The COVID-19 crisis has shown the importance of the EU’s single market for citizens and businesses. A well-functioning single market is needed for economic recovery and long-term growth, too.
The purpose of the European single market is to ensure the free movement of goods, services, people and capital within the Union so that, for example, consumers can enjoy a wider range of services and employees have better job opportunities.
During the COVID-19 crisis, the single market has mainly worked well and flexibly, even though some disruptions to the supply chains of goods were detected at the beginning of the crisis. The European Commission has managed to resolve the disruptions to the goods market in good cooperation with the Member States. The crisis has had a significant impact on the free movement of services and labour as Member States have closed their borders.
Member States are now considering how to further strengthen the functioning of the single market and thus accelerate the economic recovery following the crisis. On 27 May, the Commission will publish an EU recovery plan outlining ways to revitalise the EU economy after the crisis. Improving the functioning of the single market and strengthening the digital economy will play a key role in the plan.
More efficient mobility of services would generate additional revenue for the EU
According to a study by the European Parliament, improvements to the internal market for industrial products could increase the EU economy by 1.2 –1.7% of the EU's GDP, i.e. by EUR 183 –269 billion. Removing existing barriers to the service market could, in turn, increase the EU economy by 2% of GDP, i.e. by EUR 297 billion a year. Services still account for only around 20% of intra-EU trade. It is clear that, in the long term, measures are needed to ensure the competitiveness and growth of the EU in order to improve the mobility of goods and services in particular.
Barriers to the single market may be related to legislation, but in many cases they may be due to the widely varying practices of the national authorities in the Member States as regards to, for example, business licences and permits. According to its communications in March, the European Commission intends to address the obstacles to the single market and strengthen compliance with EU regulations. The Commission emphasises that deepening the single market is a joint task of the Member States and the EU.
A well-functioning single market is in the interest of export-driven countries such as Finland.
As a well-functioning single market is in the interest of export-driven countries such as Finland, Finland considers it important that single market barriers are addressed and the implementation of the existing single market rules strengthened.
The COVID-19 crisis has shown that the Member States or the Commission alone cannot ensure the functioning of the single market. Everyone must take care of the movement of goods and services, and any problems must be solved together in a systematic manner. The single market provides security in times of crisis, but it also strengthens the competitiveness of EU industry in the long term.
Isabella Paju, Senior Specialist, Ministry of Economic Affairs and Employment