The Single Market in the Evolving European Economic Crisis: Opportunity, Constraint, Threat? - A Roundtable

25/04/2012

Event report

This fourth roundtable in the Reforming European Economic Governance series brought together speakers from across Wales, the UK and Europe to consider the future of the Single Market in the light of the global financial and economic crisis, and in the very recent context of the December 9th 2011 and January 29th 2012 summits within the European Union. This brief report provides an overview of the roundtable, chaired by Professor Alistair Cole, which took place on 28th March 2012. The roundtable addressed a wide range of issues, including UK attitudes to the Single Market, the consequences for the Single Market of a multi-speed Europe – notably with the UK outside the Eurozone and the ‘fiscal compact’ and the ability of the Single Market to resist inevitable pressures to adopt more protectionist measures across Europe.

Challenges facing the Single Market

The first speaker, Professor Michelle Cini, University of Bristol, observed that the spotlight had shifted away from the Single Market in the early 1990s but that it had recently received greater attention via the 2010 Monti report and the Single Market Act, published by the Commission in 2011. Professor Cini argued that it is possible to identify at least six overarching challenges which the Single Market faces within the context of the economic and financial crises.

Firstly, the Single Market has been neglected over the past 10-15 years – partly due to the focus on the Euro and Eurozone in recent years. Secondly, the Single Market remains incomplete and made up of a ‘patchwork of legislation’ with substantial gaps which have proven difficult to address. Thirdly, concerns around poor compliance remain and more effort needs to be taken on enforcement, using both formal and informal mechanisms. Fourthly, there is a lack of public confidence in the ability of the Single Market and the European Union more generally to deliver genuine growth. Fifthly, there remains outright opposition to the Single Market, based on different ideological visions of the role of the state and the market. Finally, there is the genuine threat that the Single Market may face disintegration due to the emerging ‘two-speed’ or ‘multi-speed’ Europe.

Recognising past achievements and building for the future

These challenges were further developed by the second speaker, Henrik Morch, Head of Unit, Single Market Policy, DG Internal Market and Services in the European Commission. Mr. Morch argued that whilst the Single Market may have been neglected in the past, the conclusions of the March 2012 European Council meeting featured some of the ‘strongest and most ambitious language on the Single Market’ in recent years. He reflected that although the response to the economic and financial crises had understandably centred on budgetary issues and austerity, the increased focus on growth had meant that Single Market had returned to foreground. Mr Morch argued that there was a need to emphasise the achievements of the Single Market since its introduction and that there was a risk that media coverage simply dwelt on negative stories, such as social dumping. Furthermore, he noted that the Single Market could be further expanded in areas like cross-border e-commerce and e-procurement but that there was no ‘silver bullet’ to making the Single Market work better and create growth. The Commission is driving this agenda through the Single Market Act and initiatives like the Social Investment Fund but in terms of governance and monitoring it needed genuine buy-in from Member States.

The Single Market and the UK and Welsh context

The third speaker, Baroness Eluned Morgan, a former Labour MEP and Honorary Distinguished Professor in the Cardiff School of European Languages, Translation and Politics (EUROP), reflected on the perceptions of the Single Market within the UK and Wales. Baroness Morgan began by noting that in its early years the Single Market was perceived as a right wing, neoliberal agenda but the social agenda pursued by Delors in the early 1990s had led to support across political parties. She reflected that support for the Single Market was at times undermined by the perception of non-compliance and a lack of implementation – highlighted by successive iterations of the Electricity Directive and concerns around the Services Directive. Baroness Morgan echoed previous speakers by stressing the potential opportunity for growth provided by a renewed focus on the Single Market and the need to continue expanding the Single Market as new industries and markets emerged. However, the context of austerity and crisis was characterised as providing fertile ground for protectionism and opposition to processes of liberalisation. Baroness Morgan concluded by reflecting on the approach adopted by the UK Government, arguing that the UK’s veto of the ‘fiscal compact’ reflecting a fundamental misunderstanding of the ‘give and take’ of the Single Market and risked isolating the UK from decision-making.

Suffering collateral damage from the wider economic crisis?

The final speaker, Professor Stijn Smismans, Cardiff University, provided an overview the effects of the economic and financial crises and specifically the Eurozone crisis on the Single Market and examined the potential collateral damage that may have been caused by the solutions proposed in responding to these crises. Before considering these issues Professor Smismans considered competing interpretations of the Single Market, noting the distinction between negative integration - the abolition of barriers between countries - and positive integration - the creation of common rules and minimum standards across the European Union. He noted that there was an inherent tension within the European Union created by the varying degrees of support across Member States for the different models. Professor Smismans argued that the wider economic and financial crisis had provided threats to the Single Market but also opportunities. The crisis, for example, had precipitated increased reluctance around the free movement of persons across many Member States but had also dictated the need for more common rules and regulation around the movement of capital.

The Eurozone crisis, as noted earlier in the roundtable, was characterised as further driving the growth of a ‘two speed’ Europe – with the UK increasingly left on the sidelines. Professor Smismans concluded by noting that the responses to the wider crises – specifically austerity measures and controls on national budgets – may undermine the political legitimacy of the Single Market and European project. The perceived benefits of the Single Market may not be enough to counterbalance the pain of austerity measures and Brussels and Europe may become equated with bad news. The roundtable presentations were followed by a lively audience question and answer session which focused on many of the core themes highlighted by the speakers including the ability of the Single Market in delivering competitiveness, the role of the EU structural funds in strengthening the legitimacy of the European project, the role of political parties in shaping perceptions of Europe and potential growth of the Single Market into sustainable and green energy markets.