Single Market going place-based

May 2024

In April 2024, Enrico Letta presented his report on the future of the Single European Market ‘Much More Than a Market – Speed, Security, Solidarity (Abre numa nova janela)’. The much-anticipated report was commissioned by the EU Council and the European Commission under the trio presidency of Belgium, Spain, and Hungary. It represents a concerted effort to re-evaluate and enhance the European Single Market in response to both long-standing challenges and the unprecedented disruptions of recent years. As the subtitle of the report reveals, it is about empowering the Single Market to deliver a sustainable future and prosperity for all EU citizens.

The report assesses the current state of the Single Market, proposes strategic reforms, and ensures that the Single Market evolves to meet future economic, social, and technological challenges while promoting sustainable growth and prosperity for all places and all EU citizens.

To have a future, the Single Market needs to offer a future for all places

The report strongly advocates the Single Market and the need to adapt it to conditions of our time and future needs. While the focus is on the economic dimension of the Single Market and Europe’s competitiveness, the report also stresses the social dimension and importance that the Single Market is all of us – and needs to benefit all of us.

The report’s emphasis on the need for place-based approaches not least through the idea of a ‘freedom to stay’ show that it acknowledges the importance of the territorial dimension and territorial diversity of Europe. Indeed, focusing on this perspective one key message of the report could be summarised as ‘to have a future, the Single Market needs to offer a future for all places’.

This message echoes the objectives of the Territorial Agenda 2030, not at least due to a growing perception that the advantages of the Single Market mainly go to individuals and enterprises already equipped with the means and skills to take advantage of intra-EU opportunities. Such a perception may lower the public support that is necessary to keep the Single Market successful. Being aware that the Single Market may bring different benefits and have different effects on people and places across the EU, even since its creation, Cohesion Policy was put in place as a fundamental of it, taking two to tango.

‘Freedom to stay’ as accelerator of European integration

Acknowledging that the distribution of the Single Market benefits needs to be improved, the report advocates for a strong place-based approach through improved conditions for citizens, SMEs and places.  

Following this rationale of a stronger place-based approach which allows futures for all places, Enrico Letta proposes to complement the freedom to move with the ‘freedom to stay’.

The idea of a ‘freedom to stay’ emphasises the necessity for the European Single Market to evolve in a manner that benefits all European citizens, not just those who are mobile or businesses that operate transnationally. The idea is outlined as a critical aspect of a sustainable Single Market that ensures shared prosperity and addresses the geographical and socio-economic disparities within the EU.

The ‘freedom to stay’ is defined as the right of European citizens to choose to remain in their local communities without being economically disadvantaged. It aims to complement the existing freedom of movement within the EU by ensuring that staying put is a viable option for everyone. Letta argues that economic and social opportunities should be evenly distributed across the EU to prevent regions from being depopulated due to lack of local opportunities. This initiative seeks to empower individuals by providing them with the freedom to either move for opportunities or stay in their communities with the assurance of a fulfilling economic and social life.

Providing people perspectives which allow them to stay could help to – at least temporarily – combat demographic challenges and decline in many places. It is also linked to the provision of services of general interest, the increased participation of SMEs in the Single market and the need to harness talents.

In a truly European Single Market, it may even involve finding European solutions for addressing brain-drain (work elsewhere without moving there), digital nomads (work temporarily wherever you like), etc. To allow people to live in one country and work in another country (beyond cross-border commuting), or digital nomads working for some months in another country than their country of residence, quickly meet issues related to taxation and social security contributions, for which European solutions would need to be found.

In that sense, the idea of a ‘freedom to stay’ could help accelerating European integration on a range of domains. At the same time, one needs to avoid that a ‘freedom to stay’ becomes an incentive for places and people to resist adapting to economic changes or innovating, relying instead on EU support to maintain their status quo.

To implement the idea of a ‘freedom to stay’ Europe needs both new solutions for distant work across national borders and a stronger emphasis on place-based policy-making foscuing on offereing desirbel future perspectives for all palces.

Towards a place-based approach to the Single Market

Place-based approaches are fundamental for strengthening the Single Market by promoting economic diversity, regional resilience, and inclusive growth throughout the EU. In his report, Enrico Letta emphasises that place-based approaches are crucial for enhancing the effectiveness of the Single Market by ensuring that regional disparities are addressed through tailored strategies and policies. The report suggests the drafting of a comprehensive Single Market Strategy, to break down existing barriers, promote consolidation, and enhance the competitiveness of the Single Market. Place specific targeted interventions can help diverse regions within the EU to harness and maximize their unique potential, thus contributing to the overall economic health and integration of the Single Market. This becomes essential for ensuring that the Single Market remains adaptive and responsive to the needs of all its constituents.

Key aspects of place-based approaches in relation to the Single Market include:

• Alignment with Single Market objectives: The place-based approach aligns with the broader goals of the Single Market by focusing on reducing regional disparities and promoting social and economic cohesion. This ensures that the benefits of the Single Market—such as increased trade, economic integration, and mobility—are more evenly distributed across all EU regions.

• Enhancing regional competitiveness: By addressing the specific needs and leveraging the unique assets of individual regions, place-based policies help to enhance the competitiveness of those regions. This, in turn, contributes to a more balanced and resilient Single Market where all regions are capable of contributing to and benefiting from the EU economy.

• Facilitating regional specialisation: The report highlights how place-based policies can facilitate regional specialisation by supporting sectors or industries where regions have a competitive advantage. This specialisation can lead to greater efficiency and innovation within the Single Market.

• Future policy development: The place-based approach is presented as a dynamic component of future policy development within the Single Market framework. It calls for ongoing adjustments and refinements based on emerging economic trends and regional developments.

Consequently, the report discusses place-based policy-making as a strategic approach within the European Single Market, focusing on tailoring policies to the unique economic, social, and geographical characteristics of each region. This means allowing for policies that are not one-size-fits-all but are customised to maximize local advantages and address particular challenges.

Nevertheless, strengthening the place-based approaches in the Single Market does not come without challenges. The report acknowledges the challenges of implementing a place-based approach, such as the need for precise data and insights into regional dynamics, and the complexity of coordinating policies across multiple governance levels. Effective implementation requires robust mechanisms for collaboration between EU institutions, national governments, and regional authorities. Furthermore, the need for adequate funding, effective coordination among various levels of government, and the complexity of measuring the impact of such policies can be added to the challenges. Amid these challenges, the report stresses the necessity of Cohesion Policy, but also of the broader EU goals of cohesion, convergence, and solidarity among Member States which are not only a key condition for the Single Market to succeed, but also to keep the EU project alive.

by Kai Böhme & Maria Toptsidou