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What's next for the Single Market?

In January 2007 BERR, together with HM Treasury, issued a report "The Single Market: A vision for the 21st century" to feed into the Commission's current review of the Single Market. The report outlines the challenges that the Single Market faces and the principles that should be followed to ensure that the Single Market continues to deliver for Europe's consumers and businesses. It is published alongside research produced by Copenhagen Economics for the BERR - "The potential economic gains from full market opening in network industries."

Since the creation of the Single Market, work to improve its operation and effectiveness has been ongoing. Priorities include improving implementation and enforcement of Single Market rules; lightening the burden of regulation on businesses; and liberalisation in areas such as utilities, services and public procurement. By removing cross-border barriers the Single Market has created an additional 2.75 million jobs across the European Union and boosted prosperity by €225 billion in 2006. Europe is now the largest market in the world with a population of over 490 million and accounts for 20% of world trade. The Services Directive, for example, is a major contributor towards opening up the market. For further information please see the related pages on the left hand side.

Nevertheless, there remain weak areas in the Single Market, due to non-implementation of some directives, or inadequate enforcement, or because better co-operation is needed between Member States.

In terms of competition, there is a lot more that the EU can do together. Global competition is already here and firms cannot shelter behind tariffs or local monopolies. If the EU wants strong companies that deliver jobs, higher wages and high profits, they need to compete effectively by being productive and innovative. This is why the UK has strongly supported the European Commission in its work towards a “proactive competition policy”. This is about using competition policy to make markets work – so they bring about productivity gains and innovation, rather than its more traditional role as a “policeman” of anti-competitive measures i.e. illegal cartels. This way, competition policy will further increase Europe’s competitiveness globally and promote long term economic growth.

What if we Left the European Union?

Leaving the European Union would put at risk many of the advantages the UK gets from membership of the Single Market. However, as the destination for more than half our exports, accounting for some three million UK jobs, we would still need to co-operate with the EU. If we were to leave we would no longer automatically enjoy the benefits of Single Market membership. For example basic Single Market freedoms such as the right to live, study and work in Europe might be jeopardised; we might lose the advantages that economies of scale bring to pan-European industries such as car manufacturing or aerospace and much more.

What about the Norwegian and Swiss Models as an alternative  to  EU  Membership?

Many have suggested that the UK leaves the EU and follows the Norwegians and Swiss models but each would have drawbacks:

The Norwegian model
Norway is a member of both the European Free Trade Association (EFTA) and the European Economic Area (EEA). As such, it is not subject to EU tariffs and quotas and can benefit from the free movement of goods, services, people and capital. Nonetheless, Norwegian goods are still subject to customs requirements and a certificate of origin is needed, adding to the cost of exporting. Norway is still subject to “horizontal” EU policies, such as consumer or environmental legislation, but it is not represented in the Council of Ministers and therefore has no input into EU law making. Norway still has to contribute to the EU budget – for example as part of the EEA-Enlargement Agreement, but gets little back in return. Whilst not subject to the Common Agricultural Policy or Fisheries policies, Norway has signed up to the EEA Co-operation Agreement, which has a similar effect.

The Swiss Model
Switzerland is a member of EFTA, but not the EEA. Like Norway, it is subject to customs checks, although not to EU tariffs and quotas. Switzerland also contributes to the EU Budget under the Enlargement agreement. Trade with the Single Market is governed by bilateral agreements. However agreements – for example in the field of aviation – demand in effect that Switzerland applies EU laws, but like the EEA countries, it has no say in negotiating them. Switzerland only has limited access to the Single Market in other areas – for example services.

Contact

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