Finance
Germany, Italy warn of risks to EU competitiveness, call for concrete measures
Published by Global Banking and Finance Review
Posted on January 21, 2026
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 21, 2026
2 min readLast updated: January 21, 2026
Germany and Italy urge EU reforms to enhance competitiveness, warning of risks from global rivals. They propose cutting red tape and boosting market integration.
BERLIN, Jan 21 (Reuters) - Germany and Italy have warned that the European Union risks falling behind the U.S. and China unless leaders agree on reforms to revive the bloc's competitiveness, according to a policy paper prepared ahead of an informal summit next month.
The paper, which positions Germany and Italy as Europe's leading industrial powers, calls for sweeping changes to cut red tape, accelerate permit approvals and enhance Europe's single market.
The document, reviewed by Reuters, warns that Europe's living standards and sovereignty are at stake, with many new competitors increasing their global influence.
"Continuing on the current path is not an option. Europe must act now," the joint statement said.
The policy paper was drawn up for the Leaders' Retreat in Alden Biesen in Belgium on February 12, where German Chancellor Friedrich Merz and Italian Prime Minister Giorgia Meloni will press for a coordinated EU strategy to support businesses and attract investment.
The paper urges leaders to use the meeting and the European Council gathering in March to agree upon concrete commitments.
BARRIERS AND BUREAUCRACY UNDER FIRE
The paper cites International Monetary Fund figures showing EU internal barriers amount to internal tariffs of as much as 44% for trade in goods and more than 110% for services trade. It calls for an "ambitious ease of regulatory burden."
It proposes fast-track approval procedures, routine repeals of outdated laws and stricter scrutiny of new rules, with regular reports to EU leaders on progress.
Germany and Italy also advocate deeper integration in services, energy, capital markets and digital industries, a pan-European stock exchange and revised merger rules to help companies compete globally.
The paper urges the EU to speed up free trade talks with partners including India, Australia, the UAE and ASEAN, while warning Europe is ready to use defensive trade tools if necessary.
(Reporting by Andreas Rinke; Writing by Linda Pasquini; Editing by Thomas Derpinghaus)
Competitiveness refers to the ability of a country or region to attract investment and maintain economic growth in the face of global competition.
Red tape refers to excessive regulation or rigid conformity to formal rules that can hinder decision-making and slow down processes.
A single market is a type of trade bloc that allows goods, services, capital, and labor to move freely among member countries.
Internal barriers are obstacles within a country or region that restrict trade and economic activity, such as tariffs and regulatory hurdles.
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