EU productivity drive needs fewer barriers between national markets, says EESC

Making it easier for businesses to expand across EU borders could unlock productivity gains, the European Economic and Social Committee says. It calls for measurable targets to complete the single market, alongside investment in innovation and skills and safeguards for labour rights.

Europe does not need another diagnosis of its productivity problems: it needs action to remove the barriers that prevent companies from growing across borders. A fully-functioning single market could be Europe’s most powerful untapped driver of productivity, the EESC argues in its opinion adopted at the October plenary session.

‘Further integration of the Single Market provides opportunities for higher compensation levels for workers as businesses scale up and productivity grows. At present, the full potential of the Single Market remains unexploited and this restricts mobility opportunities for workers as well as the development of skills and competencies that would benefit European workers and their families by bringing in higher incomes,’ said the rapporteur for the opinion, Philip von Brockdorff.

‘Boosting productivity through a more integrated Single Market, therefore, is as important for European businesses as it is for workers,’ he added.

Different national rules, diverging standards and administrative burdens make it harder for companies to invest, innovate and reach customers in other Member States. These obstacles divert resources away from production investment and limit the economies of scale that a larger market could offer. The EESC wants single market integration to become a political priority with targets and deadlines rather than remaining a policy objective.

Services remain an untapped opportunity

Although the call covers both goods and services, the EESC identifies services as one of the largest untapped sources of productivity gains. Restrictions persist, including on the mutual recognition of professional qualifications, while some Member States remain reluctant to remove them. The Committee argues that closer integration must also protect consumers and ensure fair conditions for businesses and workers.

The EESC also calls for a review of fragmentation in areas such as telecommunications, air traffic control, copyright and radio spectrum. It calls for much stronger coordination between Member States on future 6G spectrum arrangements and further development of the unitary patent, which can help innovative businesses access a larger market.

Helping companies grow without weakening rights

The proposed ‘28th legal regime’, intended to complement national company law, could help start-ups and scale-ups operate across the EU. The EESC opinion points to the possibility of setting up a company in the space of 48 hours but insists that the framework must not undermine existing labour rights or allow abuse of working conditions.

Access to finance is another obstacle. The EESC argues that Europe’s predominantly bank-based financial system offers too few alternatives for young, innovative companies. It calls for a Savings and Investment Union with more diverse funding options, including venture capital and private equity, to support firms that might otherwise seek opportunities outside Europe.

Finance and market access must go hand in hand with investment in workforce training and skills, the Committee says. It also wants public research spending to do more to turn Europe’s strong science base into breakthrough innovation. It calls for funding programmes to be assessed against clear performance indicators, with underperforming programmes closed and funding redirected to successful programmes.

A European approach rather than competing national policies

The opinion warns that unilateral national industrial policies risk fragmenting the single market further. It supports an active European industrial policy with ‘Made in the EU’ provisions that reflect high social standards, but opposes relaxing state aid rules: countries with greater spending capacity could otherwise provide excessive support, undermining fair competition within the EU.

The EESC also advocates simpler regulation, including ‘once-only’ reporting so businesses do not have to submit the same information repeatedly to public authorities. However, it stresses that cuts must be justified by showing that the requirements being removed are genuinely superfluous. Progress on integration should be tracked through clear indicators and incorporated into the European Semester, the EU’s economic policy coordination process.