The EU internal market: Open construction sites, need for reform and options for action – in focus: industry, mechanical engineering and logistics – Image: Xpert.Digital
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The “Terrible Ten”: These 10 bureaucratic monsters are really crippling Europe’s economy
It is the foundation of European prosperity and the heart of the EU economy: the single market. But this heart is stuttering. Instead of a seamless economic area for 450 million people, companies are increasingly experiencing a labyrinth of special national regulations, paralyzing bureaucracy, and a lack of digitalization. In a time of geopolitical tensions, global subsidy races, and aggressive competition from the US and China, this internal weakness is becoming an existential threat.
The result is a gradual loss of competitiveness that directly threatens Europe's industrial base – especially German mechanical engineering and systemically important logistics. Renowned reports from Enrico Letta to Mario Draghi are sounding the alarm, warning of deindustrialization if the EU does not radically change course. This article analyzes the most serious problems facing the single market, highlights the concrete impacts on industry and logistics, and outlines the urgently needed reform steps for a sustainable and sovereign European economic area.
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Why is the internal market now the central project?
What is the significance of the European Single Market in a volatile global economy? The Single Market is the heart of the European economic architecture. With 450 million people and more than 23 million companies, it offers enormous potential – in theory. In practice, however, this potential is blocked in many ways: fragmented rules, excessive bureaucracy, national unilateralism, and a lack of digitalization are hindering economic development in the EU. Especially in times of geopolitical tensions, global subsidy races, growing trade barriers, and the threat of reindustrialization in other regions of the world, Europe is under pressure. Without the consistent completion and modernization of the Single Market, there is a risk of a loss of prosperity and the creeping deindustrialization of strategically important sectors such as industry, mechanical engineering, and logistics.
How acute is the situation? The signs are clear. Almost all relevant reports, from BusinessEurope to Enrico Letta to Mario Draghi and the European Commission itself, warn of increasing regulatory fragmentation, high bureaucratic costs, stalled harmonization, and the risk of permanently falling behind in the international technology race. Competitiveness is suffering from high energy prices, a lack of economies of scale, inadequate capital market integration, and an innovation lag – especially compared to the US and China.
What must the EU do now? The single market is in greater need of reform than ever before, particularly with regard to industrial value creation, mechanical engineering, and logistics and heavy-duty logistics. The following Q&A format will outline the most important open issues and discuss proposals for a comprehensive modernization roadmap.
What are the ten most serious problems in the EU internal market?
The European Commission names a “Top 10” of the most serious, so-called “Terrible Ten”:
- Complicated company formation and management, especially across borders
- Overly complex and inconsistent EU regulations; national “extrapolations” (gold plating)
- Lack of uniform implementation and ownership by Member States
- Limited or contradictory recognition of professional qualifications and authorisations
- Lack of common standards, particularly for products, packaging and services
- Fragmented national regulations on packaging, labelling and waste management
- Insufficient product conformity (CE marking, safety standards, market surveillance)
- Restrictive and deviating national service rules (e.g. construction, logistics, maintenance)
- Bureaucratically complex regulations for the posting of workers
- Unjustified territorial restrictions on supply and distribution.
These barriers not only affect the cross-border movement of goods and services, but also slow down innovation, green tech investments, and the growth of small and medium-sized enterprises (SMEs). The impact is particularly noticeable in service sectors such as machine installation, maintenance, and logistics.
Why does fragmentation particularly affect industry and mechanical engineering?
What challenges arise for the core industrial sector? The mechanical engineering, industrial plant, electrical engineering, and their associated service providers are particularly hard hit. Their strong export focus means that companies must work with multiple national legal regimes, tax systems, certification, and reporting requirements. Frequently diverging technical standards, differing product safety regulations, and discrepancies in working hours, minimum wages, and social security obligations cause considerable additional workload.
How high are the costs? Studies show that medium-sized mechanical engineering companies in particular have to shoulder annual bureaucratic costs of up to 6.3 percent of their revenue – a burden that exceeds their gross return on sales and total research and development expenditures. This corresponds to several full-time positions. Small businesses with fewer than 250 employees are particularly affected by this cost burden, which limits their innovative strength and competitiveness.
Does this also affect larger companies? While the relative share of bureaucratic costs is somewhat lower in larger companies, the resource expenditure amounts to several dozen full-time positions annually, limiting agility and growth.
What specific challenges exist in the area of certification and standardization? The harmonization of technical standards is making little progress. Numerous machines have CE markings, but often do not meet basic EU requirements due to inadequate control and monitoring mechanisms and inconsistent national implementations. This situation creates legal uncertainty and severely hinders the free movement of goods within the EU.
What are the biggest current risks for mechanical engineering and industry?
Compared to international standards, European industry – especially German mechanical engineering – is rapidly losing competitiveness. High energy costs, administrative burdens, and an increasingly uncertain legal environment are causing market share losses not only in third-country markets, but also within Europe.
Export hurdles such as tariffs, differing product safety requirements, complicated approval procedures, and complex digitalization regulations are making market access outside, but also within, the EU increasingly difficult. Additional US tariffs on steel, aluminum, and machinery, which have risen significantly due to political uncertainty and trade conflicts, are particularly burdensome. Many companies expect revenue losses in the mid-double-digit percentage range and fear job losses.
What role does digitalization play? The slow expansion of digital infrastructure, as well as national unilateral efforts in the digitalization of administrative processes, are slowing down the necessary digitalization, especially in mechanical and plant engineering. The incomplete implementation of the "once-only" principle, the lack of interoperability of digital administrative portals, and fragmented data regulations are leading to expensive and risky isolated solutions.
How do these obstacles manifest themselves in practice? Examples from the everyday life of industrial and mechanical engineering companies
– Companies must submit thousands of declarations of posting every year for the cross-border posting of employees – often per country, rather than centrally. Incorrect or incomplete information leads to liability, fines, and even criminal offenses.
– For product approvals (CE, REACH, WEEE, packaging), special national regulations exist that require separate registrations and documentation in each target country.
– For order-specific individual products (special machine construction), complex individual approvals and new product registrations are often necessary, even if the product has already been sold in a similar form across the EU for years.
– Delays in mandating and publishing (harmonized) European standards lead to legal uncertainty. Companies often do not know which standard is binding at which point in time – a problem that is becoming increasingly significant, especially in rapidly innovation-driven areas (e.g., digitalization, AI applications, cybersecurity).
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What are the consequences of fragmentation for competitiveness?
According to studies, the level of bureaucracy in the EU single market corresponds to an average internal tariff of 44 percent for industrial goods – and as high as 110 percent for services. From a company perspective, the single market thus almost takes on the character of an international export, with corresponding additional costs.
The result: Many companies, especially small and medium-sized enterprises, are foregoing EU-wide expansion or withdrawing from business areas in other member states. At the same time, large corporations and regional SMEs are losing market share to Chinese and US competitors who benefit from massive economies of scale, lower regulation, and larger innovation budgets.
What is the situation regarding logistics and heavy-duty logistics in the internal market?
Transport, logistics and especially heavy-duty logistics (e.g. large and heavy-duty transport of machinery, equipment, industrial goods) are systemically important for industry and are particularly affected by single market hemispheres.
What are the main obstacles?
– Infrastructure is often incompatible across borders: different bridge, tunnel, and route profiles, excessively low clearance heights, insufficient capacity, delayed expansion projects in the rail, road, and waterway networks, and a lack of "military mobility" corridors.
– Approval procedures for large-volume and heavy-duty transport vary nationally, are bureaucratic, and time-consuming. Separate permits must be applied for for each route, with long processing times and uncertain requirements.
– The implementation of the "once-only" principle is just as inadequate in the logistics sector as it is in industry: data is recorded and processed multiple times, often redundantly.
– Different requirements for vehicle equipment, drivers, and accompanying regulations complicate cross-border operations.
– The digitalization of logistics administrative processes is patchy, leading to media disruptions, misunderstandings, and inefficiencies.
– The development of efficient intermodal hubs (e.g. heavy transshipment terminals on waterways) is stalling in many places because national investment plans, responsibilities and regulations are not uniformly coordinated.
This is a problem, particularly for military logistics and the supply of large industrial facilities, which not only limits business models but also Europe's strategic ability to act.
How could and should the EU address the key issues?
1. Completion and harmonisation of the internal market
The key to overcoming fragmentation lies in consistent harmonization of standards, regulations, and administrative processes—both horizontally (across sectors) and vertically (across administrative levels). The EU must systematically eliminate national unilateralism ("gold-plating"), diverging implementation of directives, and contradictory standardization processes.
Specifically, this means:
– Uniform product approval, labeling, and registration systems recognized throughout the EU.
– Introduction of a uniform European company law framework (the so-called "28th regime") with simplified insolvency, tax, and labor law provisions as an alternative to 27 national legal systems.
– Efficient, digital access to central information portals such as the Single Digital Gateway for all important notification and reporting obligations.
– Rapid removal of expired or obsolete standards, faster updating of harmonized standards, and greater transparency in standardization, especially for SMEs and the skilled trades.
2. Reduce bureaucracy and promote digitalization
Reducing reporting and digitizing processes are the stated goals of the current EU strategy ("Omnibus" initiatives). By the end of 2029, administrative burdens for companies are to be reduced by at least 25 percent and for SMEs by 35 percent. Key steps:
– Central, EU-wide accepted digital reporting portals (e.g., for posting, social security, product registrations)
– Implementation of the "once-only" principle, so that documents and data are only exchanged once with authorities and used for all purposes.
– Creation of an EU "Digital Identity Wallet" for companies and employees.
– Promotion of innovation and the use of digital tools in compliance management.
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3. Support investment and industrial transformation
Reports such as the Draghi Report call for massive investments in strategic technologies, infrastructure, and energy independence – with an investment requirement of approximately 750 to 800 billion euros annually.
Recommended measures are:
– Joint implementation and financing of important infrastructure projects (e.g. Trans-European Networks, cross-border electricity grids, military mobility)
– Reform of European funding policy (e.g. expansion and generalization of the “Important Projects of Common European Interest”, IPCEI)
– Sector-specific support programs for strategic industries, including mechanical engineering, plant engineering, clean tech and sustainable logistics
– Promoting the participation of SMEs in research, standardization and investment projects
4. Protect and strengthen competition and trade relations
Stronger protection against distortions of competition caused by subsidies in third countries and targeted European strategies against aggressive trade practices, such as those currently emanating from China and the USA.
Recommendations include:
– Introduction of a European-coordinated investment screening to protect strategically important industries
– Independent development of digital infrastructures (keyword: “EU Cloud and AI Development Act” as a basis for sovereign digitalization)
– Breaking dependencies on critical intermediate products and raw materials through targeted diversification
How can logistics be specifically strengthened?
In addition to the general measures, the following are particularly necessary for logistics and heavy-duty logistics:
- Complete harmonization and digitalization of licensing procedures for large and heavy goods transports. A centralized EU-wide digital licensing system with binding processing times could drastically reduce bureaucracy and delays.
- Elimination of physical bottlenecks in infrastructure (bridges, locks, tunnels, railway lines), including targeted rehabilitation programs for the core network.
- Strengthening multimodal logistics hubs, particularly at inland ports (heavy-load terminals) for industrial projects, defense and energy supply.
- Complete implementation of standardized procedures at border crossings, Europe-wide harmonisation of dangerous goods, customs and special permit regulations.
- Investment initiatives to modernize and digitize European waterways and expand charging infrastructure along strategic corridors.
How can implementation be successful? What tools are needed?
– Clear political prioritization and control at the highest level, with monitoring by an independent European body.
– Stronger sanctions for national unilateral actions that harm the internal market, as well as more European enforcement options in cases of inadequate implementation or delays.
– Increased involvement of the private sector, particularly industrial SMEs and logistics companies, in standardization and legislative processes at the EU level.
– More flexible, agile adaptation of existing regulations to the pace of innovation and new business models through regular "Regulatory Fitness Checks."
– Rapid implementation of the European Commission's "Competitiveness Compass" and the recommendations of the current Draghi and Letta reports as guidelines for a competition-oriented location policy.
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Without a radical change of course, the EU will lose its industrial base
If the EU wants to defend its economic independence and industrial strength in a volatile, uncertain world, there is no way around a breakthrough to a genuine European single market. Eliminating administrative, regulatory, and infrastructural fragmentation is a necessary prerequisite for resilience, innovation, and economic sovereignty—especially in the key sectors of industry, mechanical engineering, and logistics. Only in this way can Europe overcome the "triple pressure" of geopolitical turmoil, global subsidy races, and technological disruption and embark on its own, sustainable path to prosperity.
This Q&A comprehensively assesses the diverse challenges and opportunities. The actual implementation of the upcoming tasks remains a mammoth task—but there is no alternative if the European Economic Area is to fully realize its strategic potential for the coming decade.
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