EU internal market on the upswing: opportunities for Germany’s economy!

EU internal market on the upswing: opportunities for Germany’s economy!

The economic situation in Germany is currently challenging. While the German economy is growing weakly, the EU internal market still opens up new growth opportunities. Loud Focus The domestic market counts over 450 million consumers and 26 million businesses and acts as a bulwark against Donald Trump's disruptive America First policy.

A 2.4 percent increase in trade between the 27 EU member states could offset the current 20 percent decline in trade with the US. However, companies face significant challenges. The existing trade barriers in the internal market effectively act like tariffs, which are comparable to 45 percent on goods and 110 percent on services. These barriers hurt growth more than existing U.S. tariffs and impose a burden three times the cost of trade between U.S. states.

Challenges in the internal market

A central aspect of the challenge is over-regulation and bureaucracy, which significantly hinder the flow of goods and services in the internal market. National regulations and fees vary greatly between EU countries, making further trade difficult. Examples include high fees for packaging, different packaging regulations and territorial delivery restrictions. The EU Commission estimates that consumers could save up to 14 billion euros annually by removing these trade barriers.

The regulatory burdens are making the internal market, which is considered the economic heart of the EU, less functional. Proposals for improvement include removing 20 percent of existing hurdles, which could lead to economic growth of 2 percent and more than a million new jobs. Internal Market Commissioner Stéphane Séjourné is also planning a law to make it easier to buy branded products within the EU, but this bill will not be presented until the end of next year.

Growth opportunities through harmonization

Deloitte complements this topic and highlights the key industries that could particularly benefit from reducing trade barriers. In electronics in particular, intra-European trade is forecast to grow by 3.7 to 4.7 percent, while mechanical engineering is expected to grow by between 3.8 and 4.9 percent. Removing trade barriers and promoting integration measures are crucial for a stronger European economy, according to analysis Deloitte.

Furthermore, a comparison of exports shows that the increase in EU industrial exports to Brazil, Vietnam and the Philippines to 4.1, 3.3 and 5.6 percent already shows how important access to international markets is. In a positive scenario in which all trade barriers are removed, growth in the EU internal market would be similarly high, although the basis in the EU is more pronounced. Political dynamics, supported by the current geopolitical situation, could promote significant progress in deepening the internal market and new free trade agreements as a logical consequence.