In February, while former Italian Prime Minister Enrico Letta was discussing his idea for "one market" for the European Union at an informal retreat of European leaders at Alden Biesen castle in Belgium, a slide was projected behind him. It showed a three-column matrix summarizing the pillars that, if integrated, would allow the EU to overcome its long-lasting market fragmentation: the financial sector, energy and connectivity.
"We must be obsessed with completing in the next three years what we didn’t achieve in the last 35: the single market," Letta said in an exclusive interview with The Parliament.
On March 19, the European Council adopted many of Letta's recommendations, launching a new agenda called "One Europe, One Market." The plan aims to boost the EU's competitiveness and strengthen European strategic autonomy and economic security by harmonizing national rules in areas including company law and the mutual recognition of professional titles by the end of 2027 at the latest.
This article is part of The Parliament's special policy report "Infrastructure for a connected Europe."
For Letta, EU competitiveness has primarily been constrained by the fragmentation of Europe's financial markets. An integrated capital market — in the shape of a proposed Savings and Investments Union — would allow the EU to mobilize greater investments.
This is urgently needed, Letta argued, given public expenditure in member states has been constrained by high public debt. At the same time, he said that the resources in the European Commission's proposal for the EU's next long-term budget are "not sufficient" to finance the reforms needed to complete the single market.
This interview has been edited for length and clarity.
At their latest meeting, EU leaders endorsed your approach to completing the single market. What do you make of the Council’s conclusions?
The EU is going in the right direction. The fragmentation of financial markets, energy and connectivity is a very hard blow to European competitiveness. Such fragmentation, [particularly in] the financial markets, prevents Europe from competing with the Chinese and Americans. The most important thing is that the 27 [EU leaders] have become aware that this is the main problem, and that it is necessary to raise the threshold. The objective now is to apply One Europe, One Market as quickly as possible.
The EU must add three horizontal enablers, the drivers of this integration: the fifth freedom [of movement of research, innovation, knowledge and education], the introduction of the 28th regime and the freedom to stay for social and territorial cohesion.
We must be obsessed with completing in the next three years what we didn’t achieve in the last 35: the single market.
Can the funds allocated under the proposed Multiannual Financial Framework realistically support the investment required to implement the One Europe, One Market plan?
The resources of the new MFF are not sufficient. We are talking about figures that are not large enough to accompany major transitions, such as sustaining companies and consumers or helping farmers implement the Green Deal. These big European plans must be managed outside the MFF, through extraordinary funding.
It is a very structural issue, which is why I have put forward the idea of the Savings and Investments Union. European savings are sitting idle and are not providing positive returns to savers. The idea is to transform them into investment. Another important tool is [leveraging] pension funds. In Europe, there are virtuous examples such as Sweden, Denmark and the Netherlands.
Higher investments are needed to boost critical EU projects — above all, integrating transport infrastructure and reinforcing the European energy grid. What is their current state of development across the continent?
The EU must create connections between existing infrastructure. Many European capitals are not connected to each other, and people often choose to fly from one city to another instead of taking the train, which is total madness.
This issue of interconnections is fundamental and underpins both transport and energy infrastructure. The European system for the interconnection of energy infrastructure is not sufficient today and it must shift to European-level decision-making. If it is left to the bilateral choices of two neighboring countries, we all know how it's going to end: everything is based on their interests, and the other European member states are not considered.
From 2022 to 2024, 80% of European defense procurement spending went to non-EU suppliers. How can the EU redirect these funds to build out its own defense industry?
We need to buy European, especially when it comes to defense and security. That means the EU needs to integrate its defense industry. The fragmentation of defense systems and the defense industry represents one of the main problems for Europe and its competitiveness today. I consider it a suicide to spend these hundreds of billions of euros on security to create jobs in the United States, South Korea or even China.
I spoke about it at the European Council retreat on February 12. This is the point on which the ability of the European leaders to rise to the challenge will be tested, because they must come together. For instance, I saw the latest French-Italian agreement [between aerospace groups Leonardo, Thales and Airbus to build a joint satellite manufacturing company] as a very positive development.
French President Emmanuel Macron recently announced that France is strengthening nuclear cooperation with European partners to foster EU deterrence. Do you see it as a political gesture or a substantive change?
I see it positively. In any case, regardless of how it is interpreted, sharing nuclear [technology] is the only way forward for Europe. The sooner this sharing happens, the better — but it will come anyway, because the world we are entering is moving toward a regionalization of challenges and security tools. Our region is Europe, and within the EU the country that has this instrument at its disposal is France, alongside the United Kingdom outside the EU. I hope these steps will take place in an even more concrete way.
This reflects a shift toward a pragmatic European foreign policy invoked by European Commission President Ursula von der Leyen. Can this call for a more realistic approach coexist with European multilateralism?
These needs should be held together. A stronger European security profile and a united response capacity can be compatible with a necessary level of economic, commercial and financial openness. Our economy cannot be protectionist: structurally, the EU must remain part of an open system. That's why I found recent developments such as [the trade agreement] with India, as well as Mercosur, significant. Despite the great difficulties, Europe is on the right track.
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