Tuesday, 11 May 2010

Mario Monti: A new strategy for the single market

The European Union and especially many of the member states squandered the decade of the Lisbon strategy for growth and jobs. Are we going to fare any better under the new Europe 2020 strategy taking shape?

Yesterday, 10 May 2010 we took a first look at the proposals by the “Wise Persons” in EU Reflection Group delivered report: Project Europe 2030. Yesterday, one of these twelve Wise Persons, Professor Mario Monti, completed a mission of his own.

Monti presented his report on a new strategy for the single market to the President of the European Commission, José Manuel Barroso.

For some additional material, you can go to the dedicated web page of the Bureau of European Policy Advisers (BEPA).

The main thing is, of course, Mario Monti’s report:

A new strategy for the single market – At the service of Europe’s economy and society (symbolically dated 9 May 2010; 107 pages)

What does Mario Monti propose as we approach the 20th anniversary of the project to complete the Single Market (1992)?

Monti’s report examines the challenges that an initiative to relaunch the single market faces today and outlines a comprehensive strategy to make such a new beginning politically successful and economically and socially viable (page 6).

Monti distinguishes three challenges for the single market:

• The erosion of the political and social support for market integration in Europe

• Uneven policy attention given to the development of the various components of an effective and sustainable single market

• A sense of complacency, as if the single market had been really completed and could thus be put to rest as a political priority

The report proposes a new strategy to safeguard the single market from the risk of economic nationalism, to extend it into new areas key for Europe's growth and to build an adequate degree of consensus around it.

It contains three broad sets of initiatives:

1. Initiatives to build a stronger single market;

2. Initiatives to build consensus on a stronger single market;

3. Initiatives to deliver a stronger single market.

Historic compromise

According to the Lisbon Treaty, one of the main aims of the European Union is to work for a highly competitive social market economy, aiming at full employment and social progress (Article 3 TEU).

What Monti proposes is no less than a historic compromise, a life-enhancing convergence of views at a higher level (page 9):

In particular, Member States with a tradition as social market economies could be more prepared to a new commitment on fully embracing competition and the single market, including a plan with deadlines on putting in place the single market in areas where it is still lacking, if Member States in the Anglo-saxon tradition show readiness to address some social concerns through targeted measures, including forms of tax coordination and cooperation, while there is no need to pursue tax harmonisation as such.

Monti points out that there is little room for budgetary stimuli, given the sad state of public finances. The proposed qualitative reforms to achieve a more efficient single market offer the best endogenous, self-engendered source of growth and job creation.

Is Europe mature enough to act on Monti’s wise vision of new dynamics, or is the EU going to wither under the command of the die-hards of ideological trench warfare?

Ralf Grahn