European Council President Antonio Costa said leaders are ready to make another push to unify their markets, arguing that a fracturing world order could force action on languishing reforms.
“My feeling is there is a real commitment for all the leaders, and the clear sense of urgency among all of them, that now we need effectively to take decisions with impact,” Costa told Bloomberg News.
Costa wants to discuss how to do that on Thursday, when he gathers all 27 European Union leaders at a centuries-old Belgian castle for a day-long retreat. While no major breakthroughs are expected, leaders will discuss ways to integrate EU markets, prioritize EU companies in public contracts and ease rules to create larger EU companies, according to people familiar with the planning. Leaders will then meet again in March to solidify their plans.
“We need to ensure that we have a real European capital market to fund our companies, fund innovation and to be competitive in the global market,” Costa said.
The remarks echo repeated calls from Europe’s economic leaders in recent days, which have come with a dire warning: If the continent doesn’t hasten these stalled reforms, it will hasten its own demise.
Such a concept is not new, of course — Europe has long argued that melding its economies would help the continent compete with the US and China. Yet leaders have repeatedly failed to follow through, caving to logistical complications, internal squabbles and a wandering focus.
EU leadership in Brussels, including top EU executive Ursula von der Leyen, has also fielded blame for not keeping economic reforms moving.
Costa argued leaders have become more motivated after US President Donald Trump threatened to seize Greenland and China showed its willingness to weaponize supply chains.
“The geoeconomic situation is a very important incentive for the leaders to move forward,” Costa said.
Von der Leyen, who runs the European Commission, had a similar message on Wednesday morning, speaking to EU lawmakers.
“This is the urgency mindset we need and we will relentlessly stay the course until we get it all done,” she said, pledging to propose a single-market “roadmap” with timelines and commitments to enact changes.
EU leaders would endorse the plan at their March summit, she said.
Business leaders are watching to see if this time, it’s for real.
“The current geopolitical changes can be a genuine opportunity for Europe,” Deutsche Bank Chief Executive Officer Christian Sewing said in a statement on Wednesday. “Right now, however, we are still playing below our potential. We need ambitious and substantial reforms.”
The Problem
Given that Europe is not a military power, the continent’s best hope to have a global voice is its extensive single market. The bloc accounts for roughly 15% of the world’s gross domestic product, with nearly 450 million potential consumers.
Still, the EU’s economic footprint is fading. In 2010, the EU’s GDP rivaled the US and was well ahead of China. Since then, it has fallen behind the US and now sits alongside China, according to the International Monetary Fund.
“We have the second-largest economy in the world, but we are driving it with the handbrake on,” von der Leyen said Wednesday.
EU leaders and top economic officials argue the single market could still be powerful — if it’s used effectively. Currently, they say, internal barriers mean that businesses struggle to grow, workers can’t easily move and money sits idle, uninvested. That has left Europe crawling while the US and China run.
“Europe’s convergence engine is stalling,” said Kristalina Georgieva, the IMF’s managing director, speaking last week to EU commissioners, who help craft the bloc’s policies. “It is held back by an incomplete single market and complacency about what it takes to compete in today’s and tomorrow’s world.”
Von der Leyen tried to put a positive spin on that fact during her speech.
“The good news is,” she said, “this can be fixed.”
Possible Action
Costa said Thursday’s retreat is “a good moment to take stock” of the situation.
A Deutsche Bank research note published on Monday said the EU has shown only “incremental” and “limited” progress on its competitiveness agenda, focusing more on action plans than actual changes in the last year.
The note did say, however, that Thursday’s gathering could signal “a reorientation of EU economic policy,” citing leaders’ “increasing sense of urgency.”
Ahead of the event, officials have been pushing their preferred economic policy ideas across speeches, letters and closed-door conversations.
“Continuing on the current path is not an option,” the German and Italian governments argued in a paper they circulated with numerous suggestions. “Europe must act now.”
The countries, two of Europe’s largest economies, pressed the EU to adopt fast-track permitting, routine repeals of outdated laws and stricter scrutiny of new rules, with regular reports to leaders on progress. They also advocated for a Europe-wide stock exchange and looser merger rules allowing European companies to scale up and rival America’s tech giants.
Costa broadly agreed, saying the EU must “look at our competition rules” to “allow companies to scale up to be competitive in the global market.”
The European Central Bank also joined the conversation, sending EU leaders a five-point checklist. It implored leaders to finally unite the bloc’s 27 fractured financial systems, enabling money to be saved and invested fluidly across national borders.
Additionally, the ECB reiterated its call for a digital euro, arguing such a step would help shield Europe and create local alternatives to foreign payment systems.
EU officials and diplomats have picked up on the idea in recent days as part of discussions about Europe’s reliance on US financial services, according to the people familiar, who spoke on the condition of anonymity to discuss the private talks. Officials have been exploring whether they could break the hold that US payment firms like Visa or Mastercard have over Europe’s transactions, or lower the dollar’s preeminence for international exchanges.
Costa argued that Europe-based digital options would help weaken these ties.
“It’s clear that we need to have a payment digital infrastructure in Europe to allow us to make payments without any kind of dependence,” he said.
French President Emmanuel Macron also plans to bring up exchange rates at Thursday’s gathering, given the euro’s mounting strength against the dollar. The currency’s appreciation can help lower import costs, but it also creates a headwind for exporters, potentially curbing growth.
Other countries will raise persistent concerns about energy costs, which remain double those in the US. Energy-intensive industries such as the chemical sector are sounding alarm bells that if prices don’t come down, manufacturers will go under.
Here again, Costa argued that a single market would help, along with targeted investments in low-carbon technology and other areas.
Sitting in on Thursday’s meeting will be some of Europe’s economic elite, including former ECB President Mario Draghi, who has been warning that the EU isn’t moving nearly fast enough on his suggested changes.
Draghi and other economic leaders insist that completing their long-sought reforms would considerably narrow Europe’s gap with the US — and help it survive on its own if needed. IMF research, Georgieva said, shows that the EU could boost productivity by 20% if it reduces internal market frictions.
Costa said there was also an existential reason to reform the EU’s economy with global power in mind.
“I don’t say that the rules based order has died and we need a new one,” he said. “Of course it’s under threat, but I think we are strong enough to protect the rules based order.”
“The alternative,” he added, “is chaos.”
Photograph: Antonio Costa in Brussels, on Feb. 10, 2025. Photo credit: Wiktor Dabkowski/Bloomberg
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