On a historic day in politics, the speakers address the European Single Market, increasing investments in the EU, and European identity and fragmentation.
Wednesday, 6 November 2024 will be remembered in Germany as the day that Donald Trump was re-elected President of the United States and Germany’s governing traffic light coalition came to an early end. It was under these momentous circumstances that the Jacques Delors Centre and the Hertie School hosted a discussion with Friedrich Merz, CDU Federal Chairman and candidate for Chancellor, and Enrico Letta, former Italian Prime Minister, about European competitiveness in a changing world.
The event, titled “Enhancing the competitiveness of the EU and its single market”, was moderated by Hertie School President Cornelia Woll and drew around 250 participants onsite and more online.
Single market: Too much fragmentation, too little funding
Johannes Lindner, Co-Director of the Jacques Delors Centre, opened the discussion by highlighting Merz' role in the European Parliament during Jacques Delors’s EU Commission Presidency, when the European Single Market was a key issue for Brussels. He also stressed that competitiveness was emerging as one of the main issues for Germany’s upcoming early elections.
Enrico Letta, who serves as President of the Jacques Delors Institute in Paris, the Jacques Delors Centre’s sister institute, identified fragmentation as a key challenge for European competitiveness and the strengthening of the single market. He sees the European Union not acting as one but representing 27 different interests in sectors such as telecommunications, energy, financial services and defence. Letta cited the use of digital payment providers as an example: Europeans would rather use a US service than one from a neighbouring country. Friedrich Merz agreed on the need for a change of perspective: “The relevant market for European companies is not national, is not Europe, the relevant market is the world – and Europe has to be prepared to step into the next phase of competitiveness.”
Following their opening statements, President Woll raised the issue of the Capital Markets Union – “a project that everybody agrees upon in principle and nobody in practice.” Merz argued for a competitive European stock exchange, citing the example of two European companies that prospered during the pandemic but eventually chose the US market due to better conditions there. Letta observed that the issue lies in mobilising money: US companies in future markets such as Artificial Intelligence can afford to fail; in the EU, these same markets lack the necessary funding to succeed.
Obstacles to European market integration
Letta emphasised that many issues concerning the single market are also tied to cultural identity – such as in an attempted merger between two banks from Catalonia and the Basque Country. In his opinion, identity should play a smaller role than the relevant financial figures. “We are living in a European Union where the border is between Europe and Russia, the border is between Europe and Turkey – the border is not within.” Merz added that these issues are most apparent in the energy sector, where a unified grid, the costliest aspect of an integrated European energy supply, should be the main concern: “As soon as we have a European grid, we are ready to install the European market for energy.”
During the Q&A session, Hertie School students asked the German party leader and Italian EU rapporteur about their positions on the digital euro, the potential suspension of the German debt break for further defence financing, and the German strategy regarding Italian UniCredit’s buy-in into the German Commerzbank. Merz did not comment on the latter, not viewing the development as strategic, while Letta argued that UniCredit’s multinational presence made its Italian identity irrelevant.
Finding common ground on European identity
The discussion concluded on a shared note regarding European identity. Letta recounted a meeting with an Italian citizen who showed disinterest in European politics because he did not consider himself European – a category he reserved for people who travel a lot and speak several languages. Both Merz and Letta acknowledged the need to include those who feel distant from European integration, seeing them as essential to a strong and competitive Europe.
“You helped us see what political pitfalls to pay attention to in order to avoid losing a big number of European citizens in a European project,” Cornelia Woll summed up the discussion. “I think we have our work cut out for us.”
Watch the recording of the event below.