Why the euro crisis threatens the EU single market
Twenty years after the European single market was created, the euro crisis is posing a threat to one of the main achievements of European integration - the single market. Even the latest round of proposed improvements that the European Commission has announced will not be sufficient to mitigate this threat.
In a new ECFR paper Sebastian Dullien sets out the three most likely scenarios for how the euro crisis is likely to develop, and explains who each would adversely affect the single market and harm cross-border business and activity within the EU.
A full break-up of the Eurozone could shatter the single market and threaten the Schengen agreement.
A ‘muddling-through’ scenario would probably significantly damage the single market and reduce its depth.
A positive solution to the crisis in the Eurozone, involving a great leap towards a true fiscal and banking union, would probably see several countries (such as the UK) withdraw, shrinking the single market.
Any one of these scenarios may lead to a loss of EU influence in global trade negotiations and institutions like the IMF and G20.
Download ‘Why the euro crisis threatens the European single market' (pdf) - the kindle version of the paper is available here.
Click here to listen to a podcast with the author Sebastian Dullien.
“European policy makers must understand that they cannot separate the single market from finding a solution to the euro crisis. If they are not careful they could lose many of the real benefits that the single market has brought to Europe – from cheaper and better products on our shelves to a vast market for our businesses.” - Sebastian Dullien
The single market is an EU project to integrate the economies of its member states.Although several treaties contributed to this gradual integration, the current single market owes its existence to the abolition of hundreds of technical, legal and bureaucratic barriers that restricted economic exchange between EU members.
The Single European Act was signed in 1986 and came into force in 1987. The final implement of these measures took place twenty years ago, and were complete by the end of 1992.
According to the European Commission these reforms were responsible for generating almost three million extra jobs by 2008 and increasing EU27 GDP by €233 billion over and above what it would have been without the single market. This amounts to around €500 for each EU citizen.
This paper, like all ECFR publications, represents the views of its author, not the collective position of ECFR or its Council Members.