Letta advocates simplifying regulation and redesigning taxes to stop 300,000 million euros from 'escape' from Europe to the US every year | EUROtoday

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“The Single Market is a product of an era when both the EU and the world were smaller, simpler and less integrated.” When Jacques Delors conceived and introduced that revolutionary thought, in 1985, the EU didn’t exist, lots of at the moment's key gamers had not but entered the scene, Germany was divided in two and the USSR was not solely the nice menace, however the nice different. 40 years in the past, China and India collectively constituted lower than 5% of the world financial system, and nobody was serious about the BRICS. At that point, the Single Market arrived to strengthen integration, “removing trade barriers, guaranteeing fair competition and promoting cooperation and solidarity between Member States.” It facilitated the free circulation of products, companies, individuals and capital, bettering competitiveness, however at the moment, that world now not exists and people deserves are now not sufficient.

The EU is staying straggler At an unaffordable velocity, the financial savings go to the opposite facet of the Atlantic (as much as 300,000 million yearly) and return to purchase our corporations. He goes to Asia and comes again to manage infrastructure. Everyone on the continent is aware of it, however there is no such thing as a response. The single market can’t be only a technical issue, however have to be a geopolitical catalyst for a Europe that aspires to be on the desk the place selections are made. These concepts, and these phrases, are on the coronary heart of the long-awaited Letta Report, the work commissioned by European governments to former Italian Prime Minister Enrico Letta and which might be introduced and mentioned this Thursday on the European Council by leaders.

The doc, a draft of which this newspaper has had entry to, is just not the primary nor will it’s the final, however it carries a elementary message: “for this larger world, we need a strong political commitment to a new framework which must be able to protect fundamental freedoms while supporting a dynamic and effective European industrial policy. To achieve these ambitious objectives, we need speed, we need scale and, above all, we need sufficient financial resources,” calls for Letta. More and bigger corporations, much less administrative burden, much less pointless paperwork, tax proportionality, extra financing, extra integration, harmonization, extra interconnections, a real capital market and ending fragmentation and regulatory, fiscal and territorial asymmetries.

“The Commission has made significant progress in the area of ​​corporate taxation and the simplification and reduction of bureaucracy. The proposals presented by President von der Leyen They represent an important commitment that must be pursued as an absolute priority in the coming years. The compass of new single market must emphasize the crucial importance of proportionality and subsidiarity, especially in the context of its regulatory framework,” it reads.


14 years in the past Mario Monti supplied his reformist concepts in a report titled “A new strategy for the single market. Serving Europe's economy and society,” and in July he’s anticipated to Sea Dragons do the identical with one other. Therefore, Letta's essential goal, after visiting 65 cities and main 400 conferences, is to create “a moment”, an impulse, to stop the talk from falling on deaf ears. States are at all times reluctant to vary, transformations, particularly if they’re profound, even in occasions of disaster. But the illness could be very clear, the analysis is written, and the recipes suggest depth, political will and braveness. earlier than it’s too late.

The political introduction of the report, whose last size may exceed 100 pages if nobody stops it, summarizes the massive drawback: “The EU is facing a shrinking and aging population. In contrast to the growth observed in other regions, the birth rate within the European Union it is decreasing alarmingly (…). Furthermore, even without considering the Asian economies, the Single Market lags behind the US market. In 1993, the two economic areas were of comparable size. However, while the PIB per cpita In the US it increased almost 60% between 1993 and 2022, in Europe the increase was less than 30%,” the doc laments.

A shake-up of type and substance is required. When the Single Market was conceived, three sectors have been neglected of the mixing course of “considered too strategic for their operation and regulation to extend beyond national borders: finance, electronic communications and energy“, reproaches Letta. They then thought that prioritizing inside management over these areas would higher serve strategic pursuits, nevertheless, “national markets, initially designed to protect national industries, now represent a major brake on growth and innovation in sectors where global competition and strategic considerations demand a rapid move to European level. Even within the original perimeter, the Single Market needs an overhaul: in particular, the provision of services within the EU continues to encounter barriers that must be addressed and eliminated to unlock the full potential of the Single Market,” the report says.


The former Italian prime minister, who is aware of he can not go too far in his aspirations, can not advocate something like Eurobonos or extra joint debt, as a result of that might shut down essentially the most frugal nations, measure your steps. But it can’t be ignored that the variations between the companions with extra fiscal muscle and fewer have been accentuated and the chance of fragmentacin threatens the market. In different phrases: state assist has been helpful in the course of the pandemic and subsequent crises, however it has created brutal imbalances between Germany and the wealthy and the remainder. “One way to overcome this dilemma could be to balance a stricter application of state aid at the national level and the progressive expansion of financial support at the EU level. In particular, we could imagine a state aid contribution mechanism that requires Member States will allocate a part of their national financing to finance pan-European initiatives and investments,” suggests the doc that might be debated this week.

In his textual content, Letta contains most of the complaints and strategies of enterprise organizations that, such because the Spanish CEOE, very energetic within the preparation of this doc, defend that the deepening of the interior market is crucial to speak about competitiveness or strategic autonomy open. It isn’t just about eliminating persistent limitations, however about avoiding dissuasive measures, which don’t enable corporations to make full use of the one market (particularly SMEs). And to enhance implementation, as a result of guidelines on paper are one factor and day-to-day for corporations and residents are one other. And Spain, on the forefront of violations for not transposing the directives, is a superb instance.

Thus, for instance, along with an unlimited simplification, he advocates for a European Code of Business Law that would supply corporations with what is named “a regime number 28 to operate within the Single Market”, which might “directly address and overcome the current patchwork of 27 national regulations, acting as a key tool to unlock the full potential of the free circulation within the EU. “Certainly, if these points will not be addressed, the threat of deindustrialization of the continent turns into an actual menace. In the present international context, Europe can not and should not cede its position as a producing chief to others. At the start of the century and for a lot of the next decade, change was broadly thought of a possible and even useful choice. However, it’s now evident that that is now not the case,” warns Letta.

One of the main objectives of the new Single Market must be to make European industrial capacity compatible with the objectives of the green and digital transition. In this effort, he argues, the Single Market can and should play a fundamental role. “The preliminary precedence ought to be mobilize non-public capital, a vital step that lays the foundations for a extra inclusive and environment friendly monetary framework, as it’s the space by which the EU is furthest behind. The European Union is house to a staggering €33 trillion in non-public financial savings, predominantly in money and deposits. However, this wealth is just not being absolutely exploited to satisfy the EU's strategic wants. A worrying development is the annual deviation of about 300,000 million euros of European households' financial savings from EU markets overseas, primarily into the US financial system, because of the fragmentation of our monetary markets,” he elaborates below.


This phenomenon highlights an inefficiency in the use of the EU's economic assets. In this context, the Report calls for a significant transformation: the creation of a Savings and Investment Union, developed from the still incomplete Capital Markets Union. “By absolutely integrating monetary companies into the Single Market, the Savings and Investment Union goals not solely to keep up European non-public financial savings inside the EU but in addition to draw further assets from overseas,” he promises.

To illustrate the profound limitations and contradictions of the Single Market, Letta uses the example of the railway: it is almost impossible to travel by high speed train between the European capitals, except for the Paris-Brussels-Amsterdam axis. In a continent as small and densely populated as ours, which has also opted for environmental sustainability, the natural thing would be for it to be possible to travel by train, but it is not and will not be possible in the short term, “because the particular operational plans “They remain merely theoretical. This is a profound contradiction, emblematic of the problems of the single market.” The continent has “rapidly and efficiently developed the high-speed rail system”, however on the nationwide stage nothing extra. “We have not even managed to connect the three main European capitals: Brussels, Strasbourg and Luxembourg,” he criticizes.