Analytics, Economics, EU – Baltic States

These are very hard times for both consumers and businesses. Economic predictions are bleak and are still worsening. There is a slump in consumer spending. These are testing times indeed. Extraordinary challenges. We are in unchartered waters and having to use our ingenuity and inventiveness to try navigating our way out of this crisis. This is going to dominate Commission’s policies and approaches for 2009 and beyond. As bad as this financial and economic crisis is there is no doubt it would be worse without the Single Market.

Through the internal market we can find the ingredients that will help re-launch economic recovery in Europe.

A comprehensive Commission-wide effort is now underway to address financial crisis on a number of joined-up strands. E.g. in applying EU law on competition and state aids flexibly and fast, coordinating Member States’ actions in close cooperation with the EU to bail out ailing banks. And the EU has been quick in proposing the most urgent adjustments to the EU regulations. Proposals have been tabled on deposit guarantees, credit rating agencies and capital requirements for banks, which are going to be adopted soon. And there is more to be done. This work must continue because the risks to the financial system are far from over; and Parliament has a crucial role in this work.

At the same time the Commission has taken decisive first steps to stem the recession in the real economy. In December 2008 the European Council endorsed the Commission's proposal for an economic Recovery Plan for Europe. Governments have shown unity in facing up to risks that we can only tackle together. Now every effort must be made to act upon what we have agreed.

The single market must be part of that effort. The single market is one of Europe's "most valuable assets" that should be maintained and further developed. Both today, and in the future: today, because our market of 500 million people and our single currency are cushioning the effects of the financial crisis and recession. And in the future, because the single market will allow us to grasp, shape and lead the process of globalisation, and will contribute to the process of recovery.

The more effective that the single market is, the easier firms and entrepreneurs will find it to invest again and create jobs once the credit crunch eases and banks lend again. The Single Market Review has a specific contribution to make to this crisis.

At the end of 2008 the Commission presented the first annual report on the implementation of the 2007 Single Market Review.

The messages of this report (16th December 2008) are both clear and straightforward: the orientations of that Review are proving to be the right choices to face the current recession. The following are the main “orientations”:

Consumer confidence and consumer opportunities

First of all, what helps boost consumer demand will help cushion the impact of the crisis. A number of initiatives have been launched since 2007 to enhance the protection of consumers and increase consumer choice in retail markets. More will be done in the medium term.

The Commission has tabled a proposal to create a harmonized set of consumer rights in the single market, so that consumers know they can get the same level of protection everywhere in Europe. This proposal is presently before the EP’s committee.

In the area of financial services, safer financial products – bank accounts, savings, investment products and payments – were all prioritised in 2008. For instance, a code of conduct has been agreed with the banking industry to make it easier for consumers to switch from one bank to another. And we will publish a White Paper on retail investment products shortly to give consumers reliable information and protection for the various competing investment products they can choose from.

Only well-informed citizens and consumers can make well-informed choices. Therefore, the Commission has launched a project to create a "Single Market Assistance Service" by early 2010. The aim is to give users a single and simple gateway to replace the maze of information, advice and problem-solving services they have to find their way through at the moment. The Commission is working hard on this project and it will keep the Parliament closely informed during the course of this year.

Easing burdens and creating opportunities for SMEs

Secondly, the single market must also take care of the needs of small business. They play a crucial part in innovation and job creation. More than ever, our priority in 2009 must be to improve and ease the environment to help firms – and in particular SMEs – to cope with the deepening recession.

Several reform proposals are on the table of the Council right now and can yield large cost-savings for companies quickly. The Commission’s proposal on a simple, single European private company statute of June 2008 must be mentioned, as well as the Community patent and the proposal for a unified patent jurisdiction. The EU will table a proposal to give Member State an option to exempt micro-entities from the accounting rules. All these proposals can save SMEs large amounts of money. But time is of the essence. Member States must now cast aside vested interests and national vanities and reach agreement.

They need to show a strong political will to overcome these hurdles now and the EP’s support to this effort would be highly welcome.

Upholding the principles of the single market and modernising the way it is managed

It is known very well that it will be a challenge to stick to the principles of the single market as the EU economy is sliding deeper into the recession. The temptation may be all too great for some Member States. But the Commission is firmly committed to ensuring that these principles are applied and it will do everything to uphold firmly our level playing field and the principle of non-discrimination. That level playing field is the very foundation of the prosperity we have reached in Europe.

We should not throw over board now what has served us so well during decades. If we had not already created our single market then I am certain, as a response to this crisis, we would be busy setting one up.

Each EU policy field will play a constructive role in translating the recovery effort into meaningful actions of course. The Commission will assist and help Member States where it can. In the Internal Marker Service for example, an accelerated public procurement procedure will be applied throughout 2009 and 2010 for all major public projects.

The Commission is also ready to assist Member States in fine-tuning national recovery programmes to find the right procurement solutions.

And in line with the philosophy of our Single Market review, we want to expand this "partnership" with Member States into every policy area. In June 2009 the Commission intends to present a Recommendation on the joint management of the single market. This Recommendation will set out a number of actions that Member States can take to improve transposition, application and enforcement of single market rules. It will look at ways to better inform citizens about their single market rights. And it will present ideas on how to improve internal and cross-border cooperation between authorities in the 27 Member State.

Furthermore, to underpin this process a new Single Market Scoreboard will be publish shortly. We will look more closely at the quality of transposition, at Member States' performance on infringements, and at economic indicators for the success of the Single Market.

Finally, some up-dates on the implementation of the Services Directive.  

In line with the "partnership" philosophy, we have created a cooperative, network-based implementation process. We now have less than one year to go and all the EU Member States are working hard and have made considerable progress on implementation. Yet in this final phase now it is essential that efforts are stepped up once more. To deliver on time, Member States must now assign adequate resources in priority areas; there are some of them:

= Efforts to set up the "Points of Single Contact" need to be increased. Member States should by now be finalising concrete solutions for the organisation and practical functioning of the "Points of Single Contact", and they should be testing them.

= Closely related to that is the introduction of electronic procedures. Member States need to enhance efforts to ensure that service providers can use electronic procedures across borders.

Member States should complete their review of national legislation as quickly as possible.

= The assessment of a broad range of legislation was not an easy task. But timely completion of this process is essential for Member States to adopt the necessary changes in legislation.

= Member States should start preparing the reports to be submitted by the implementation deadline and get the mutual evaluation process underway in 2010. These evaluations will launch a peer review process covering many national rules that affect the functioning of the internal market. It will give all of us a detailed picture of where we stand in the internal market for Services. The Commission will – as is foreseen in the Directive – keep the European Parliament closely informed of this process and its findings.

= Practical arrangements for administrative cooperation between local authorities need to be rolled out on the ground. This year we will test the Internal Market Information system (IMI) in a pilot project on the Services Directive. Member States are now in the process of identifying the competent authorities that will participate. After registration of these authorities the testing phase will start as such. For all this, it is essential that Member States dedicate sufficient resources to awareness raising and to training the future users of IMI.

The Commission will continue to provide technical assistance, monitor progress, facilitate and coordinate work.

We have assigned a lot of our own resources to making this process work. But with less than a year to go, our targets can only be met if all Member States deploy sufficient resources and show the necessary commitment. The Commission will continue to inform the Parliament, which can provide for political support to keep the pressure on Member States in this work.

The single market can be an effective launch-pad for recovery and the more effective the single market is, the safer everyone's jobs will be in the European Union. A proper implementation of the Services Directive is a key measure to make investment and the creation of jobs more attractive, all the more so in the face of the economic slowdown.