ECONOMIC POLICY

Economic Policy Economic cooperation has long been at the heart of the process of European integration. Economic policy deals with the production, distribution and consumption of goods and services. Fiscal policy deals with budgets: how and where government revenues are raised, and how and where public funds are spent. Monetary policy is also concerned with the growth and stability of the economy, but from the perspective of money supply. While member states control the former, they have mainly transferred control of the latter to EU institutions.

The Single Market Early progress on the building of the single market was hampered by non-tariff barriers, mainly of a physical, technical, or fiscal nature. While there has been progress since the Single European Act, economic liberalization remains patchy, and the EU was embarrassed by its failure to achieve the goals of the Lisbon Strategy (since replaced by the Europe 2020 Strategy). The most practical effect of the single market is freedom of movement. This has changed the economic and sociological dynamics of migration. Another effect of the single market has been to accelerate corporate mergers and acquisitions across European borders.

The Single Market Effects of the single market include the following: There is almost complete freedom of movement for legal residents of EU member states. The binding of the European marketplace has included efforts to build trans-European networks (TENs) encouraging the integration of transport, energy supply and telecommunications systems. Changes in laws and opportunities have encouraged cross-border corporate mergers and acquisitions that have helped European corporations regain some the market shares they lost in the 1950s and 1960s to the USA and Japan.

Competition Policy Competition policy is aimed at limiting the marketplace distortions created by monopolies, cartels, price-fixing, abuse of dominant position, and market-sharing. The EU has long had a competition policy focused on the reduction of restrictive practices, the control of mergers, and monitoring the effects of state aid. EU competition policy is among the most visible, effective, and respected of all policies pursued by the European Commission, and has had implications far beyond the borders of the EU, most notably in the USA, where mergers have been blocked and corporations punished for restrictive practices.