Ministers from Latvia, Lithuania, Estonia, Sweden, Austria, Poland and Finland have signed a joint statement calling on the European Union to significantly reduce bureaucracy and regulatory barriers in the Single Market in order to strengthen Europe's competitiveness and economic growth. Europe needs a far more ambitious approach to deregulation. The current complexity of regulation, legal fragmentation and the varying application of rules across Member States impose considerable costs on businesses and prevent the Single Market from working to its full potential.
For more than thirty years, the European Union (EU) Single Market has been a genuine example of the free movement of goods, services, capital and people. The EU proudly presents the Single Market as a success story, but that claim is only partly true. The Single Market is still held back by regulatory complexity, legal fragmentation and administrative burden, which weigh heavily on businesses, especially small and medium-sized enterprises (SMEs), and undermine Europe's competitiveness on a global scale.
The European Commission's (EC) Simplification Agenda, with initiatives such as SME and competitiveness checks, stress tests, reality checks and ten Omnibus proposals, aims to cut red tape for SMEs by up to 35%. That amounts to 15 billion euros a year in reduced bureaucracy for our businesses and our economy. These steps are welcome, but they are not enough. Greater efforts are needed to boost Europe's competitiveness.
Europe has a growth problem. We are falling behind most other global players in terms of economic growth. This economic divergence between EU Member States and the United States is creating an ever-widening gap in GDP per capita, which stood at 82% in 2021. If the trend continues, by 2035 the prosperity gap between the average European and the average American will be as wide as the gap between the average European and the average Indian is today.
The economic potential is considerable. Studies show that barriers within the Single Market act as de facto tariffs — 44% for goods and 110% for services. According to International Monetary Fund figures, if the EU were to match the United States' level of openness in services trade, productivity could rise by more than 8%. Europe must do more. This shows that the services sector needs fresh energy to complete the Single Market, calling for far greater ambition and commitment to removing the remaining barriers.
A review of the economic consequences of EU legislation shows that the legislative proposals currently under discussion in the various Council configurations that come with an impact assessment are expected to generate an annual recurring burden of 71–86 billion euros, plus roughly 65 billion euros in one-off costs.
The EU must build a genuine capacity for deregulation — not merely tidying up the regulatory machinery, but actively reducing its scale. Existing rules must be repealed, not just simplified. Without these changes, the growth and competitiveness the EU so urgently seeks will remain out of reach. Given the serious security and political challenges Europe faces, such an outcome would be in nobody's interest.
The current density of regulation in the Single Market has produced overlapping systems, inconsistent implementation across Member States and considerable compliance costs. SMEs can spend up to 10% of their resources on regulatory compliance, sometimes even hiring dedicated staff to cope with reporting obligations. Too many people in Europe are busy with compliance matters when they should be growing their businesses.
Legal fragmentation further undermines the promise of the Single Market, as businesses have to deal with differing standards, licensing regimes and requirements depending on the country. To reduce regulatory compliance costs for businesses, deregulation must go hand in hand with the harmonised implementation of rules across all Member States. To regulate more intelligently, the EU needs to strengthen its regulatory toolkit — with particular emphasis on proportionality assessments and gold-plating. Proportionality assessment is especially important in preventing new barriers from arising in the Single Market as a result of disproportionate obligations placed on businesses.
To unlock the potential for growth and competitiveness, the European Commission, the European Parliament and the Member States must do their homework and adopt a comprehensive deregulation agenda built on three pillars:
1. Simplify, harmonise and regulate only once: the EU should adopt the principle of "regulate once, use often". Data should be collected only once and made reusable across borders and institutions. Fragmented rules should be replaced with harmonised legislation that is easy to navigate. All new legislation should be subject to mandatory review to ensure it remains fit for purpose, while outdated rules should be systematically phased out. Harmonising terminology in EU legislation, much as has been achieved in the New Legislative Framework for goods legislation, would reduce legal uncertainty and improve the mutual coherence of requirements. Effective, market-driven European standardisation has been and will remain important in reducing the regulatory burden on businesses by simplifying EU legislation.
2. Smarter rules with better monitoring: effective regulation requires continuous monitoring. The EU should assess regulatory performance throughout the legislative cycle, with robust impact assessments, including public consultations, that reflect the cumulative burden on businesses. All proposals should be examined through SME and competitiveness checks to safeguard innovation and growth. A strict "one in, one out" principle should be observed, backed by transparent annual reporting. It is important that businesses and stakeholders are involved early on, shaping practical, workable rules, and remain actively engaged throughout the process, particularly in negotiations between the Council and the European Parliament.
3. Simplification is not enough — deregulation is needed: deregulation lowers compliance costs for businesses and encourages new competitors to enter the market, which in turn drives innovation and economic growth. Without heavy compliance spending or restrictive rules, businesses have greater freedom to set prices, develop new products and expand into new markets.
If we want a Europe that is competitive, innovative and resilient, we must unlock the full potential of the Single Market — not by adding new layers of regulation, but by repealing those that no longer serve their purpose. A smarter Single Market is not only an economic necessity but a political one.
Europe, long regarded as the world's standard-setter, must now prove that it can adapt its rules to a rapidly changing technological and economic environment.
Europe must act decisively. Red tape must be cut, barriers dismantled and the full power of the Single Market unleashed. Growth will not come from more rules — it comes from the freedom to compete and innovate.
Minister for Economics Viktors Valainis, Latvia
Minister for International Development Cooperation and Foreign Trade, Benjamin Dousa, Sweden
Minister of Economic Affairs and Industry Erkki Keldo, Estonia
Federal Minister for Economy, Energy and Tourism Wolfgang Hattmannsdorfer, Austria
Minister of Finance and Economic Affairs Andrzej Domański, Poland
Minister of Employment Matias Marttinen, Finland
Minister of Economy and Innovation Edvinas Grikšas, Lithuania