Intra-EU trade volume fell for the first time in almost a decade.

Trade between EU member states has declined for the first time in nearly a decade, excluding the coronavirus pandemic, despite efforts to reboot the single market in the face of economic threats from the US and China , the Financial Times reports, citing the European Commission's draft annual report on the EU single market. The document is due to be published later this month and is subject to change, the newspaper notes.

According to new data, the share of trade between EU countries fell to 22% in 2024 , down from 23.5% the previous year. The FT notes that this is the first decline since 2016, excluding the impact of the COVID-19 pandemic .

At the same time, the period required to develop and approve pan-European product standards has increased from 3.2 years in 2023 to four years in 2024.

"The single market is our best asset to counter external pressures, and the time has come to play to its strengths," the report said.

The document notes improvements in some areas of intra-EU trade, such as the recognition of professional qualifications at EU level and the adoption of digital technologies, but notes a "clear deterioration" in others. Specifically, the EU's share of foreign direct investment has fallen by 22% over the past five years, the report states. It emphasizes that "fragmented" national legal frameworks "continue to make it more difficult and expensive to establish and operate companies across the EU, with no progress to date."

Officials interviewed by the FT suggested that the fall in trade volumes between EU countries could be linked to fluctuations in energy prices following the outbreak of hostilities in Ukraine and the imposition of sanctions against Russia.

Francesca Stevens, secretary general of the European packaging industry body Europen, says Europe is losing competitiveness largely through its own fault: “The problem is not just complex and burdensome regulation, but also a false ideological separation between competitiveness and sustainability, the mistaken belief that one can exist without the other.”

According to the BusinessEurope association, foreign markets are becoming more attractive than domestic ones for European producers.

Improving the integration of the single market is at the heart of the EU's efforts to improve the EU economy in the face of US tariffs and competition from Asian producers with lower energy and employment costs than European companies.

Last year, European Commission President Ursula von der Leyen promised to present a "roadmap" for completing the EU's single market by 2028. The strategy is expected to be completed by September, the FT reports.

The head of the EC mentioned that, according to estimates by the International Monetary Fund, internal barriers within the EU are equivalent to a tariff of 45% on goods and 110% on services. An article in the Financial Times states that, according to estimates by the European Central Bank, the hidden costs associated with intra-EU trade are equivalent to a tariff of 65% on goods and 100% on services.

One of the measures being considered in Brussels to address fragmentation in the internal market is the creation of a single supervisory authority for key EU financial infrastructure, including stock and cryptocurrency exchanges, as well as clearing houses, the FT reported in November. 

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