We have to update the single market fast, former Italian PM Enrico Letta says

None. Hello and welcome to talking Europe. The EU single market was created more than 30 years ago, and it has proven crucial to economic growth by guaranteeing the free movement of goods, capital, services and people. But the needs of a market of 12 members are not the same as those of a union of 31 states, and the world has changed profoundly as well. My guest says it’s time for a new single market, and he has delivered a much awaited report to EU leaders, entitled much more than a market. He is Enrico Letta, a former Prime Minister of Italy, former leader of the Italian Democratic Party and a former member of the European Parliament. He is now president of the Jacques Delors Institute. Enicoletta, thank you so much for joining me from Rome. You had 400 meetings in 65 European cities. You talked to a really wide variety of people. Is that what convinced you that the single market is not delivering for everybody? Yes, it is for many reasons. The first reason is the fact that the single market is first of all for big companies is perceived as a great opportunity for big companies and less opportunity for SM ES. This is why I put in the report many ideas to help SM ES. The most important one is the passport to on the legal system that I propose to be able, thanks to a 28th legal regime, to avoid changing a legal regime for the different countries as it is today. So the way to simplify for SMEs and it is not perceived as an opportunity or so for part of our people, the people who want to stay and not to want to move, because you know the the cosmopolitan part of our society is very much happy with the single market. But there’s a large part of our society less mobile with thinking that the single market is not giving them any opportunities indeed. And you do say that collectively 135 million people cat live in places which have slowly fallen behind. So that that is a key part of the report. But more broadly, you’ve been calling for a fifth freedom. So on top of the four that I mentioned in my introduction and this would be enhancing research, innovation and education. Why do you want to do that? And do you think this fifth freedom is going to be formally enshrined in the single market? It is absolutely vital. You know, the lack of innovation is one of the reasons why we are lagging behind in comparison with US and other part of the world. We have a problem. There is a problem of dimension. We need to scale up is a problem of dimension of the investments on innovation is the way you saw to help more circular activity of researchers, scholars being able to work everywhere in Europe and not only going from east to West and from South to north as it is today. You know, the fifth freedom was an idea that Jacques Dolor himself, at the end of his mandate as President of the Commission launched. And my point about the fifth freedom as the boost for the future of the single market is in my view fundamental to avoid continuing lagging behind. So this is really about competition then with the big outside players, the US and China. And you use this word decochage in French, which I suppose we could say in in English would be to stall as a plane that is stalling and is no longer going forward but actually falling. That’s a pretty dramatic image is that’s what is that what’s happening in the E US competition with America in particular. Yes, it is exactly a problem of decrochage. I put as Phil Rouge of the entire report, the idea that there’s a sense of urgency. We have to be very, very fast in introducing the big changes at the European level, at the single market level. Otherwise, I say very clearly in the report, inertia means decline for Europe, for the very simple reason that on important sectors as energy, telecom and financial services, at the beginning of the journey of the single market, more than 30 years ago, Member States decided to keep these sectors at the national dimension, not to give these sectors to a European dimension, because at that time the big Member States were big enough to compete at world level. That is not the case today. You know China and I40 years ago when the journey of the single market started together, where around 4% of the world GDP. Today, together they are 25% of the world GDP Enriqueletta. How should the EU approach competition with China, particularly in the light of this visit by Xi Jinping to France on the 6th and 7th of May? It is absolutely fundamental that the European Union is united with with all the topics that are on the table in relationship with China. We risk to be divided and the division will create problems. And I think the main point is how to integrate the sectors where the single market wasn’t integrated until now, because these three sectors, services of financial markets, energy and telecom are the main sectors in terms of competitiveness. And today we are lagging behind in comparison with China and with the US exactly because on these three sectors, energy, telecom and finance, we are not integrated. We are in reality 27 markets and we are too small to compete with Chinese and Americans. So. So what would it take to integrate those markets in financial services, energy and electronic communications? It’s is it a political hurdle that at the moment seems too big to overcome. Political hardness are very big. First of all, because of the idea of national sovereignty, everyone is wishing defending his so-called national sovereignty. But in reality we have to have a European sovereignty on these topics is the only way to be economically secure. And the most important part is related to financial services, because today all what is finance is going to the US. We are too small, too fragmented and so less competitive and the integration of the financial market I propose to launch the Savings and Investments Union is the only way to finance the transition and to have private money to finance the transition, the green, digital and just transition that is the most important choice of the European Union for the years. And on the Savings and Investments Union, you say in the report the initial priority should be to mobilize private capital. I’d like to play you a quick sand bite of Philip Lamberts, who’s head of the Greens in the European Parliament, because I asked him about this, whether it was naive to expect the private sector to get involved. As much as people like you would like it to be involved, let’s take a listen to his answer first. Without a very strong public investment, the Green Deal will not happen. And even in areas where you might think, well, it has to be private, you know, let’s talk about building renovation. Most buildings are privately owned. So you might say that’s for private investment to to to be to fund it. Yeah. But that’s a bit too easy actually. Most homeowners do not have spare capital available to pay for refurbishment of their houses, which means that actually if you really want the renovation wave for a a category of households without public investment, it won’t happen. Obviously he’s talking about the green and energy transitions there, but I think it’s a relevant point to all the transformations that we’ve been talking about. Without a massive investment of public money, then all these big changes won’t happen. What do you think? I agree with Philip Lambert’s, but I tell you why my proposal is a mix of private and public funding. Because in my proposal I to put together the two way to finance private and public. Because I know very well, after you mentioned my trip around Europe, all the European countries, 65 cities, all the governments, I had the feeling that there’s one part of the European leaders and European governments, they don’t want to put public money in European fiscal capacity as we did with next generation EU. And these countries are the Nordic countries, Germany, the Netherlands. It is clear that to convince them to open at the opportunity to have a European fiscal capacity, the only way is to have also a private part of financing. So my proposal is a compromise proposal, the only proposal in my view that can be concretely real feasible in the European Council meeting, where you have to find unanimity of the 27 countries, otherwise it would be impossible to have a solution. We’re running out of time. But just briefly, if you could you, you’ve said that you want these issues, these reforms of the single market that you’re proposing, for example, the savings and investment union and and so forth. You want those to be part of the debate in the European election campaign. Do you think people are interested or listening to those things? I think there’s a big interest for two main reasons. The first reason is about the peripheric areas of our Europe that are losing services of interest, general interest, and the report talks about that and about the way in which we can finance the transition. People are asking who will pay for these big costs for the transition and farmers were in the streets to protest on that. So my report is exactly to give some answers to these big questions. And I hope the discussion about this point can be deep and very wide. Thank you so much for your time. Emery Coletta, former Prime Minister of Italy and president of the Jacques de la Institute. You’ve been watching Talking Europe.