Von der Leyen Future Economic Legacy

In her State of the Union address, Commission President Ursula von der Leyen touched on nearly every aspect of European life, including the economy. She spoke about housing shortages, energy bills, food prices, and even small electric cars. She also reminded MEPs of the institution she leads, making sure to mention competitiveness.

If her time as President of the European Commission will be judged by what she has done for Europe’s economy, the verdict is far from flattering. The Commission has taken some steps in the right direction, which von der Leyen was quick to point out: pushing for joint purchases of raw materials, creating support schemes for AI gigafactories, and promising to cut red tape.

However, the European economy remains indifferent. During the last quarter, the Euro area grew by 0.1 percent, seven times slower than the US. Germany, once the engine of EU economic growth, is kaput, while France remains on strike.

Europe’s biggest hurdle for growth was recognised by von der Leyen herself. In her speech, she acknowledged one of the EU’s deepest, most persistent flaws: the absence of a genuine single market for services. For decades, Europe has promised one. In practice, it barely exists. Goods flow freely across borders, but services remain stuck in national silos.

The European Commission president knew her numbers. Citing the IMF, she told the audience that if barriers holding back services trade inside Europe were a tariff, they would equal a staggering 110 percent.

Von der Leyen’s answer is to present a “Single Market Roadmap” running to 2028, including services, capital, energy, telecoms and innovation. Worthy, perhaps. Urgent, hardly. A roadmap is not exactly a rallying cry, and 2028 feels a lifetime away – by then the Olympic torch, and perhaps some EU businesses, will already have moved to Los Angeles.

The real cost of an incomplete single market for services is far higher than is commonly understood. It is no longer just about missed opportunities for accountants or lorry drivers willing to offer their services in another EU country. It is first and foremost about digital services and the future of the EU economy. Without a true single market for services, Europe’s digital economy will be little more than a shadow of what it could be.

The reason is simple: digital firms thrive on scale. A US or Chinese start-up can instantly reach hundreds of millions of consumers. A European entrepreneur wanting to use big data to sell services across the EU must wrestle with 27 different sets of rules, licences and regulators.

Even though digital services are expensive to build in the first place, they are cheap to replicate, with each new customer costing almost nothing. That means success depends on rapid expansion. An idea may be global by design, but without a large market, it goes nowhere. This explains why European digital firms are a fraction of their American peers.

In our latest paper, we estimated the cost of the lack of scale in Europe. Fragmented markets in services depress any technology uptake of Artificial Intelligence, big data, or cloud computing, reducing Europe’s value added by around 1.3 percent. That may sound small, but on the EU’s private-sector output of €10 trillion, it means €131 billion lost every year, or about €300,000 per European company that could be turned into innovation and jobs.

With digital technologies such as Artificial Intelligence reshaping every industry, Europe desperately needs a single market for services that offer new and established European companies the incentives to invest, scale up and compete with US and Chinese companies.

Von der Leyen’s economic legacy will be judged not by roadmaps but by results. If Europe still lacks a single market for services in time for the next Olympics in Los Angeles, von der Leyen will be remembered as the European Commission president who trained hard but never reached the starting line. If she acts now, the prize is for her to take. Otherwise, Europe will continue its path towards economic irrelevance.