Civitas
+44 (0)20 7799 6677

Who will measure the performance of the Single Market, how, when and for whom?

After 22 years the European Commission and Parliament are considering measuring the performance of the Single Market, but not it seems to make it more accountable to the press or public


The EU has legitimized its moves towards ever closer union by predictions derived from economic models, which tell of gains in productivity, employment and income, once the next step forward is taken. It is a forever forward-looking mind set which resembles that of Soviet planners, and does not require backward glances to see whether the gains were actually realised, or any explanation or apology if they were not.

The Single Market fits this pattern rather well. It began with predictions of the Cecchini Report that it would increase GDP by 6.5%.[1] It then marked its tenth anniversary in 2003 with celebrations of its astonishing achievements, but without pausing to see whether or not it was living up to Cecchini’s predictions or to the high expectations at its launch.

In 2007 a European Commission staff report indicated that all might not be well in some blunt asides (see Chapter 25) but only to show how they made the agenda stated in its title, ‘Steps towards a deeper economic integration’, that much more urgent.[2]

In 2008 Boltho & Eichengreen, two neutral academic observers, made some informed, but as they admitted, rough estimates, and concluded that the Single Market (1993-2002) had been responsible for an increase in EU GDP of between 0.75 and 1.0 percent of EU GDP.[3]

All the data presented in Chapter 23 about the Single Market’s distinctively high and severe unemployment and its distinctively low rate of productivity growth had not formed any part of discussion of the Single Market within the European Commission or Her Majesty’s Government (HMG) or its numerous enthusiasts in the UK political elite who argued, without having any evidence one way or the other, that it was the main reason for our membership.

In 2014, discussions within the European Commission came full circle with a series of reports called ‘The Cost of Non-Europe in the Single Market (Cecchini Revisited)’.[4] Given this title, one might have expected a thorough, even definitive, analysis of why things did not turn out quite as Cecchini expected, but from its opening words the report hits a different note.

It is well known that the Single Market has contributed significantly to economic growth and consumer welfare within the European Union. It has not, however, achieved its full potential and economic gains could be secured by better and more effective application of existing legislation and a deepening of the Single Market.

Off we go again, one is tempted to add, though it did pause briefly to mention the six studies mentioned by the UK Balance of Competences Review (these are discussed, and found to be less than conclusive analyses, Chapter 38), but then moves quickly on to urge the start of another cycle with ‘the deepening of the Single Market’. The further reforms proposed will, the authors estimate, yield ‘potential economic gains [which will] range between 651 billion and 1.1 trillion euro per year, equivalent to between 5 per cent to 8.6 per cent of EU GDP.’

At some point, as the years have rolled by and its achievements become part of the folklore of European elites, there was always the chance that, simply as a matter of public policy routine, some government agency or other would ask whether, given the amount of time and money devoted to it, the Single Market’s performance ought not be evaluated. Her Majesty’s Government could never, of course, be involved in such an investigation. Most members of the UK political elite had been speaking and soundbiting about its benefits for years. One deputy prime minister used to describe them as ‘immeasurable’ anyway. The ‘quality’ newspapers of the UK and media commentators tended to agree. So to British eyes, there could be nothing to measure.

Nonetheless, settled bureaucratic routines of the European Commission did finally notice that the performance of the Single Market had never been measured. After some 22 years, the moment had finally arrived. On 25 September 2014 a meeting of the Internal Market Committee of the European Parliament, helped by a Brussels-based consultant’s report, finally addressed the question: how might the performance of the Single Market be measured?[5]

The committee has not yet answered this question, but it has given its first thoughts about what would, and would not, be a suitable measure.

It first recommended that the chosen measure of its performance should not use economic indicators for a country-based annual assessment. Those who hoped that, at long last, the electorates of member countries might be able to judge how much or how little their own country might have benefited from the Single Market, will therefore be disappointed. All the measures used in these notes, such as the rate of growth of UK exports to other members, or the amount of FDI, or unemployment or productivity growth, are evidently unsuitable.

It also decided against a composite indicator, which means that it might not be quite so easy to say whether the Single Market is succeeding or not. The European Commission will evidently have several indicators and one imagines will therefore continually have a mixed ‘good in parts’ verdict. This will also mean that we will not be able to hold any particular Commissioner or Director-General responsible for any noticeable failure they happen to identify. Whenever it appears, this performance measure does not therefore seem as if it will mark a step forward in accountability.

Transparency and accountability were clearly not high priorities for members of this committee. Instead they recommended that ‘sectoral indicators could be used to highlight where the highest potential lies’, allowing predictions to be made about possible gains in the future, and hence enabling the EU tradition of propelling ever more integration on the basis of predicted future gains to continue, without having to reflect too much on the past, and having to decide whether it had been a success or a failure.

The second main recommendation is that regulatory performance might be measured by a ‘Single Market Gap indicator’ which could be ‘directly used by EU institutions (e.g. the Commission) in the European Semester process to define EU-wide or country-specific recommendations.’ In sum, the committee said that the proposed measure of performance might be a useful management tool to identify harmonization, integration and ever closer union.

Notes

[1] Commission of the European Communities, ‘Europe 1992: The Overall Challenge’, Brussels, 1988, Paolo Cecchini et al., SEC (88)524. http://aei.pitt.edu/3813/.

[2] Fabienne Ilzkovitz et al.

[3] Barry Eichengreen and Andrea Boltho, ‘The Economic Impact of European Integration’, Centre for Economic Policy Research Paper No. 6820, 2008, pp.30-32 http://eml.berkeley.edu/~eichengr/econ_impact_euro_integ.pdf

[4] The Cost of Non- Europe in the Single Market: An overview of the potential economic gains from further completion of the European Single Market of EU GDP, PE 510.981, EPRS European Parliamentary Research Service, September2014: www.europarl.europa.eu/…/EPRS_STU(2014)510981_REV1_EN.pdf

[5] “Indicators for measuring the performance of the Single Market – Building the Single Market Pillar of the European Semester”, presentation held during the IMCO Committee meeting of 25/09/2014. A summary of their conclusions was prepared for the Directorate General for Internal Policies by Carine Piaguet entitled Can we measure the Performance of the Single Market? PE 536.298 EN

Summary http://www.europarl.europa.eu/RegData/etudes/ATAG/2014/536298/IPOL_ATA(2014)536298_EN.pdf

Full Report http://www.europarl.europa.eu/RegData/etudes/STUD/2014/518750/IPOL_STU(2014)518750_EN.pdf


 

Please specify which chapter you are reading and offer feedback using the form below.