Allied For Startups' Analysis of the European Commission's Strategy For Making the Single Market Simple, Seamless and Strong

The European Commission’s new strategy, “The Single Market: our European home market in an uncertain world”, aims to revitalise and modernise the EU Single Market. It is the Commission response to rising global challenges, from geopolitical tensions to economic instability and growing competition from the U.S. and China.

The Commission frames the Single Market as both the EU’s economic engine and a buffer against external shocks. Yet it acknowledges that fragmentation, particularly in services, digital integration, and cross-border operations, still holds it back. This is costing the European economy up towards EUR 1.3 trillion per year. 

To address this, the Strategy revolves around eight main pillars, each addressing a major area of reform:

1. Fewer Barriers: Identifies and commits to an effort to eliminate ten most harmful Single Market barriers, including:
   1. Overly complex EU rules
   2. Lack of Single Market ownership by Member States
   3. Complicated business establishment (28th regime)
   4. Delays in qualification recognition
   5. Slow standard-setting
   6. Fragmented labelling and waste rules
   7. Outdated product regulations
   8. Diverging services regulation
   9. Burdensome posting procedures
   10. Territorial supply constraints

2. More Ambition: Revitalising the services sector, which remains significantly less integrated than the market for goods, recognising its critical role in the EU economy.

3. More SME Focus: Acknowledges that small and medium-sized enterprises (SMEs) and small mid-caps (SMCs) are particularly burdened by regulatory fragmentation and bureaucracy. The strategy proposes actions to: 
   1. Streamline and simplify regulatory obligations
   2. Improve market access 
   3. Tailor regulation to the needs of growth-stage firms (e.g. through the introduction of a small mid-cap category)
   4. Launch a dedicated Startup and Scale-up Strategy to support innovative and high-growth businesses
4. More Effective Digitalisation: Seeks to modernise and harmonise administrative processes across the EU to enhance efficiency and reduce burdens. Key initiatives include:
   1. Moving from a paper-based to a data-based system 
   2. Introducing the Digital Product Passport (DPP)
   3. Implementing the “once-only” principle
   4. Advancing paperless mobility and enabling digital public procurement
5. More Simplification: Simplification via the Single Market Omnibus – a legislative package, targeted for mid-caps, that bundles immediate, high-impact actions to: 
   1. Reduce administrative burdens to lower costs and boost productivity
   2. Support mid-cap companies 
   3. Streamline standards, product regulations, and service provision processes
6. More Effective Implementation and Enforcement: Focuses on improving rule enforcement, including the potential creation of an EU Market Surveillance Authority and more systematic infringement proceedings to uphold Single Market rules.
7. More Ownership by Member States: Proposes appointment of Single Market Sherpas in national governments to coordinate reforms and ensure barrier prevention at the national level.
8. More Synergy: Aims to better link EU spending with regulatory reform efforts, including public procurement and cohesion funds that support value chains and business cases.

Relevant for startups:

• A new European 28th regime, set for Q1 2026, will create a fully digital legal framework for businesses to establish and operate EU-wide, with a fast-track process allowing company registration potentially within 48 hours. This marks a first step toward a broader European Code of Business Law, designed to simplify scaling – especially for startups.
• The EU Startup and Scale-up Strategy: Explicitly promised as a follow-up to the Single Market Strategy, presented later this month. This should provide a platform to address the more specific needs of innovative and fast-growing firms that are only partially covered in the current document.
• The Single Market Omnibus Package targets regulatory burdens on small mid-caps, extending some SME exemptions to support scale-ups. Key changes include scrapping paper-based product compliance requirements and addressing barriers caused by missing technical standards.
• To improve talent mobility, the strategy proposes expanding Common Training Frameworks. By Q4 2026, the Commission aims to introduce EU-wide rules to expand Common Training Frameworks and recognise third-country qualifications. Member States are also encouraged to ease admin for short-term postings of skilled professionals.
• In public procurement, the Commission plans a full revision of the framework to reduce complexity, encourage sustainability and resilience, and prioritise European providers. This includes simplified, harmonised rules for defence and security procurement by Q4 2026.

Conclusion: 

Overall, the strategy is good news for startups and aligns with many of the priorities AFS and our members have long championed, including reducing administrative burdens, improving talent mobility, and simplifying public procurement. We are particularly pleased to see the Commission’s intention to advance the 28th regime, though we are curious by the specific target of a 48-hour company registration, and we look forward to understanding the rationale behind this timeframe, and why not making it shorter. 

While many of the proposed initiatives will support startup growth, the strategy prioritised mid-caps over startups. This is disappointing given that the Conclusions of the European Council from April 2024, which called for this Strategy, explicitly stated that special attention should be given to “SMEs and start-ups.” AFS highlighted this in our response to the Single Market consultation.  That said, we take note that the Commission will present a dedicated EU Startup and Scale-up Strategy later this month and look forward to assessing how it complements the Single Market Strategy. 

As startups are particularly affected by Single Market fragmentation due to their unique, high-growth nature, it is critical that all EU strategies, addressing fragmentation, take their needs and experiences. Overlooking them is a missed opportunity, especially when the EU must double down on homegrown innovation and global competitiveness.

To conclude, while AFS welcomes the overall direction of the Strategy, we are eager to see how the Startup and Scale-up Strategy will build on the Single Market Strategy to create a truly forward-looking Single Market, one that prioritises the needs of the very businesses driving Europe’s next wave of innovation.