Germany, Denmark benefit most from internal market

A container ship owned by the Danish shipping giant Maersk docks in a harbour in Hamburg, Germany. August 2010 [Niels Linneberg/Flickr]
A container ship owned by the Danish shipping giant Maersk docks in a harbour in Hamburg, Germany. August 2010 [Niels Linneberg/Flickr]

Twenty years after the introduction of the internal market, Europe is wealthier than ever with Germans and Danes benefiting the most from the steady increase in economic integration, according to a recent study by the Bertelsmann Foundation. EurActiv Germany reports.

European integration has had a consistently positive effect on economic growth in the EU member states over the past 20 years, a recent study suggests.

Published on Monday (28 July) by the Bertelsmann Foundation, the research showed that in the EU bloc, Germany and Denmark benefited the most.

The internal market boosted Germany's economic performance by an additional €37 billion on average, the study says. That translates to an additional €450 per person, per year.

With an increase of €500 annually per capita, Denmark was the only country where the measurable benefit was higher.

One of the primary goals of the European internal market, concluded in 1992, was to raise the economic prosperity of EU citizens.

According to Thieß Petersen, an economic analyst at the Bertelsmann Foundation, the internal market has managed to do that.

"The internal market is at the core of European integration and drives economic growth in all the member states," said Petersen.

Less benefit for southern EU states

Researchers from the Swiss economic research institute Prognos AG conducted the study on behalf of the Bertelsmann Foundation. They examined the effect the European internal market had on growth between 1992 and 2012 in 14 of the 15 countries that were member states of the EU in 1992 (Luxembourg excluded).

The findings showed that Europe's convergence has had a fundamentally positive effect on these countries, although in vastly different ways.

The internal market has been particularly beneficial for those countries that are very tightly interconnected with the other EU countries economically, the study says.

While northern and central European countries rank near the top of the list, positive effects are less prominent in southern EU member states.

The average annual increase in income due to rising European integration was around €80 per capita in Italy, in Spain and Greece the number was €70 and in Portugal €20.

The European internal market took effect in 1993. It is founded on four basic freedoms; the free movement of goods, workers, services and capital.

But while the common market for goods functions quite well, the researchers said there is still room for improvement in the services sector. Services currently make up about 70% of Europe's GDP, the study indicated, but only 20% of cross-border trade between EU countries.

The researchers proposed measures that could help promote the cross-border supply of services, namely better standardisation of services and the full implementation of the Services Directive. Labour mobility in the EU could be facilitated by faster and less-bureaucratic recognition of qualifications and certificates earned in other EU countries, they added.

The study's authors also suggested improving cross-border transfer of information such as job advertisements and more simplified transfer of entitlements in the social security system.



Antmatt's picture

No mention who came bottom of the list, That's right it's Britain who despite it's governments huge investment & insistence that being in the single market has given Britain huge advantages in trade & Britain would be mad to leave has delivered just €10 Euro's benefit per citizen, the lowest out of the group.

Mike Parr's picture

This begs the question: why such low benefits? Could it be due to the de-industrialisation which has occurred since 1980? Significant value added comes from making and selling/trading things.

The Brits seem to have forgotten this aspect - since 1980 they have sold most of their assets be it companies or state-owned assets such as power networks or railways. jobs with significant value added have migrated out of the UK.

And those responsible? step forward the Tory-vermin and Tory-Vermin-lite (aka labour-scum).

Iwantout's picture

The most recent IMF figures show German industrial output at $1,167bn, by far the biggest in the EU. Of the remaining 27 EU countries, the UK is the next largest industrial manufacturer with an output of $580bn while France produces $540bn and Italy $530bn.

Clearly the days of coal, ship building, raw steel manufacturing etc are behind us. However it seems that the newer high tech businesses in chemicals, pharmaceuticals, IT, aerospace engineering, bio sciences etc. seem to be doing passably well. To describe the UK then as de industrialising seems a little harsh; which is not to say I would not like to see a rebalancing of our economy.

One possible reason why the UK is not benefiting as much as might be expected from the single market is the fact that most of the service industries that the UK excels in are simply not covered by this much over hyped structure. The majority of other more protectionist states have repeatedly refused to complete the market and allow competition. There is no real indication that this will change any time soon.

Mike Parr's picture

I'd agree with some of your comments - but taking the example of the power industry - it is dominated by non-Uk companies - EdF is owned by the French state. Once you strip out taxes and network costs, energy costs in the UK are almost 60% higher than Germany (13eurocents/kWhr vs 8eurocents) - so much for "competition". It is also worth noting, the French power market is de facto closed to any kind of competition - despite the provisions of the 3rd energy package. So on the one hand, the Tory-Vermin were dumb enough in the 1990s to open the Uk power market to "competition" on the other, they are too dumb to attempt to enforce the provisions of the 3rd package - which would at least start to address some of the competitive "black-holes" in Europe with respect to power. Instead, they focus on irrelevant stuff - typical.