Understanding the Single Market for services

Services account for 70% of European Union (EU) GDP and for a similar share of jobs, but only 20% of services, representing 5% of EU GDP, are provided across borders. Intra-EU trade in services has been less affected by the crisis than trade in goods, however, and experts agree that further integration of the market will bring about significant economic gains. The free movement of services was mentioned in the Treaty of Rome back in 1957. Liberalisation efforts started at the end of the 1980s and with the introduction of sector-specific legislation and, more specifically, the horizontal Services Directive, many barriers have been removed. The market is much more open to EU-wide competition than in the past.

Nevertheless, many obstacles to greater integration persist and addressing them is a complex process, cutting through various policy fields and dependent on finding a compromise between sometimes divergent national interests. Also, the implementation of existing legislation is in many instances imperfect and national regulation of services often differs across the Member States making it difficult for businesses, especially SMEs, to provide their services throughout the EU. In its 2015 Single Market Strategy the Commission proposed a number of initiatives to address many of the shortcomings identified and to deepen the integration of the European services market.

Author: Marcin Szczepański