‘Simplifying Single Market rules’ is the new mantra in Brussels – but whose interests will it truly serve? And what does it mean for the circular economy?
The push for deeper harmonisation across the European Union, to ensure the uninterrupted flow of goods and services, has been gaining momentum in Brussels, culminating with the release of a new Single Market Strategy in May.
Bringing together 450 million people and 26 million businesses across 30 countries, the European Single Market holds significant potential. But the political drive to eliminate trade barriers through ‘simplification’ carries both opportunities and risks for the transition to a truly circular economy.
Looking at the freshly published Single Market strategy, a few key questions remain unanswered:
- Under which conditions do greater harmonisation and a more integrated market truly serve European citizens, workers, businesses and the environment?
- And who really benefits when laws are weakened in the name of ‘simplification’: the incumbents benefiting from the status quo of a wasteful linear economy, or the multitude of innovative circular business models that need policy support to scale and thrive?
To begin with the obvious: harmonisation within the Single Market can be a powerful catalyst for the circular economy transition. Common rules – such as on eco-design, green public procurement, reuse and recyclability – have been shown to boost efficiency, drive innovation, stimulate lead markets and reduce market fragmentation, thus supporting sustainable businesses throughout the bloc and lowering costs. By fostering upward competition on sustainable product design, the Eco-design for Sustainable Products Regulation stands out as the clearest example of how ambitious EU-wide standards can drive a race to the top, combining environmental gains with strengthened long-term competitiveness.
But there’s a flip side to making harmonisation the top priority. The legitimate pursuit of market integrity is sometimes abused to excessively restrict Member States’ right to introduce measures that go beyond the minimum requirements set by the EU. To drive a race to the top on sustainable consumption and production, national and, where relevant, local authorities need to retain the mandate to implement bold forward-thinking policies that protect our health and the environment. These additional policies are often essential to meet EU targets on waste prevention, reuse and waste management. They include, for example, targeted incentives, national circular taxes, and other regulatory tools tailored to local contexts.
The value of the EU Single Market lies in its high social, labour, environmental, and consumer protection standards, which protect citizens and businesses in an increasingly challenging global context. Efforts to deepen and strengthen the Single Market must therefore never compromise the environmental and social standards that underpin it.
EU packaging rules: a cautionary tale
The lobbying on the new EU rules to reduce packaging waste showed how concerns about Single Market integrity can be exploited to slow down environmental protection. Some single-use plastic industries have actively tried to stop national efforts to cut waste and pollution, via both lobbying and legal challenges, using the argument that diverging national initiatives would hurt trade of packaging and packaged goods within the EU. These attempts exposed a reflex to negatively frame ambitious national circular economy policies as ’gold-plating’ or ‘unjustified disruptions’ to the Single Market.
But the truth is, the EU rules on waste prevention and reuse included in the new packaging regulation, finalised in January 2025, fall short of what is needed to achieve the binding 5% reduction of packaging waste generation by 2030. To meet their target, EU countries will need to go further with their own national measures. This shows that the Single Market must not be used as an excuse to excessively restrict sustainable action at national and local level.
The Single Market should raise the bar – not lower it
The EU Single Market is important, but it should never come at the cost of health, the environment, or the public good. As such, the frictionless movement of goods and services across borders always needs to be balanced with other fundamental EU values, including the protection of people and the planet. Harmonising rules should not mean settling for the weakest standards.
If we want a truly circular economy, we need a profound transformation of our production and consumption systems. And this doesn’t require less regulation, but smarter, clearer, and bolder rules to level the playing field for circular business models. Circular businesses often struggle to scale because the current system still rewards cheaper, wasteful practices that hide their real environmental and social costs. True simplification means creating a supportive and predictable regulatory framework. The ongoing dismantling of existing rules under the misleading banners of ‘cutting red tape’ or ‘regulatory pause’ does exactly the opposite.
A Circular Economy Act for a race to the top
The Single Market is a powerful instrument, but it is not an end in itself. Its future hinges on its credibility and, most importantly, on who it is designed to serve. That credibility depends on more than just the uninterrupted flow of goods and services: it also relies on high social, environmental, and consumer protection standards that benefit both people and our planet.
Getting the upcoming Circular Economy Act right will require striking the right balance: besides harmonising existing rules, we need to leave the linear economy model behind and engage all actors, including national and local authorities, in a race to the top for prevention, reuse, repair and resource-saving activities.
The EU must harness the potential of the Single Market, fostering shared prosperity within planetary boundaries and building long-term economic resilience – not a regulatory race to the bottom driven by short-term reduction in compliance costs for industry laggards.