The EU's single market is based on free movement of goods, services, capital and people. Ex Italian PM and author of a report into the single market, Enrico Letta argues a 5th freedom - encompassing research, education and innovation - is vital for Europe's future prosperity.
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00:00I start from a very strong red alarm.
00:06The big red alarm is the fact that the gap is growing with the US.
00:11The single market as it is today, it is not enough,
00:14because it was conceived for a world that is no more there.
00:18Six months, 65 cities, 400 meetings and one high-level report later,
00:23Enrico Letta's verdict on the single market is in,
00:27and it's a wake-up call for Europe.
00:31Hello and welcome to Business Planet from Brussels,
00:34where I've come to interview the report author,
00:37the former Italian Prime Minister, Enrico Letta.
00:42The single market was founded in 1993.
00:45It's just 31 years ago, but the world is almost unrecognisable.
00:50When Jacques Delors launched the single market,
00:53the Soviet Union was there, Germany wasn't reunified,
00:57China and India together were 4% of world GDP.
01:02The big of today and tomorrow has to be bigger,
01:05because the dimension of China, of the US, the BRICS, has completely changed.
01:10Three sectors, energy, financial services and telecoms,
01:14are not part of the single market,
01:16and Letta believes fragmentation in these sectors damages Europe's competitiveness.
01:22We are having 100 telecom operators in Europe, fragmented.
01:28In each country, 3, 4, 5 operators.
01:31In the US, there are 3.
01:33In China, each operator has more than 467 million clients.
01:40Worse still is the lack of integration in financial services.
01:45Our 27 financial markets are not enough integrated,
01:50not enough attractive, they are too small,
01:54and the American market is having a sort of pull effect.
01:58He suggests creating a savings and investment union,
02:02what he describes as a pillar of private money,
02:05that combined with public funds will pay for Europe's flagship net zero policies.
02:10The financing is a divisive subject.
02:13If we continue not answering the question how to finance the transition,
02:18farmers will be the first of a long sequence of people protesting.
02:22Next one will be the workers in the automotive industry.
02:26Then you will have other workers, other business people, other citizens.
02:31Many entrepreneurs say the single market isn't working for them.
02:35While big companies have the money and staff to operate in countries with different legal regimes,
02:41smaller companies don't.
02:43Letta aims to simplify this.
02:45So the idea, starting from the legal environment,
02:48is to create a sort of master key, a sort of passpartout.
02:53One legal system, a 28th legal system,
03:00that is a sort of another European country,
03:03a virtual European country, with his own system, legal system.
03:10I asked the head of small tech firm's lobby, Digital SME, if he thought this would help.
03:16I think it's a brilliant idea.
03:18If I have to set up a company, I will have to set it up in my country,
03:22let's say I'm Italian, I will set it up in Italy.
03:24But if I want to do business in another country, let's say France, Poland or elsewhere,
03:29I have to set up another company in these countries.
03:32So this is a complete mess.
03:35The four pillars of the European single market are freedom of movement for goods, services, capital and people.
03:41Letta acknowledges this is a very 20th century view and says a fifth freedom,
03:47for innovation, research and education, is desperately needed.
03:53Having meetings around Europe, many young people start up telling me that we want to go to the US.
04:01Europe is not a place where we can develop our ideas.
04:06One example in medical research, allowing free access to articles and their data,
04:12is already helping accelerate European health breakthroughs.
04:16To find out more, I went to French public research body INSURM.
04:31Research centres like this are vital to allow Europe to innovate and compete.
04:36And a next generation single market should allow this sector and others to fulfil their potential.
04:42See you next time on Business Planet.
05:00Business Planet.