On 18 April 2024, the former Secretary of Italy’s Council of Ministers, Enrico Letta, presented his much-awaited report on the future of the single market, titled ‘Much more than a market’. In it, he warns that the EU is ‘lagging behind’ other markets: its economy is growing at a slower pace and it is less competitive. He notes that, over the past thirty years, GDP per capita has increased by almost 60% in the US, as compared to just 30% in Europe (an observation echoed in Le Monde: ‘Latest forecasts from Brussels confirm EU failing to keep up’ – article in French).

He identifies a number of reasons for this, pointing in particular to the ‘daunting complexity’ of the fragmented market landscape within the EU. Cultivating a single market in which European businesses can thrive has become an economic and strategic imperative and is essential to the EU’s sovereignty. With this in mind, Letta backs the Association Henri Capitant’s proposal, supported by the Fondation pour le droit continental, for a European Code of Business Law.

‘A European Code of Business Law would be a transformative step towards a more unified Single Market, providing businesses with a 28th regime to operate within the Single Market. It would directly address the current patchwork of national regulations, acting as a key to unlock the full potential of free movement within the EU’, writes Letta.

The report draws in particular on the 2024 Single Market Survey conducted by Eurochambres (an association of European chambers of commerce and industry). Among the business owners and entrepreneurs surveyed, 68% cited the different contractual or legal practices within the single market as an ‘important’ obstacle to trade.

Despite 19 Member States having successfully adopted a single currency, harmonising European business law remains an ongoing challenge, with disparate national legislation still constituting the primary source of law in this area. All too often, this leads to competing laws within the Union: the opposite of what is needed to support a unified trading area with the critical mass to hold its own against other major global markets.

Another issue is that EU law is not always easy to access and understand. Although the vast majority of Member States codify their laws, ensuring citizens can readily find and get to grips with them, the EU institutions have generally failed to follow this tradition, resulting in a complex web of EU law.

Two things need to happen if we are to untangle this web.

In the short term, existing EU law should be codified to provide EU citizens with easy access. This would have the added benefit of organising legislation by area of law, according to a logical plan. The Romans were the first to introduce codification, with the Codex Theodosianus and later the Codex Justinianus, and it has since become the norm within the EU: 24 of its 27 Member States rely on codified law. The upcoming EU elections could represent the perfect opportunity to get the ball rolling (again) on codifying EU law. Especially seeing as the Member States have already agreed to the principle of doing so – see para. 35 of the Interinstitutional Agreement on better law-making (europa.eu), which states that ‘legislation will be updated and condensed inter alia through the repeal of acts which are no longer applied and through the codification or recasting of other acts.’

In the medium term, as proposed by Letta in his report, the EU should prioritize adopting a European Code of Business Law. This would take integration further – beyond merely codifying existing law – helping the single market live up to its promise. The proposed Code would typically offer an optional 28th regime, while also elucidating EU competition law (mandatory, for its part). This could make domestic and EU-wide expansion more appealing to start-ups, many of which currently prefer to set up shop in the US where the market is larger.

It would be just what EU businesses have been waiting for – and the Association Henri Capitant has already come up with a draft version (Draft European Code of Business Law – available in French). This draft covers a broad range of topics: corporate forms (with the simplified European company, or Societas Europa), European loans, European guarantees (sureties and pledges), Euro-bonds, Europe-wide insurance cover and a European tax regime designed to support innovative start-ups.

A European Code of Business Law would help simplify the current patchwork of legislation, build economic sovereignty and boost competitiveness, allowing French SMEs and entrepreneurs to tap into the full potential of the EU single market with its 450 million citizens.

Looking ahead, we are now turning our attention to the report due at the end of June from Mario Draghi, former European Central Bank (ECB) President, on how to make Europe more competitive.