Benefits of EU Membership

The Single Market is a border-free area where goods, capital, people and services move freely. Importantly, it also allows for the free movement and exchange of data, knowledge and information. The Single Market aims to boost competition and trade, improve efficiency and regulations, raise quality, reduce prices and technical barriers, and harmonise national rules. While clear economic benefits are arising from these, Single Market rules also promote consumer and environmental protection, employment, and health and work standards, which will be discussed later in this briefing.

Importantly, the Single Market is not like any other free trade agreement (FTA). The latter often focus on a selection of sectors and individuals, while the former is, in essence, non-discriminatory and applies to all citizens and sectors. Contrarily to FTAs, Single Market rules (e.g. competition and state aid policy, mutual recognition) are enforceable by supranational bodies, particularly the European Court of Justice (ECJ), with EU law having supremacy over national legislation.

By reducing trade barriers, supporting competition and cutting prices, the Single Market contributes to increases in trade flows, GDP and employment. In 1988, the Cecchini Report – a highly influential contribution in preparation for the completion of the Single Market in 1993 – estimated the economic gains from the Single Market to be at European Currency Unit 200 billion. While it is difficult to estimate the growth effect directly related to the Single Market precisely, it is clear that EU economic integration is partly responsible for the huge increase in intra-EU trade and its related growth and employment. For example, recent empirical studies suggest that trade in goods and services has increased by 109% and 58% respectively, thanks to the Single Market. EU GDP would be 8.7% lower if there were no Single Market integration (see Figure 1).

All countries benefit from Single Market integration. Graph 1 of Figure 1 shows the amount citizens gain in welfare every year (in 2016 values). It is quite clear that Western Europeans benefit more in absolute terms, in terms of welfare, than those from Southern and Eastern countries. Reversely, Graph 2 shows the relative impact and how much smaller national GDP would be if tariffs and non-tariff barriers, eliminated by the Single Market, were reintroduced. The geographic picture is more nuanced, as the countries registering the highest losses are Luxembourg, Slovakia, Czech Republic, Belgium, Hungary and the Netherlands.

Figure 1. Economic benefits of the Single Market