Is Member States’ FOMO killing EU’s Single Market?

By José María Roldán Alegre, Senior Advisor Kreab

FOMO (Fear of Missing out) is a term that has become familiar in recent decades, typically describing personal experiences of individuals. It refers to the “fear of not being included in something (such as an interesting or enjoyable activity) that others are experiencing.” However, in this context, I am applying the concept differently-to countries. Specifically, I use it as a potential explanation for the contradiction between Member States’ rhetorical support for deepening the Single Market and their lack of action- or worse, actions that undermine the Single Market.

The world is becoming more inward-looking

Brexit was initially seen as a serious but isolated event. It was significant because the EU lost a major, influential Member State that had long championed the Single Market. It was also a setback for globalization, as the UK—a country that had led economic and financial globalization since the 19th century—took a step backwards, looking for greater autonomy in decision-making.

To some extent, it was also perceived as a one-off event, originating from the very complex relationship of the UK and the EU since its start. Let’s not forget that Churchill defended the need of Europe’s integration, but seeing it as an external body, different from the UK (in his famous 1946 Zurich speech were he defended the Creation of a United States of Europe, he clearly states that “Great Britain, the British Commonwealth of Nations, mighty America and I trust Soviet Russia – for then indeed all would be well – must be the friends and sponsors of the new Europe and must champion its right to live and shine”).

But a few years later, we must accept that, rather than a one-off event, it was a precursor of an international political climate not precisely favorable to economic and financial globalization. The events in the US, another nation that championed globalization during the XX century, are a clear indication of the reversal of trends. And in the EU, the emergence of new political parties that champion a retreat from the economic and financial integration represented by the EU is a reminder that the global trends are neither one off events or external phenomena. On the contrary, the world, or more precisely, the countries that encompass the world, are becoming more inward looking and selfish.

The silver bullet is the EU Single Market

The EU has an immense advantage in the context of the current deglobalization process. The EU is home to the second biggest market in the world (the ranking being the US, the EU and China): 450 million citizens, living in one of the wealthiest parts of the world. And although EU Member States are all open economies (measured as exports and imports over GDP), the EU as a whole is not so dependent on international trade.

The other element why the Single Market can save the EU from the turbulences afflicting world trade is quite paradoxical: despite its name, the EU Single Market is not, by far, single. In fact, the Draghi report has exposed the stark reality: the administrative and regulatory barriers imposed by Member States to Single Market are equivalent to a 45% for goods and to 110% for services[1]. For quite a few Member States, it is easier to export services to third countries outside the EU than to a fellow Member State within the so-called Single Market. And this may well explain by the EU has since 2008 a Current Account Surplus (thus exporting financing to third countries outside the EU and accumulating foreign assets).

But here lies the paradox. Precisely, since EU members have been doing such a poor job with the Single Market, we can use it as an additional source of growth. The potential upside in terms of growth and jobs generated by the completion of the Single Market is huge.

Member States FOMO is impeding progress

The diagnostic is clear: if MS do what needs to be done around deepening the Single Market, the EU will weather the storm afflicting the world. And yet, despite the clear path forward, there seems to be little, or no love, for the agenda of deepening integration within the EU.

Take the example of financial services. We made some progress in the integration of bank supervision (and resolution) around the ECB. But after more than a decade, both the Banking Union and the Capital Markets Union are far from complete. Little to no progress has been achieved, despite the efforts of the European Commission and a European Parliament that was extremely supportive of the initiatives. And the new projects aimed at reviving it, such as the new Savings and Investment Union (SIU) launched by the Commission, are bound to fail if Member States do not change tack. We should judge Member States for what they do, not for their general rhetorics of support: reversing the phrase, Member States should do what they say and stop marketing what they never do.

But why all this reluctance to make progress? Where is this all coming from? Because we need to accept that Member States’ views reflect also the political views of EU citizens.

One reason why we see this reluctance may be FOMO: the fear that in this completion of the Single Market they may lose in certain areas. For instance, if the banking sector starts to integrate cross border, some Member States may see that most, if not all of its banks, will be part of a bigger international, pan European banking group. In fact, this is almost inevitable: greater integration will mean an increased size of EU companies. If that fear matters, we should recognize it is a real one.

But what can we do to appease these legitimate fears? Can we reduce FOMO and make progress in the completion of the Single Market? The first strategy would be to help countries, and voters, see the bigger picture. Individual Member States may not win in all sectors being integrated, but for sure they will win, on average, in terms of growth, jobs, wealth. It is the average of the outcome distribution that matters, not the negative tail of the distribution. In fact, this is the rationale behind the European integration project!

Another area where more education would help is the defense of markets as the ultimate tool to allocate scarce resources where they will be more productive. The problem we must confront is the increasing lack of trust in free markets. The shift of the political climate on international trade is progressing in parallel to an increasing mistrust in markets. We are seeing public intervention by countries in areas that were not subject to it just a decade ago. And this illiberal, mercantilist views are also present, albeit in more subtle ways, in countries such as the US, where the President is coming from the private sector.

In the end, our politicians must decide on what is the most effective way to retain their electorates: an old fashion rhetoric on national champions or a better outcome in terms of growth, job creation and wealth. I may not be representative of the EU median voter, but my ballot goes without doubt for the second option. And I am sure I am not alone.

[1] “Forget the US- Europe has successfully put tariffs on itself,” Mario Draghi, Financial Times 14/2/2025.