The same week that the European Commission announced its adoption of a comprehensive package of measures designed to remove barriers and unlock the full potential of the EU single market for financial services, chief executives of large European companies were downbeat on Europe’s economic prospects – and more bullish about investing in the US.

The survey of the European Round Table for Industry, which comprises about 60 CEOs and chairs of companies such as ASML, BASF and Vodafone, showed respondents believe the business case for investing in Europe has weakened further, and that the European Union is too slow to implement required reforms. Many of which were highlighted in Mario Draghi, a former ECB president and Italian premier, widely acclaimed report last year.

Thirty eight percent of respondents said they planned to invest less in Europe than they would have six months earlier or had put decisions on hold, while just 8% said their European investments would increase. In contrast, 45% said they intended to invest more in the US in a continuation of a trend that has seen many of Europe’s most exciting starts ups turn to US venture capital and larger companies like Spotify to list in the US too.

Too little too late?

It makes the European Commission recent adoption of a comprehensive package of measures designed to remove barriers and unlock the full potential of the EU single market for financial services, timelier than ever.

The latest initiative is a central component of the Savings and Investments Union (SIU) strategy, which aims to create a more integrated, efficient, and competitive financial system. It also seeks to channel the EU’s vast savings pool into productive investment by harmonising supervision, regulation, like insolvency laws, and establishing the banking union. Simplified access to capital markets reduces costs and makes the markets more appealing for investors and companies across all Member States, irrespective of size.

“For too long, Europe has tolerated a level of fragmentation that holds back our economy. Today we are making a deliberate choice to change course. By building a real Single Financial Market, we will give people better opportunities to grow their wealth, and we unlock stronger financing for Europe’s priorities. Market integration is not a technical exercise — it is a political imperative for Europe’s prosperity and global relevance,” said Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union.

Proposed measures

The package aims to eliminate barriers to integration in trading, post-trading and asset management. It seeks to enable market participants to operate more seamlessly across Member States, thus reducing cost differences between domestic and cross-border transactions. Proposed measures include enhancing passporting opportunities for Regulated Markets (RMs) and Central Securities Depositories (CSDs), introducing ‘Pan-European Market Operator’ (PEMO) status for operators of trading venues to streamline corporate structures and licenses into a single entity or single license format, and streamlining the cross-border distribution of investment funds (UCITS and AIFs) in the Union.

Facilitating innovation

The package also focuses on removing regulatory barriers to innovation related to distributed ledger technology (DLT). It adapts the regulatory framework to support these technologies and amends the DLT Pilot Regulation (DLTPR) to relax limits, increase proportionality and flexibility, and provide legal certainty, thus encouraging the adoption of new technologies in the financial sector.

Streamlining and enhancing supervision

Improvements to the supervisory framework are closely linked to the removal of regulatory barriers. The Commission wants to address inconsistencies and complexities from fragmented national supervisory approaches, making supervision more effective and conducive to cross-border activities, while being responsive to emerging risks. This includes transferring direct supervisory competences over significant market infrastructures such as certain trading venues, Central Counterparties (CCPs), CSDs, and all Crypto-Asset Service Providers (CASPs) to the European Securities and Markets Authority (ESMA) and enhancing ESMA’s coordination role for the asset management sector.

As seen in previous SIU measures, the package also aims to simplify the capital markets framework further by converting directives into regulations, streamlining level 2 empowerments, and reducing national options and discretions.

Next steps

The proposals must now be negotiated and approved by the European Parliament and the Council. The Commission says it is dedicated to collaborating closely with the European Parliament, Member States, and other stakeholders to ensure the swift and effective implementation of these measures but for European businesses, the finishing line still feels a long way off.