For years, the European economy has faced a well-known obstacle: the gradual loss of competitiveness resulting from regulatory fragmentation, growing bureaucracy, and the overlap between national and European rules. Despite successive reforms, the Single Market remains far from functioning as a truly integrated market. Companies face 27 distinct legal regimes, high administrative costs, and lengthy procedures. Paradoxically, part of this burden stems from European policies designed to harmonize but which have ultimately created additional layers of complexity.

The proposal for a 28th State, or 28th Regime, does not create a new Member State of the European Union. Instead, it introduces an optional legal framework operating alongside national legislation, allowing companies to operate under a single set of European rules. The objective is to simplify cross-border activity, particularly for startups and SMEs, by reducing the complexity generated by 27 different systems.

This initiative responds to a persistent diagnosis: Europe does innovate, but not always with a value creation perspective. Legal fragmentation constrains investment and growth, as highlighted in recent reports, including Draghi’s. The new regime aims to offer a system with fast and predictable registration, framed within a broader reform that the Commission is preparing.

However, understanding this proposal requires revisiting earlier shortcomings in European integration. The Services Directive, created to remove barriers within the Single Market, fell short of its promise. National implementation maintained restrictive licensing, diverse requirements, and reserved activities. Commission evaluations revealed persistent barriers and weak coordination with other directives, preventing genuine sector liberalization. Ultimately, the governments of many European countries have sought to distort EU rules to benefit their own firms or institutions.

Climate and energy policies have also been implemented with considerable voluntarism by the EU, and at economic and competitiveness costs that face growing criticism. The creation of the Single Market does not require such policies, nor should they constitute the Union’s core purpose. There are therefore increasing demands for climate and energy ambitions to be fully assessed in terms of their economic, social, and political costs.

The GDPR, General Data Protection Regulation, likewise illustrates the limits of regulation. Its enforcement varies across Member States, and the rising number of fines highlights compliance gaps. Technological complexity, globalization, and uneven supervisory capacity sustain disparities that undermine the intended uniformity. Europe seeks to regulate a market it does not fully dominate or understand, at evident costs in terms of competitiveness and regulatory credibility.

Taken together, these examples illustrate a European paradox: ambitious policies, yet often complex in design, generate their own bureaucracy. The proliferation of rules in services, environmental, and digital domains creates regulatory layers that weigh on businesses and render the European space less competitive. Many of the burdens that are pushing companies out of the EU today result not from a lack of rules, but from their excess.

It is in this context that the 28th Regime emerges. It aims not only to overcome differences between national legal systems, but also to correct the cumulative impact of regulation that, although well intentioned, has made the economic environment less agile. By creating an optional and simplified legal shortcut, the EU acknowledges that part of today’s complexity stems from its own regulatory choices.

The 28th State seeks to balance two forces: maintaining high standards in services, climate, and data, while at the same time offering a competitive framework in a world that values speed, scale, and simplicity. The effectiveness of this solution will depend on its ability to avoid repeating the cycle of complexity it now seeks to correct. However, this solution will only be credible if accompanied by a significant regulatory pullback on the part of the Union.