Von Der Leyen urged to prioritise single market to counter slowdown

File photo. Ursula von der Leyen at the EU summit on 17 October 2019. [Council newsroom]

As incoming European Commission President Ursula Von Der Leyen prepares to take office in one week, the mission letters she sent to her team of 27 commissioners are being closely scrutinised. For some, there is an essential element missing: revitalisation of the single market.

“When she outlined her new vision of European integration over the next five years, we think the single market wasn’t present enough in her speech,” Piotr Arak, director of the Polish Economic Institute, told a EURACTIV event in Brussels last week.

He stressed that EU countries need to trade more with each other to shield against a possible coming economic slowdown, and single market barriers are still preventing this from happening.

“We have 500 million customers – more than in the United States,” he said.

“But the American states trade twice as much with each other as EU countries do. If we have a slowdown over the next two years it will be very important to have a more integrated single market, there could be a boost of two or three percentage points of growth to EU economy.”

Experts are expecting a slowdown in the global economy as a result of the Trump trade wars with China and the EU, and the economic turbulence of Brexit. Institutions including the OECD, IMF and the Commission have already told national governments to balance their public accounts and lift their growth potential with reforms “while the sun is shining”.

Small business transformation

Panelists at the event debated whether the single market is working for all Europeans at the moment. Ana Štrbac, a counsellor at the EU permanent representation of Croatia, which takes over the rotating presidency on 1 January, said the single market is at the centre of EU policy but in her country there are doubts about whether it’s working for everyone.

If you ask businesses whether the single market is working, you would probably get a different answer from large companies than from SMEs, she said.

Hubert Gambs, director for modernisation of the single market at the European Commission, said he is intently focused on how things can be adjusted to take emerging realities into account.

“The single market is the machine room for the many policies we have at European level, but it’s always a work in progress,” he said. “I don’t talk about completing it because it will never be completed. We’ll always have some work to do.”

But he disputed the idea that the single market isn’t delivering for small- and medium-sized enterprises. “SMEs are the backbone of the European economy – 99.8% are actually SMEs,” he said.

“For them the single market gives more possibilities to grow and scale up. But it’s important in the single market that there are no barriers for SMEs to go across borders or expand in their own market.”

Svenja Hahn, a liberal member of the European Parliament from Germany, agreed. “The challenge will be to set a legislative framework that allows to scale up from small enterprises up to big global players, and to find a framework that doesn’t hinder innovation and small enterprises,” she said.

“A good single market ensures fair competition for small and big players.”

Digital transformation

A big area of concern for those gathered at the event was how the single market will handle the digitisation of the European economy and new technologies such as artificial intelligence, which are causing alarm for many privacy advocates and consumer organisations.

“We should embrace new technologies when they offer benefits to consumers but we also need to look if there are risks,” said Johannes Kleis, communications director at the European consumers organisation BEUC. “For instance when it comes to discriminatory practices for AI, an algorithm takes a decision for them.

For the single market to thrive we need to look into how people can trust the single market. Consumer consumption is a big share of the single market. If we increase trust, if we ensure consumers feel safe buying within the EU, that is a big issue that helps with the economy.”

Arak said his organisation wants to see the EU increase its already strong soft power in the area of technology regulation.

“If we have more competition from American and Chinese companies, what the EU is better at than those two big economies is creating rules that help the consumers. This is something that digital companies before, with data protection and privacy, had to use a rulebook designed in Brussels. With AI, and new techs like the internet of things and wearables, this is also going to be very needed.”

Gambs said the Commission doesn’t believe it has to reinvent the wheel to accommodate digital technologies, but rather to look at how to modernise the existing single market to account for them.  “There is no difference between a digital single market and a single market, the whole single market will go digital”.

Energy transformation

Whether the single market is helping or hurting attempts to transition to a sustainable, clean energy economy was also a major topic of debate. Five years ago the EU launched the energy union policy to break down barriers in the EU’s single market for energy, but it has had mixed success.

“We haven’t managed to have a true energy union in the EU although it was promised some years ago,” said Arak. “But I think with more competitiveness, more antitrust laws in terms of energy, and forging a true energy union, we can exchange more.”

“We had some decisions made by some governments which were against competitiveness and the single market in the last years, and we had the energy goals which have to be reached in 2050. Mixing those two is going to be difficult.”

Kleis said that changing the way energy is used and distributed in Europe is going to require buy-in from consumers. “In terms of the climate crisis, the single market has its work cut out for it,” he said. “Consumers can play a big role in this, and measures are needed to engage consumers.”

All the panellists agreed that right now, EU citizens are not well enough aware of what the single market is and how it makes a difference to their everyday lives. Educating people about why it’s important, particularly in an era of rising populism and anti-EU rhetoric, will be critical to its survival.

“The single market is defining our everyday lives but we’re often not aware of the awesomeness it presents to us,” said Hahn.

“Jacques Delors said you cannot fall in love with the single market,” observed Arak. “But we want to prove to him otherwise.”

[Edited by Zoran Radosavljevic]

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