EU Must Strengthen the Single Market in Response to Trump’s Election

Extensive expansion of the EU single market for services can permanently increase gross value added in Europe by 2.3 percent or 353 billion euros. “Trump’s election as US President demands answers from Europe. A deepening of the single market, especially in relation to services, could increase the EU’s economic weight and make the EU more attractive for US companies,” says Lisandra Flach, Director of the ifo Center for International Economics.  

Removing barriers in the EU single market for services would increase the gross value added of all member states. In absolute terms, the largest increases would be in Germany (plus 67.8 billion euros), France (plus 37.8 billion euros) and Ireland (plus 29.9 billion euros). In relation to their economic strength, Luxembourg (plus 8.6 percent), Malta (plus 7.8 percent) and Ireland (plus 6.2 percent) would record particularly strong growth.

The calculations are based on a reduction in trade barriers for services in the EU single market by 25 percent (scenario 1) and 10 percent (scenario 2). This includes, for example, a reduction in bureaucracy or the harmonization of various national regulations. Reducing trade barriers for services by just 10 percent could increase gross value added in the EU by 0.5 percent or 77 billion euros. The calculations on the permanent economic effects relate to a time frame of 10 to 15 years.
 

Questions can be directed to: Prof. Dr. Lisandra Flach, 0049 / 89 / 9224-1428; Flach@ifo.de