Trade between EU member states is set to fall for the first time in nearly a decade in 2024, exposing the challenges facing the European single market ahead of the internal barriers and rising energy prices. ΠThe draft report of the European Commission states that the internal trade for the community as a share of the BBΠ the bloc falls from 23.5% in 2023 to 22% in 2024.
The decline comes despite declared efforts to revive the single market and comes in a context in which the European Union is experiencing economic pressure from the United States and China.
The report highlights that fragmented national regulations "continue to "it is difficult and expensive to set up and run companies within the EU, with no progress so far."
An analysis published by the European Central Bank confirms that the EU's internal trade frictions are outweighing those generated by US customs policy. According to a study by economists including Lucie Kyalieti and Banesa Günela, internal barriers are equivalent to tariffs of approximately 67% for goods and 95% for services.
ECB economists calculate that a reduction of just 2% in barriers to goods and services could fully offset the impact of US tariffs. in long-term economic growth. If all member states achieve the level of integration of the Netherlands, trade barriers could fall by around 8 percentage points for goods and 9 percentage points for services.
ΠECB President Christine Lagarde has repeatedly warned that Europe's economic model is under strain. "Our domestic market has remained stagnant. "If we make the single market truly single and truly simple, European growth will no longer depend on the decisions of others, but on our own choices," Lagarde said at the European Banking Congress in Frankfurt.
The Commission report also says that the time needed to develop European product standards has increased from 3.2 years in 2023 to four years in 2024, and total foreign direct investment in the EC has decreased by 22% over the last five years. Lobby groups like BusinessEurope argue that external markets are becoming more attractive than the internal market for European companies.
Former ECB President Mario Draghi stressed in a recent report that Europe risks economic collapse if it does not change course. "To continue as we are now is to condemn ourselves to failure", warned Draghi, who identified the productivity gap with the United States as having widened since the mid-1990s.
Lagarde expressed growing disillusionment: "Another six years of inaction and wasted growth would be simply disillusionment. It would be a no-brainer".