One obvious move is to dust off “services passports”. These would allow firms licensed to serve customers in one member state to do so across the EU. The bloc is pushing a passporting proposal for telecoms services, many of which are regulated at the national level. Another policy with potential is to stop countries gold-plating EU rules, which often set bloc-wide goals but leave governments to fill in the details. Especially when it comes to the single market, the commission is determined, wherever legally and politically possible, to write exhaustive regulations that leave no room for national glitter. A more ambitious idea is the creation of truly pan-European companies. Since EU treaties leave fundamental choices about taxes, labour relations and other aspects of corporate law to member states, any firm incorporated in any one of them faces headaches when it crosses borders. After years of haranguing from think-tanks and policy wonks, the commission has unveiled a streamlined “28th regime” of rules that would live side by side with the 27 national frameworks. It lets firms register digitally for less than €100 and demands no minimum capital. Startups that meet criteria such as spending a lot on research and development enjoy EU-wide stock-option plans, a simplified, fully online insolvency procedure and other perks.

The commission’s newfound zeal to simplify and integrate is on clear display in finance. Unifying the EU’s fragmented capital markets could lower businesses’ funding costs, encourage investments in riskier, more innovative ventures and improve returns. Proposed changes would make financial firms less rule-bound and financial plumbing less prone to clogging. They would make life easier and cheaper for cross-border investment funds, which today cost between €20,000 and €60,000 to set up in every member state where they operate and €400,000 a year in administrative bills to run. Rules for trading venues would be harmonised and more supervision centralised in the hands of the European Securities and Markets Authority. Will the war on red tape work? Getting to American levels of integration is impossible unless the EU becomes a much more federal entity, for which there is no appetite. Many obstacles to a more vigorous economic union are beyond Eurocrats’ power to shove aside. Member states are unlikely to give up their say over how to treat debt and equity for tax purposes or how to govern labour markets. Part of the costs borne by firms trying to sell across the EU are the result of different languages, cultures and legal traditions, not regulations. However much they are reformed and integrated, capital markets will stay small if Europeans refuse to invest savings in anything riskier than a bank deposit. And even the limited reforms may stumble. On April 28th discussions between the commission, the European Parliament and national governments over the “omnibus” relating to AI broke down. A critical industry of the future may be stuck with existing, restrictive rules. Something similar to services passports and the 28th regime has been tried before with little to show for it. “We want to be in favour of this,” sums up Fredrik Sand of TechSverige, a lobby group for Sweden’s technology industry, referring to pan-European startups, “but it is not a silver bullet.” He is right. But it is nice to see the EU shoot on target. ■ For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/05/04/the-eu-wants-to- unshackle-its-economy-for-real-this-time

Finance & economics | Kulturkampf UniCredit’s lowball bid for Commerzbank causes consternation A bad-tempered battle for a big German bank May 7th 2026 The offer was not a surprise. On May 5th UniCredit, Italy’s second-biggest bank, made a bid for all the shares it does not already own in Commerzbank, Germany’s second-biggest listed lender—as it had promised in mid-March. Until June 16th Commerzbank’s shareholders can swap one share for 0.485 of UniCredit’s. It is not an enticing proposition: the implied price is more than 8% below Commerzbank’s closing mark on May 4th. The bid values the whole bank at €35bn ($41bn). Why has UniCredit made such a stingy offer? Pragmatism, its bosses say. The bid pre-empts a provision in German law that obliges a shareholder owning more than 30% of a listed company to make an offer for the rest.

They envisage two scenarios for how things will play out. One is a continuation of the status quo. UniCredit, which owns just under 30% of Commerzbank, in effect controls 36% already, once total-return swaps (derivative contracts that separate credit and market risk from formal ownership) are counted, says Paola Sabbione of Barclays, a British bank. The other is full control, the ultimate aim of Andrea Orcel, UniCredit’s chief executive. UniCredit already owns HypoVereinsbank (HVB), another leading German lender. With Commerzbank, it would have around 9% of the German market by revenue. The pair would complement each other: Commerzbank is strong in central Germany; HVB in Bavaria, in the south and the north. So it would make sense to offer a premium to Commerzbank shareholders instead of a discount, says Ms Sabbione. But Mr Orcel may be betting that the price of Commerzbank’s shares will slide, enabling him to buy them cheaply in the open market after his offer expires. That is despite a near-doubling since he first bought a stake, of 9%, in September 2024, thanks to strong results, share buy-backs and generous dividends (see chart). Mr Orcel has also said that he may “mildly” improve his offer.

Rather than trying to charm his prey, Mr Orcel has been in attack mode. On April 20th UniCredit published a 34-page plan for Commerzbank, peppered with words such as “vulnerable”, “underperformance”, “risky” and “overvalued”. The plan says that without a merger Commerzbank will be a weaker bank that prioritises growth outside its core market, whereas with UniCredit it will be a stronger one, centred on Germany (especially Mittelstand companies, the country’s economic backbone) and Poland. It promises to increase Commerzbank’s net profit to about €5.1bn in 2028, twice as much as last year and much higher than current forecasts. “A new chapter”, as the plan is called, went down badly in Commerzbank’s 53-storey Frankfurt tower. “They basically told us our business model is garbage,” says an insider. Mr Orcel’s calls Commerzbank’s foreign operations “oversized, fragmented, risky [and] operationally complex”. Michael Kotzbauer, the German bank’s deputy chief executive, retorts that “Commerzbank operates a global and efficient network of branches” in more than 40 countries. The bank was founded in 1870 in Hamburg, Germany’s biggest port, to promote international trade, and remains the go-to bank for the international business of Mittelstand firms. Its global network brings in almost three-fifths of its revenue from corporate clients. Commerzbank’s flustered bosses have their second-biggest shareholder, the German state, on their side. It owns 12% of the lender, residue of a clean-up in the global financial crisis of 2007-09. “For the German government, a hostile, aggressive takeover, especially of a systemically important bank like Commerzbank, would be unacceptable,” says a spokeswoman for the finance minister. Mr Orcel’s brash tactics have irritated regulators, too. On April 24th BaFin, Germany’s financial watchdog, ordered the Italians to cease “sensationalist and irrelevant” advertisements describing Commerzbank as “neglected, uncertain, short-sighted”. On May 8th Commerzbank is due to present its quarterly results and its (independent) strategy until 2030. To keep other investors on her side Bettina Orlopp, the chief executive, will have to keep producing strong results at a time when Germany’s economy is struggling. Her guiding principle, she has said, is “Keep calm and carry on”. But if her biggest shareholder gets its way, she won’t get the chance. ■

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Finance & economics | The rent is too damn AI DeepSeek and Alibaba rescue China’s office landlords Technology firms are reviving (a few) Chinese commercial-property markets May 7th 2026 A COURT IN Hangzhou, AI capital of China, ruled in late April that companies cannot fire their staff and replace them with artificial intelligence. This may come as a relief to plenty of people in a metropolis that is home to Alibaba, one of Chinese tech’s mightiest titans, with a total payroll of 128,000 employees. It is also good for Hangzhou’s commercial landlords, who have little use for AI agents and are desperate for human desk jockeys. China’s dazzling skylines are worryingly lifeless. Since a property bubble burst in 2021, sales, prices and investment in residential and commercial real estate have tumbled. Housing has attracted most of the attention during the