City of London School

1
City of London School extra materials

• European Single Market

2
The Single Market why bother?

• Barriers to trade in services penalise in
  particular small and medium sized enterprises
  (SMEs), which are disproportionately affected by
  complex administrative and legal requirements and
  therefore more likely than larger firms to turn
  down cross-border opportunities because of them.
  Given the predominance of SMEs in service
  operations, this has clearly acted as a
  considerable hindrance the development of the
  Internal Market for Services.

3
What is the Single Market?

• Signed 1986
• non-discrimination - between domestic and
  imported goods
• mutual recognition - accept products produced in
  other countries but of different standards
• Burden of Proof - health a safety issues must be
  proven by scientific evidence

4
The Single Market

• Free movement of people, product and capital
• removed many barriers to free trade
• technical standards
• costly documentation
• So now we must meet product standards
• harmonised tariff rates
• adapt to ease of trading conditions e.g.
  inspections at customs posts

5
Single Market

• Free access to markets
• access to factors of production
• large markets - 450m
• protection from external competition
• increased competition
• Drive for efficiency and standards
• with a common currency they have no transaction
  costs
• transparency of prices
• comparisons of quality/non-price competition

6
Does it have problems?

• Lack of choice?
• Increased costs?
• Reduced market share as competition increases?
• Lack of efficiency as barriers protect?
• Marketing may have to be changed to appeal to
  diverse markets?
• What of enlargement can it cope?

7
Cohesion Spending

• Spain 12.3bn
• Poland 4.1bn
• Portugal 3.3bn
• Greece 3.3bn
• Hungary 1.1bn
• Czech Republic 936m
• Lithuania 608m
• Ireland 584m
• Slovakia 570m
• Latvia 515m
• Estonia 309m
• Slovenia 188m
• Cyprus 53m
• Malta 21m

8
Deeper Integration

• New members trade with other EU countries
• Czech Rep 79
• Estonia 73
• Cyprus 60
• Latvia 77
• Lithuania 58
• Hungary 72
• Malta 60
• Poland 75
• Slovenia 72
• Slovakia 80
• UK 57

9
Deeper Integration

• Belgium 75
• Denmark 72
• Germany 85 (highest)
• France 70
• Ireland 65
• Italy 62
• Spain 72
• Luxembourg 59
• Netherlands 68
• Austria 78
• Portugal 80
• Finland 54
• Sweden 65

10
Growth rates new members

• Bulgaria 5.5
• Cyprus 3.7
• Czech Republic 6.1
• Estonia 9.8
• Hungary 4.1
• Latvia 10.2
• Lithuania 7.6
• Malta 2.5  
• Poland 3.4
• Romania 8.5
• Slovakia 6.1
• Slovenia4.0

11
Growth Rates older member states

• Austria 2.0
• Belgium 1.5
• Denmark 3.2
• Finland 2.9
• France 1.2
• Germany 0.9
• Greece 3.7
• Republic of Ireland 5.5
• Italy 0.0
•  Luxembourg 4.0
• Netherlands 1.5
• Portugal 0.4
• Spain 3.4
•  Sweden 2.7
• United Kingdom 1.9

12
The future of Single Market

• Working towards services being included
• Working towards capital market being included