Germany and Italy have issued a stark warning that the European Union risks falling behind global powers like the United States and China unless leaders implement concrete measures to revive competitiveness, according to a policy paper reviewed by Reuters.
The paper, prepared ahead of an informal EU summit in Alden Biesen, Belgium, on February 12, calls for sweeping reforms to reduce bureaucracy, accelerate permit approvals, and deepen integration across Europe’s single market. German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni plan to use the summit to push for coordinated action.
“Continuing on the current path is not an option. Europe must act now,” the joint statement reads, emphasizing that living standards and sovereignty are at stake amid rising global competition.
Cutting barriers and red tape
The policy paper highlights significant internal obstacles within the EU, citing International Monetary Fund data that show internal barriers equating to tariffs of up to 44% for goods trade and more than 110% for services trade. Leaders propose fast-track approval procedures, regular repeals of outdated laws, and enhanced scrutiny of new regulations, with progress reports submitted to EU heads of state.
Germany and Italy also advocate for deeper integration in services, energy, capital markets, and digital industries, including the creation of a pan-European stock exchange and updated merger rules to strengthen companies’ global competitiveness.
The paper calls for accelerated free trade negotiations with partners such as India, Australia, the UAE, and ASEAN, while cautioning that Europe should be ready to employ defensive trade measures if necessary.
The upcoming Leaders’ Retreat and the European Council meeting in March will provide opportunities for EU nations to commit to these reforms and set the course for Europe’s economic future.
