Mario Monti (2010): A new strategy for the single market

We are on the reform trail.

The free movement of goods, persons, services and capital and the comprehensive prohibition of all discrimination on grounds of nationality, are means to achieve a highly competitive social market economy. The internal market, which now consists of 31 countries with a total population of 515 million, is often (aspirationally) called the single market.

When we want to study the development of the internal market during this decade, the obvious time to start is Europe Day 2010 and the document to read is the study by professor Mario Monti: A new strategy for the single market at the service of Europe’s economy and society (9 May 2010; 107 pages).

Rereading Monti’s report brought back the image of the  “historic compromise” he wanted to forge among dedicated market proponents and reticent players (here from page 9):

The new comprehensive strategy outlined above should be seen as a "package deal", in which Member States with the different cultural traditions, concerns and political preferences could each find elements of appeal important enough to justify some concessions, relative to their past positions.

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.

The magic treaty formula of a highly competitive social market economy was evoked already in the mission letter by José Manuel Barroso, the president of the European Commission.

Monti sketched opportunities for dynamic reform and remedies for social concerns at a strategic level, not only general enough but also penned finely enough to remain astonishingly fresh today.

Since the  margins available for budgetary stimuli were very limited, Monti reminded all actors that making the single market more efficient was Europe's best endogenous source of growth and job creation.

While summing up his proposals, Monti recalled that the member states had made the bold decision to share the same currency (page 107):

That requires, at the very least, a high degree of sharing effectively a single, integrated, flexible market, a prerequisite for an optimum currency area and a vector for improvements in productivity and competitiveness.

Finally, he called for the single market to be placed as a key item on the agenda of economic government, “the latest expression of the EU’s ambition to control its economic fate”.  

Ralf Grahn