BDI analysis: “Europe’s largest construction site”: Internal trade barriers cost the EU 1.1 trillion euros

Olaf Scholz at the EU summit in Brussels

Europe is facing “big tasks”, stated Chancellor Olaf Scholz at his first EU summit.

(Photo: dpa)

Brussels Once again it was all about big politics in Brussels: At the summit of the heads of state and government, the focus was on the Russian troop movements, capers on the energy markets, the pandemic, climate change and migration. Global political emergencies have been drawing the attention of the leaders of the European Union for years. Crisis management has become permanent.

Europe is facing “big tasks”, stated Chancellor Olaf Scholz at his first EU summit, as usual soberly. At the next meeting the deliberations will continue, at the next one and the next one as well.

While European politics is moving from crisis to crisis, there is growing concern in the German economy that the EU is neglecting what has made it great: the internal market. In a previously unpublished analysis available to the Handelsblatt, the Federation of German Industries (BDI) warns: “The internal market remains Europe’s largest construction site.”

Bureaucratic hurdles for goods and services cost the European economy up to 1.1 trillion euros per year, calculates the BDI. That corresponds to almost nine percent of the EU’s gross domestic product. It is precisely because of “ongoing economic turbulence and geopolitical shifts” that Europe could not afford to leave this potential untapped, warns the industry lobby.

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The completion of the internal market must therefore be a top priority for Scholz and his traffic light coalition. Too often in the past the EU Commission’s liberalization initiatives have been blocked, watered down or implemented only half-heartedly by the member states.

Germany, too, has repeatedly stood in the way of completing the internal market in the past. The old federal government had reintroduced the master craftsman’s obligation in many trades under the curious slogan of “re-mastering”. Regulations against alleged wage dumping by freight forwarders and in the construction industry are also overshooting their target and inhibiting competition.

German industry is one of the main beneficiaries

For the BDI, one thing is clear: German industry is one of the main beneficiaries of the common European economic area. Around two thirds of German goods exports and imports are due to trade within the EU.

However, different national regulations, complicated administrative channels and, in some cases, even deliberate market foreclosure are still in the way of companies. New problems arise from digitization and the increasing importance of data evaluations for industry. Three out of four companies complain about legal uncertainty about the anonymization of data.

Medium-sized companies in particular are suffering from this. Because: “Coping with these problems often exceeds the capacities of the companies or the anticipated benefits of expansion,” as the study says. The result is lost growth opportunities: only 17 percent of small and medium-sized industrial companies exported to other EU countries.

The industry lobby demands that the EU set an internal market target, just as it has set itself a climate target: “This should provide for additional economic growth of at least two percent EU GDP by 2030 by deepening the internal market in all areas. “

The different vaccination rates in Europe pose an acute threat to the domestic market. In countries like Bulgaria and Romania, comparatively few people have been vaccinated so far, which is why there are concerns in Brussels that other Member States might impose entry restrictions.

More: Economists urge the government to act quickly on climate protection and pandemics.

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