Strengthen the Single Market
We can strengthen the EU if we remove existing trade barriers and enhance focus on the digital Single Market
By UK Ambassador Vivien Life and Nordic director for Google, Peter Friis.
The debate on the future of the EU has not exactly been quiet in either the UK or in Denmark. The need to strengthen competitiveness in Europe is urgent. Over the past six years, the European economy has stagnated while the Indian economy has seen growth figures of 33%, and China’s has grown by a whole 70%. Over the next fifteen years, Europe’s economic output is forecast to halve. If we want future prosperity, now is the time for change.
In a modern, global world, change happens not through isolationism and unilateralism. Innovation and progress happens through fruitful cooperation with European neighbours, who share our view on freedom, peace and economic prosperity.
This means strengthening the Single Market. Back in 1973, the Single Market was a fundamental reason for the UK – and Denmark, and Ireland – joining the then EEC. The Single Market has created competitiveness and innovation, has benefited our consumers, and has strengthened trade between the countries in Europe. Without the Single Market, experts estimate that trade within the EU would be half the size it currently is.
A market with 500 million consumers – the world largest marketplace – is an excellent platform for our companies in their attempt to conquer new market shares.
4700 regulated professions
But, even though it contributes €600bn to the European economy, we can do more. As well as removing the remaining barriers to trade within Europe, we need to develop the digital and services Single Markets. Let me set out some examples of what can be done.
10% of the European labour force is currently unemployed. 90% of new jobs are in the services industry. Lack of harmonisation, protection of national industries and silo thinking is currently impeding growth and the creation of jobs in Europe.
We support a full implementation of the Services directive. There currently exist 4700 regulated professions. A relic of the past rather than a snapshot of real life. We should streamline the rules to enhance competition. This will lead to growth and more jobs.
Digitalisation should be taken seriously
Change is also needed within the area of digitalisation. The digital single market is too fragmented – which is especially worrying when we consider the explosion in technological development we have seen recently. Danes and Brits have fully endorsed digitalisation and are the most enthusiastic online shoppers in Europe. In 2012 a respective 79% and 82% of British and Danish Internet users bought something online and cross-border purchases are rising consistently.
If the direction of Europe is to be one of growth then it is important that we as a society embrace digitalisation across all sectors. Europe is currently lacking behind the USA and Asia. The digital economy makes up 6% of the total American economy. In China and Japan it constitutes 7%, and in South Korea 8%. In Europe it is only 4%.
There is plenty of work to do. For example the existing system of different copyright regimes puts a damper on activity hurting trade and innovation. A good place to start would be to simplify rules, at the same time as strengthening internet infrastructure, supporting digital start-ups and enhancing consumer safety on the internet.
The prizes are significant. Research from Copenhagen Economics suggests that implementing the Digital Single Market would add 4% to the EU’s GDP by 2020. Just in the UK, the removal of all barriers in the Internal Market would boost GDP by 7%, while, due to increased competition, consumer prices would fall by 5%. Nobody would claim that the past six years have been easy. We should grasp these kinds of opportunities for growth.
We choose our own future
Since the UK and Denmark joined the EEC over four decades ago, the world has changed. Economic clout has flowed eastwards, and Europe’s role in the world is under pressure. We are at a cross road facing future challenges. We can resort to isolationism, protectionism and old school politics; or we can be positive, ambitious and forward looking. The world is changing rapidly, so should we. Luckily we are able to choose our own direction. A razor-sharp focus on well functioning competiveness and world class digitalisation - and with it economic growth and employment - is a good place to start.