Overwhelming case for developing the Digital Single Market

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This article is part of our special report Innovation and the Digital Economy.

"A Digital Single Market's economic impact would at least equal that created by the EU Internal Market for goods," writes the European Policy Centre (EPC) in an April paper.

The following is a contribution from the European Policy Centre (EPC).

"An EPC project has found that there is an overwhelming case for developing the Digital Single Market, which can bring about great economic, social and environmental benefits for Europe. The case rests on four solid foundations:

  • The economic impact of a Digital Single Market is at least as big as the impact of the 1992 programme which created Europe's Internal Market for goods;
  • the Digital Single Market can contribute to achieving many EU policy goals, including the objectives of Europe 2020 to modernise Europe's labour markets and green its economy;
  • the lack of a Digital Single Market has constrained growth of European companies, especially in the Internet content field, and; 
  • there is a strong underlying economic rationale showing that EU intervention is needed to correct the market failures which arise from the barriers to a Digital Single Market.

The EPC project is thus putting forward policy recommendations in five broad areas to make the Digital Single Market a reality in the next few years.

There is a need for an ambitious programme of legislative and accompanying measures, similar to the one which delivered the 1992 Single Market. The project has identified five priority objectives:

  • Establish a functioning Digital Single Market as the key EU project of the Barroso II Commission, which must commit to lead on and deliver.
  • Create an online market place in which consumers can trust, by ensuring transparency and Internet governance, cyber-security and protection from fraud, rogue traders and identity theft, and protect consumer rights.
  • Create a business environment fit for the knowledge economy, which facilitates companies' investment and use of ICT and cross-border and Internet economic activity. 
  • Ensure that the legal framework governing the use of knowledge assets – such as data and intellectual property – is fit for a digitalised market and fosters innovation and cross-border trade.
  • Build the foundations and infrastructure which are pre-conditions for increased access and use of the goods and services the DSM can offer, within the framework of a well-functioning Single Market for services.

As part of the EPC project, Copenhagen Economics was commissioned to estimate what the cost of not completing the Digital Single Market (DSM) would be to the EU economy.

The study shows that, even under cautious assumptions, failing to implement the DSM will cost Europe at least 4.1% of GDP by 2020.

The DSM is a key driver for productivity and competitiveness, promoting growth and innovation. It will allow companies in Europe to grow to scale and increase their global competitiveness, and not only benefit businesses but also consumers: they will benefit from low prices, better quality and more choices."

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