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.

The Services Directive was adopted in 2006 and is seen as a key tool to removing barriers to operating in Europe's internal market.

Currently, only 5-10% of EU GDP is generated by providing cross-border services.

The original deadline for member states to fully implement the directive into national law was 31 December 2009.

In the European Parliament, MEPs have expressed misgivings over the directive's implementation in EU member states.

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