Enrico Letta, former prime minister of Italy and president of the Jacques Delors Institute, told UnionPress that Europe's inability to provide a truly unified market is forcing its most promising companies to be swallowed by rivals in the United States and China.

In an exclusive interview, Letta, who also serves as dean of the IE School of Politics, Economics and Global Affairs, warned that the scale‑up phase, the point at which start‑ups either grow into global players or disappear, is now a death‑trap for many European firms. "If we keep a market divided along 27 national lines, we will keep losing scale‑ups," he said.

Single market as the missing growth engine

Letta's remarks stem from a report released earlier this year by his Brussels‑based think‑tank, the Jacques Delors Institute. The paper, which has informed much of the European Commission's recent single‑market agenda, argues that size matters more than ever in sectors such as electric vehicles, advanced machinery, health and biotechnology.

"China and the United States have the advantage of operating in markets that are already integrated at a national level," Letta explained. "European companies have to compete on a fragmented patchwork, which makes it far harder to achieve the economies of scale needed for global competition."

The report labels the current competitive pressure as "China Shock 2.0", a nod to the rapid technological leap China has made since the original "China Shock" of the early 2000s. Letta said the Chinese state's heavy investment in health‑tech and biotech is now reshaping those sectors, leaving European firms vulnerable.

Why scale‑ups are fleeing

According to Letta, the primary lure for European entrepreneurs is access to a market the size of the United States or China. "In the United States, a start‑up can tap into a market of 330 million consumers without facing 27 different regulatory regimes," he noted. "China offers massive state‑backed funding and a domestic market of over a billion people, plus a policy environment that favours rapid scaling."

European firms, by contrast, often have to navigate 27 sets of tax rules, labour laws and product standards before they can sell across the continent. The resulting cost and administrative burden, Letta argued, pushes many to seek growth elsewhere or accept acquisition offers from foreign players.

He cited recent high‑profile takeovers in the health sector, where US and Chinese investors have bought out promising European biotech start‑ups, as evidence that the trend is accelerating.

Political will and upcoming deadlines

Letta believes the EU has a narrow window to act. The European Commission's "28th regime", a proposal for a single set of business rules across the bloc, is slated for adoption before the end of the year. He expressed confidence that member states will rally around the competitiveness agenda, even as they clash on migration, budgetary matters and the location of supervisory bodies.

"We already see broad agreement on the need for a single EU‑wide business code," Letta said. "The remaining disputes are largely political and emotional, not about the economics of a single market."

He pointed to the upcoming State of the Union address by European Commission President Ursula von der Leyen on 16 September as a crucial moment. "If the Commission can present a clear trajectory that strengthens the single market, it will signal to investors that Europe is serious about protecting its own scale‑ups," Letta added.

Union and industry reactions

European trade unions have welcomed the call for deeper integration, arguing that a larger market could also improve workers' rights by setting EU‑wide standards. The European Trade Union Confederation (ETUC) said a unified market would help prevent a race to the bottom on wages and conditions.

Industry bodies, however, warned that simply harmonising rules would not be enough. The European Round Table of Industrialists (ERT) stressed the need for accompanying measures such as greater access to venture capital, a more flexible labour market for high‑skill talent and a coordinated EU‑wide research agenda.

Letta acknowledged these points, noting that market integration must be paired with "a robust innovation ecosystem, better financing, and skills development" to truly enable European firms to compete at scale.

What lies ahead

If the EU manages to adopt the 28th regime and push forward with deeper market integration, Letta believes Europe could retain a larger share of its own high‑tech firms and reduce dependence on foreign capital. "The alternative is a Europe that watches its most promising companies disappear across the Atlantic or into Beijing," he warned.

Critics argue that the EU's bureaucratic machinery may struggle to deliver the needed reforms quickly enough, especially as global competition intensifies. Nonetheless, Letta's message is clear: without a truly single market, Europe risks losing the next generation of innovators to rivals that already enjoy the benefits of scale.