, for example.

Persson highlighted the value of green investment in Sweden, citing the recent example of Marciagalia Steel Group investing EUR 1.79 billion in H2Green steel.

Meanwhile, Northvolt is an example of a business in Sweden looking towards the US, which offers a different kind of business climate.

In light of such examples, EU regulations and permit processes need to be improved and streamlined, Persson said.

According to Wallenberg, it is due to business that Europe is ahead of the US in the green transition This is therefore an area the EU should prioritise and have greater ambitions.

“It’s not only in practical terms that Europe is at the forefront of the green transition, but also from an intellectual perspective,” Wallenberg said, adding that the younger generation has been a driving force in this shift.

Europe is lagging behind in the technological shift

Discussions also included the major challenges associated with digitalisation. The rapid emergence of AI has taken us all by surprise, Wallenberg noted.

“When it comes to 5G, Europe is lagging behind other parts of the world. And, given that this technology will be critical for running virtually every process in a factory, this has major long-term implications,” he said.

“Reading between the lines, we can say that the coming AI shift requires a degree of humility. It [AI] will change the world as we know it.”

Financial support does not improve competitiveness

Following the high-level panel discussion - which was moderated by Charlotte Andersdotter – there were a series of smaller breakout sessions, focusing on in-depth discussions on themes such as skills, digitisation and standardisation.

The issue of skills was debated in one of the sessions. Gonzalo Lobo Xavier, Director of APED, the Portuguese trade association, argued that the EU must abandon of its negative perception of large businesses, and recognise that more money is not always the solution to challenges faced by small and medium-sized enterprises.

“We don’t need more money, we need ‘smarter money’.”

Arba Kokalari, Member of the European Parliament in the EPP Group, agreed with the criticism of the EU money regime.

“Today there are so many different funds, but there is no impact evaluation of them.”

“We need a more long-term approach from the Member States and the European Commission,” she added.

There appeared to be a consensus that financial aid and funds are not what will make the EU more competitive globally.

“We’re all the EU”

European Commissioner Thierry Breton said that not all criticism could be left at the door of the European Commission, pointing out that we are all in this together.

“The EU is a collective project, and Member States must do their share.”

Breton also highlighted the Commission’s initiative to rapidly increase weapons production in Member States. The promises of a million grenades for Ukraine requires the European arms industry to scale up and this will be supported by financial incentives from the EU.

Underestimated importance in people’s daily lives

A key takeaway from the day for Andersdotter was the strong support that exists for the Single Market.

“The Single Market is exciting. It is truly the crown jewel of the European co-operation. People tend not to think about all the different opportunities the Single Market offers on a daily basis. Not simply for businesses to grow and develop, but also for citizens, so we can travel, study and work in the EU. I’m also reminded of the importance of continuing to support Ukraine.”

Both Wallenberg and Persson raised the problem that the business climate in Europe and Sweden is not considered sufficiently attractive by fast-growing global businesses. What can be done to change this perception in the short and long term?

“This is partly about the heavy regulatory burden placed on our businesses, and partly about our investment climate, which must become more attractive. And we need to solve the skills shortage.”

Is it primarily Sweden’s or the EU’s responsibility to ensure that more businesses choose and can operate in Sweden?

“It’s a shared responsibility within the EU to become more attractive to businesses. A majority of the legislation that Swedish businesses are subject to is drawn up at EU level, but Sweden is a member of the EU and is therefore involved in making decisions about these laws. So, of course, some of this is also about how laws are implemented, and Sweden has a tendency to overinterpret laws and this does not always benefit businesses.

There seems to be a consensus that Europe is lagging behind in the technological shift that is underway. What is the most important priority in terms of stimulating progress?

• Member States need to step up in terms of investment in research and innovation. For decades, we have been talking about a target of 3% of GDP for R&I, but the EU is still (only) at around 2%.
• The quality of our universities, and that of our education systems in general, also needs to be improved. This is primarily the responsibility of the Member States, which they may not be taking quite as seriously as they should. Just as the innovation climate in general needs to improve, rules and regulations must also allow and support innovation and technological development.