11 July 2013

KAS: Europe must recover its hidden treasure

A new study on the European internal market, conducted by the Konrad Adenauer Foundation (KAS) and the Institute for Economic Research, urges further reforms and says Europe is doing too little to make the most of its most valuable asset.

Translated from the German

With the project of the single market, the European Union has significantly deepened its economic and political integration, but Europe is doing too little to reap the full benefit from this valuable asset. This is the conclusion of the recent KAS study "Europe's Internal Market - A market with growth potential" that has been conducted jointly by the Konrad Adenauer Foundation and the Institute for Economic Research (IW) in Berlin.

"With this study, we wanted to draw attention to the subject of the internal market and push for it to be reinstituted on the political agenda", said Jürgen Matthes, head of the International Economic Policy team of the IW. "The internal market can make an important contribution to dealing with the debt crisis, because what Europe urgently needs is economic growth. And for growth, an increased level of competition is required."

"The European Economic Area (EEA) today achieves a gross domestic product of almost €17 billion, which is just behind the North American Free Trade Agreement (NAFTA) and ahead of the US and China", explained Dr Berthold Busch in his presentation of the study. Europe had without question come a long way since the foundation of the internal market in 1985, but in areas such as services or energy supply there had been little development, criticised the study's lead author. "To recover this hidden treasure, Europe must further encourage free movement of labour, reduce barriers to the services trade, reform public procurement and take the construction of the Banking Union seriously." 

Dr Andreas Schwab, MEP, Chairman of the EPP Group in the Committee on the Internal Market and Consumer Protection, agreed with this in his commentary. Germany had come through the crisis better than most other European countries, but in the end even Germany had to realise that hard work and productivity are not sufficient when the manufactured products were not bought abroad. "For Germany the single market plays a special role, because two-thirds of our exports go to our neighbours."

But Schwab also warned that calling for new rules in response to the crisis was not the right approach: "The central problem of the internal market is not the lack of rules but a lack of implementation of the existing ones", he said.

Full article (in German)

© KAS - Konrad Adenauer Stiftung