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Amid Single Market celebrations, the fight to secure its future




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Thirty years of the Single Market have been celebrated at the European Parliament in Strasbourg but there are warnings that its future depends on resisting the protectionism that is gripping the global economy. Member states are hardly immune from the instinct to put their own interests first, writes Political Editor Nick Powell.

Few MEPs bothered to attend but the February sitting in Strasbourg opened with a ceremony to mark 30 years of the Single Market. A video hailed a former President of the European Commission, stating how in 1993, “Jacques Delors’ vision became a reality”.

The role of Delors’ Vice-President for the internal market, Arthur Cockfield, sometimes known as the ‘Father of the Single Market’, wasn’t mentioned; still less the forceful support he received from the Prime Minister who had nominated him, Margaret Thatcher. Rather, the President of the Parliament, Roberta Metsola, said she could not talk about the Single Market, “without mentioning the regretful departure of the United Kingdom, where we truly understood what it means to be part of the Single Market”.

Her point was that it is easy to fall into what she called “the warped narrative of Eurosceptics”, implicitly acknowledging that such views have not disappeared from European political discourse with the departure of British politicians who could not accept what Margaret Thatcher had signed up to.

Competition Commissioner Margrethe Vestager told MEPs that even after 30 years, the Single Market was “not a given”. She even added that “this is not for ever”, perhaps sounding more pessimistic than she intended. Her main message was that “we do not build competitiveness out of subsidies”.

Commissioner Vestager has written to EU finance ministers proposing a new state aid framework, warning of the risk of businesses relocating to the United States due to the $369 billion behind President Biden’s Inflation Reduction Act. Its very name is a rejection of free market thinking, which maintains that subsidies and protectionism drive up the prices paid by consumers.

With that in mind, the Commissioner wants temporary, targeted and transitional measures offering ‘anti-relocation investment aid’ proportionate to where “such risk really exists”. The threat to the Single Market is that not all Member States have the tax base to fund it, “the same fiscal space for state aid”, as she puts it.


“That is a fact”, she continues, “a risk for the integrity of Europe”. The temporary crisis framework, to tackle first the economic consequences of the covid pandemic and now of the Russian invasion of Ukraine, has enabled those with the deepest pockets to help their businesses the most.

Of the €672 billion that the Commission has approved under the framework, 53% has been spent by Germany and 24% by France. Italy comes third on 7%, with spending by the other 24 countries barely visible on the Commission’s graph.

Vestager’s answer is to set up a collective European fund to match to US firepower, though the Americans might observe that so far they’re the ones who’ve been outgunned, with Germany alone roughly matching the expenditure that they’ve authorised. But they’d get little sympathy from Council President Charles Michel.

He told the European Parliament that the green transition goals in the Inflation Reduction Act were laudable and legitimate but that the subsidies and tax credits posed serious problems for international competition and trade. “Our American ally is embracing a massive state aid policy”, he warned.

He defended the social market model that leads to higher labour and environmental costs in Europe, while there were also higher energy costs than in the United States. “We must therefore mobilise massive resources to drive forward an ambitious European industrial policy to boost competitiveness, to turbo-charge productivity and to spur investment”.

At much the same time as Michel’s speech in Strasbourg, Commission President Ursula von der Leyen addressed the World Economic Forum in Davos. She spelt out the plans to ease EU restrictions on state aid while also suggesting that the US and EU needed to cooperate more. Essentially she wanted European firms to benefit from American subsidies when they sell goods such as electric cars in the US market.

Presumably that would be on a reciprocal basis. The EU subsidising imports from the United States would be quite a shock to the system as the Single Market enters its fourth decade.

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