Adapting the single market

Sharing a vision for the EU’s single market.

We may come from different political traditions and different national cultures, but we still share a vision for a European single market that delivers more opportunities for businesses through trade and numerous jobs. 

Europe has been passing through a profound financial and economic crisis. To build a post-crisis Europe, we need to re-inject the same passion, political will and spirit of innovation that our respective countrymen Jacques Delors and Arthur Cockfield drew on when they joined forces to create the single market in the 1980s. These are difficult days for Europe and it will not be easy – but we believe it is economically feasible and politically feasible to give new impetus to the single market.

This year, the European single market will be 20 years old. Since its launch, the single market has grown into the most integrated and largest trading bloc in the world – 500 million people and 21 million companies that generate €13.7 trillion in economic activity. In the UK, bilateral trade with the EU accounts for 3.5 million jobs and almost 50% of exports go to the EU.

In reaching this milestone, the single market has expanded to include new member states and to create freer movement of goods, services, labour and capital. And it has helped to transform how we live, work, travel, do business and innovate. It now costs 75% less to keep in touch when travelling across Europe, thanks to EU rules against overcharging for international mobile calls. There are now more flights, at lower prices because of greater competition in aviation. And businesses can be confident that products made in their member state can be freely traded in any other member state, thanks to common European standards.

In this time of economic crisis, it is more important than ever to build on those successes and unlock the single market’s full economic potential. Doing that could add up to 7% in economic output for the UK alone.

The UK has always been a champion of the single market and it will support the EU institutions in leading the way to improve the single market. The Single Market Act II, published by the European Commission last month, identifies some gaps and missing links. The initiative calls for action to develop further transport and energy infrastructure across the EU, support the digital economy and strengthen social entrepreneurship, cohesion and consumer confidence.

In addition, more needs to be done to ensure that small and medium-sized enterprises can make the most of the single market: the benefits must not be skewed towards the big players. Many SMEs now thrive in competitive export markets, but others still feel the odds are stacked against them.

Online trading is already growing rapidly and more is possible: for example, cloud computing can lower the IT costs of businesses by 10%-20%. This is just one demonstration of the large potential gains from establishing a single market for the digital economy and breaking down barriers to cross-border e-commerce.

Ensuring that the single market in services operates effectively is also essential. Services represent 70% of EU gross domestic product, but, despite rules to facilitate the free movement of services, many businesses still have to deal with unreasonable red tape. National rules still sometimes discriminate on the basis of nationality or residence or prevent service providers from elsewhere in the EU from operating on the spurious grounds that there are already enough providers domestically and no ‘economic need’ for new ones. This sort of unacceptable barrier damages the EU’s economy, hits consumers and businesses and ultimately destroys jobs.

It is right to mark the single market’s anniversary and remind ourselves of what has been achieved. However, it is more important for the Commission, the UK and other like-minded countries to drive an ambitious programme of reforms to create a more modern and dynamic single market for the 21st century. We are both determined to play a full part in removing remaining barriers and taking on vested interests. That is the only way to put the single market at the centre of a job-rich economic recovery across the EU.

Vince Cable is the UK’s business secretary. Michel Barnier is the European commissioner for the internal market and services.