How can the UK lead the completion of the EUs Single Market
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Issued 24 January 2011
Thank you to Business for New Europe for arranging an event on
this important topic and in particular for arranging such a
distinguished panel of speakers, all of whom have contributed a great
deal to the single market agenda in recent years. Professor Monti’s
report and the work of Malcolm Harbour’s Committee have provided a good
foundation to the debate on the relaunch of the Single Market.
The Single Market is perhaps Europe’s greatest economic achievement.
But there is huge untapped potential which must be realised. Whilst the
EU must become more outward-looking, we also need policies which
reflect the fact two thirds of trade in the EU is trade between EU
countries.
Services now account for 78% percent of Europe’s output.
Despite the excellent efforts of many people, including Malcolm
Harbour, we have only had limited success in introducing proper
competition across a vast range of sectors. Many sectors are
characterised by disparate regulation. Restrictive rules remain rife.
Implementation of what has been agreed falls far short of what is
needed.
The consequences are as clear as they are unacceptable.
Productivity in services is far below that in the US - by 30 per cent
in the retail sector and more than 40 per cent in business services.
I recognise Commissioner Barnier’s ambition in setting out
such a comprehensive package of measures to address this deficit.
However in the current economic context I would urge him and the
Commission to be even more ambitious: we need a ruthless focus on
making the Single Market work and tackling restrictive practices in
particular sectors.
In particular, I believe that there is much more work to do to
realise single market benefits for services. Let me give you some
examples: Portugal still has rules governing the minimum distance
requirements between driving schools; and in Greece, directors of
dancing schools need to live within a set distance of the school!
Whilst these are slightly flippant examples, many of the restrictive
practices which remain apply particularly to important economic
sectors, such as construction or accountancy.
Europe adopted a Directive to enable the mutual recognition of
professional qualifications in 2005 but many other entry barriers
remain, such as fixed tariffs, complex shareholding requirements,
onerous capital requirements, and restrictions on the legal form a
company should take. To give a couple of examples, Malta, Germany,
Greece and Bulgaria still impose fixed tariffs on architects. To offer
recruitment services in Italy, an employment agency must have four
branches and hold min. capital of 600,000 euros, which serves as a
barrier to entry for other service providers with different business
models.
We should ask whether Europe should continue to regulate
around 4,600 professions across the Single Market or whether more could
be done to remove barriers to the cross-border provision of
professional and business services to create a more integrated single
market.
In addition to services, the UK’s response to the Single
Market Act will emphasise the need for the single market framework to
keep up with developments in the digital and low-carbon economies and
help SMEs. We need rules that support ecommerce and new cross-border
copyright frameworks for online material. We need a patent system and
standardisation framework that can support emerging technologies. And
we need to remove unnecessary requirements on the smallest firms.
The UK government will be submitting a response to the
Commission in February, and will also be publishing a Trade White Paper
which sets this work within a truly global context. I would urge
businesses to engage with the Commission and help focus EU efforts on
the real barriers to trade.
Notes :
- Lord Brittan was appointed as Trade adviser to the Prime
Minister in August last year. He took up his role in September 2010 for
a six month period and will be leaving government in March 2011.
- Lord Brittan of Spennithorne QC was a MP from 1974 to 1988.
He served as Minister of State at the Home Office, Chief Secretary to
the Treasury, Home Secretary and Secretary of State for Trade and
Industry in Mrs Thatcher's Government. From 1989 to 1999 he was a
member of the European Commission, and became Vice President as well as
Commissioner responsible for International Trade. Since 2000 he has
been Vice Chairman of UBS Investment Bank.
- Lord Brittan has taken a six month leave of absence from
UBS. As such he stepped down from all his responsibilities to the bank
during this period.
About the Author
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