Single market fragmentation: Potential gains from greater integration

On 4 December, Flint Global released a new economic impact report commissioned by Amazon quantifying the potential gains from further integration of the EU Single Market for goods and digital markets – and, therefore, the costs associated with continued fragmentation. With the new European Commission committed to fostering European competitiveness, the report shows that completing the Single Market is crucial to achieving the EU’s economic objectives. Our analysis shows that further integration could also generate additional tax revenue across the EU contributing to close the €800 billion yearly investment gap, identified in Mario Draghi’s report on EU competitiveness.  

The EU Single Market remains fragmented, limiting EU companies’ ability to scale up and compete internationally and preventing citizens from reaping their full benefits. The report’s findings support the political momentum for completing the Single Market in the new EU mandate, building on the Letta and Draghi reports using a quantitative analysis of the costs of persistent Single Market fragmentation and the potential gains from ambitious progress. 

Written by Andy King, Specialist Partner at Flint, the report builds on a review of credible studies and demonstrates that further progress towards completing the Single Market in goods and digital could raise EU-wide GDP by amounts that could be as large as €198 to €335 billion a year in a high ambition scenario (equivalent to 1¼ to 2% of EU GDP in 2024). This could generate as much as €136 billion a year of additional tax revenue across the EU – a potentially significant contribution to help close the €800 billion a year investment gap identified in the Draghi report. 

Overall, these figures strongly support the importance of deeper Single Market integration as a key lever for boosting the EU’s economic competitiveness, in line with the recommendations of the Letta and Draghi reports. 

The report was discussed at a panel discussion held on 4 December in Brussels, sponsored by Amazon. The panel included Mr Paweł Karbownik, Deputy Minister of Finance of Poland, Ms Mary Veronica Tovsak Pleterski, Director for Single Market Enforcement, European Commission, and Mr Philippe Adriaenssens, Policy Director at the European Roundtable for Industry (ERT). 

Read the full report here.