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Letta’s love letter to bigger markets

Letta’s love letter to bigger markets

by host

BRUSSELS — Enrico Letta, former prime minister of Italy, is facing a tall order: Make everyone fall in love with the single market. It’s a task former Commission President Jacques Delors famously said was “impossible.”

More concretely, Letta was charged back in June 2023 with authoring a report on how to make the single market fit for purpose. In his report, which came in at 147 pages, the former prime minister said he had wanted to start exactly where Delors stopped: bringing into the single market three sectors — energy, telecoms and finance — that Delors was forced to leave to the sovereignty of member countries. 

Many were pleased with the outcome of Letta’s work, from small tech firms lobby Digital SME to French employer lobby Medef.

Some, however, were less thrilled. The report’s emphatic call for more consolidation in the telecoms industry can seem a long way from the current approach of regulators.

“We can modify one of the most important parts of the competition rule, which is relevant market,” Letta told a POLITICO event on industrial policy Thursday.

“You cannot ask [the director of the Commission’s competition arm] Olivier Guersent to invent new rules … I think the most important part is to move from 27 markets to one … to then apply the competition rules to a much bigger relevant market.” 

“Then markets will create champions,” he said. “It is not my job.”

Letta spent two hours discussing his proposals with EU leaders Thursday within a special summit on how to integrate the EU’s financial markets. The talks were “very friendly,” he reported. There “was no blood.”

He described the summit’s conclusions as “the first step” toward actioning the report, while acknowledging it could be an uphill battle given that financial issues are “not very sexy” for voters.

 “The true step today,” he continued, “is to move from the capital markets union as it was before to an idea that we are integrating financial services for a much bigger purpose — that is, to finance the [green and digital] transition.” The point being, he explained, that finance should be a form of leverage to achieve important things for the bloc as a whole and its citizens.

“I am more optimistic today than I was yesterday,” he said.

Part of the challenge, Letta argued, is to find new and more positive ways to make people want closer integration within the EU. “We don’t have Covid, and [Russian President Vladimir] Putin is not enough. Maybe we will have [former U.S. President Donald] Trump, Trump is a great mobilizer.” He added, however, that he would not wish a negative or “catastrophic” mobilizer on the EU.

Letta told POLITICO he hopes his report will be an important tool in the hands of European leaders as well as for Mario Draghi, the former chief of the European Central Bank, who is authoring another report on EU competitiveness.

“There is a clear link,” he said. “Integrating the single market is fundamental to competitiveness.” 

Corporate lobby group European Round Table for Industry calculated that removing internal barriers among the EU27 countries would bring €2.8 trillion to the bloc’s economy beyond this decade.

If love doesn’t do the trick — perhaps cash will.

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