City of London School – extra materials European Single Market

The Single Market – why bother? Barriers to trade in services penalise in particular small and medium sized enterprises (SMEs), which are disproportionately affected by complex administrative and legal requirements and therefore more likely than larger firms to turn down cross-border opportunities because of them. Given the predominance of SMEs in service operations, this has clearly acted as a considerable hindrance the development of the Internal Market for Services.

What is the Single Market? Signed 1986 non-discrimination - between domestic and imported goods mutual recognition - accept products produced in other countries but of different standards Burden of Proof - health a safety issues must be proven by scientific evidence

The Single Market Free movement of people, product and capital removed many barriers to free trade technical standards costly documentation So now we must meet product standards harmonised tariff rates adapt to ease of trading conditions e.g. inspections at customs posts

Single Market Free access to markets access to factors of production large markets - 450m+ protection from external competition increased competition Drive for efficiency and standards with a common currency they have no transaction costs transparency of prices comparisons of quality/non-price competition

Does it have problems? Lack of choice? Increased costs? Reduced market share as competition increases? Lack of efficiency as barriers protect? Marketing may have to be changed to appeal to diverse markets? What of enlargement – can it cope?

Cohesion Spending Spain: 12.3bn Poland: 4.1bn Portugal: 3.3bn Greece: 3.3bn Hungary: 1.1bn Czech Republic: 936m Lithuania: 608m Ireland: 584m Slovakia: 570m Latvia: 515m Estonia: 309m Slovenia: 188m Cyprus: 53m Malta: 21m

Deeper Integration New members trade with other EU countries Czech Rep = 79% Estonia = 73% Cyprus = 60% Latvia = 77% Lithuania = 58% Hungary = 72% Malta = 60% Poland = 75% Slovenia = 72% Slovakia = 80% UK = 57%

Deeper Integration Belgium 75% Denmark 72% Germany 85% (highest) France 70% Ireland 65% Italy 62% Spain 72% Luxembourg 59% Netherlands 68% Austria 78% Portugal 80% Finland 54% Sweden 65%

Growth rates – new members Bulgaria 5.5 Cyprus 3.7 Czech Republic 6.1 Estonia 9.8 Hungary 4.1 Latvia 10.2 Lithuania 7.6 Malta 2.5   Poland 3.4 Romania 8.5 Slovakia 6.1 Slovenia4.0

Growth Rates – older member states Austria 2.0 Belgium 1.5 Denmark 3.2 Finland 2.9 France 1.2 Germany 0.9 Greece 3.7 Republic of Ireland 5.5 Italy 0.0  Luxembourg 4.0 Netherlands 1.5 Portugal 0.4 Spain 3.4  Sweden 2.7 United Kingdom 1.9

The future of Single Market Working towards services being included Working towards capital market being included