Foreign direct investment into the EU has fallen 22% over five years, with businesses preferring non-EU markets.
New data from the European Commission shows intra‑EU trade fell from 23.5% of GDP in 2023 to 22% in 2024. This is the first year-on-year drop since 2016, if you don’t count the lockdown chaos of the glorious 2020 global pandemic.
This data comes from a draft of the bloc’s annual single market report, so it hasn’t been officially published yet, but it’s already raising eyebrows.
Not only has trade between member countries dropped, but the time to create and approve EU-wide product standards has also gotten worse. It used to take 3.2 years in 2023, but now it takes four years.
European Central Bank (ECB) president Christine Lagarde had called the internal market frozen before these new numbers even came out. The report itself says, “The Single Market is our best asset to counter external pressure, and it is time to build on its strengths.”
Sure, there have been some upgrades, like when the EU made progress on digital tools and professional qualification recognition. But the report shows that foreign direct investment into the EU has dropped by 22% over the past five years, so none of that really helped.
The Commission straight-up blames “fragmented” national legal rules. Those rules, according to the report, “continue to make it complex and costly to establish and operate companies across the EU, with no progress to date.” That’s been a complaint for years. Now it’s finally in writing.
Francesca Stevens from Europen, a packaging industry group, said, “Europe’s loss of competitiveness is largely self-inflicted.
The problem is not only complex and burdensome regulation, but a false ideological divide between competitiveness and sustainability, the misguided belief that one can exist without the other.”
One reason for the trade drop, officials say, might be energy product price shifts. That goes back to Russia’s invasion of Ukraine. Still, that doesn’t explain why companies inside the EU are now more interested in exporting outside the bloc than doing business within it.
Lobby group BusinessEurope said businesses “increasingly find exporting to non-EU markets more attractive than trading within the single market.”
Again, that is not a minor issue folks. See, the whole point of the EU market was to be stronger together. Brussels says it’s working on it, and Ursula von der Leyen even dropped a new strategy last summer. A “roadmap” for full integration by 2028 is coming before September. That’ll be the ninth strategy since 2003.
Meanwhile, the ECB says the hidden costs of trading inside the EU are like slapping a 65% tariff on goods and 100% on services. It’s no wonder businesses are walking away.00% on services. It’s no wonder businesses are walking away.sses are walking away.
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