Tom Parker / Nov 2019
Earlier this week, with little fanfare, a report was released by the European Commission on strategic value chains and their importance for the future of European industry and the economy. Written by the Strategic Forum on Important Projects of Common European Interest (IPCEI), a high-level expert group comprised of 45 representatives from Member States, the research community and industry, the report identified six priorities:
- Connected, clean and autonomous vehicles,
- Hydrogen technologies and systems,
- Smart health,
- Industrial Internet of Things,
- Low-CO2 emission industry,
To deliver these priorities the report also set-out key enabling actions, including joint investment, new skills and consolidation of the internal market.
While the first two points feature high on today’s political agenda, the importance of the single market sadly does not currently have the same political allure and runs the risk of being dangerously neglected over the next 5-year term.
In her “Political Guidelines for Europe”, incoming European Commission President Ursula von der Leyen makes limited reference to it (three references are made in relation to tax, customs and the digital single market). Not to mention that the “smooth day-to-day functioning of the single market” makes up an oddly small part of Ms von der Leyen's mission letter to the incoming Commissioner for internal market matters. And yet the fundamental importance of the proper implementation of the single market to the future of European industry and economic prosperity is well established.
Concretely, if the 1.8% addition to European Union (EU) GDP projected by the European Commission through the proper implementation of the Services Directive were realised, a staggering 305 billion Euros would have been added to the EU economy in 2018. If further evidence were needed, you only need to look at Brexit and the reaction of the business community, which has consistently argued that remaining within the single market should be a top negotiation priority.
In today’s economy, manufacturing and services are increasingly intertwined, as identified by the IPCEI report. Where the EU can talk with some degree of satisfaction about the single market in goods, attention to the service economy, however, has at best been patchy. The importance of services to the economy varies considerably by Member State (70% Luxembourg, 44% Hungary and Germany 48.5% GDP). Yet within the context of our fast-evolving global economy it is ever more important to business, and Europe as a whole, not only in terms of today’s commercial reality and supporting investment in Europe but also empowering European trade and champions competing on a global stage.
Recognising the efforts of the European Commission services to bring recalcitrant Member States in line and the complexities of the service economy, flagrant disregard of the rules and principles of the single market and aberrations, like the ongoing freedom of establishment case brought by the companies IKEA and Decathlon against Germany (ten years ago but politically buried for the past five), need to be urgently addressed at the highest political levels.
For all the talk, Europe’s economic potential cannot be fully realised when the integrity of the single market is treated with disrespect and major European companies like this (just imagine what it is like for small operators) cannot invest billions of Euros and open hundreds of stores in a single Member State, with significant benefits for the wider European economy.
There is no doubt that the six priorities identified in the IPCEI report have the potential to deliver big for Europe - they just need Ms von der Leyen, the future Commissioner responsible for the internal market and major Member States like Germany (which despite being an EU leader is still the Member State with the third most open single market cases against it) to lead by example and stand-up for the single market in the interest of Europe and its future economic ambition.