The single market in the evolving European economic crisis: the role of Wales

Pic: Alicia Villegas

The economic crisis has prompted an urgent need to increase Welsh competitiveness within the European single market to achieve growth.

Eluned, Baroness Morgan, former MEP and honorary distinguished Professor at Cardiff University, yesterday warned to the Welsh business community to face up to the current economic climate.
The single market seems to work better in other areas than in Wales but, for Eluned, Baroness Morgan, the issue is not the EU lack of support but a Welsh problem.

“In Wales we have three cases of top level EU funding and we are going backwards,” she said. “I am not sure where is the problem of the lack of growth, I am trying to work out what are we doing wrong, because whatever we are doing at the moment is not working,” she added.

Eluned, Baronness Morgan, who is now employed by Swalec, a company that is keen to look at opportunities for closer collaboration in innovation and research and development in Wales, said also that the Welsh business community should look into trade within the EU, as 15 per cent of Welsh trading good are in the European market.

“People speak about the importance of reaching out to countries like Brazil, Russia, India or China, which are all there with huge potential, but the fact is that Welsh businesses have more trade in Ireland that they do with all of this countries together,” she said.

During a roundtable at Cardiff University in which the future of the European single market in the light of the global financial and economic crisis was discussed, Eluned, Baroness Morgan explained that, at the time of the creation of the single market within the UE, the Welsh business community was very supportive of it.
“The single market in Welsh economy is key because a lot of investment came into Wales, attracting Japanese and Korean investors,” she said and, referring to the trading opportunities within the UE, she added: “I think it is fair to say that the opportunities offered to Welsh business are immense because of this market of 500 million people.”

The single market can offer benefits, but also some challenges and, with the current economic crisis, these ones are even more demanding.

“We are living in a global market where competition is fierce, facing the particular challenge that we have an aging population, so unless we are going to act together, we will not be able to pay for our older population, which could lead to a social crisis,” she explained.

Apart from the higher competition within the single market, there are other challenges that need to be addressed. Michelle Cini, European Politics professor from Bristol University, pointed out that gaps in legislation within the single market were a problem.

“Where the gaps are, tend to be the most controversial areas and the most difficult areas to legislate,” she said.

Ms Cini said that the businesses complained about the lack of legislation. Also the dynamic within the single market was another important issue that must be addressed, along with the lack of public confidence in the single market to deliver growth.

“It seems to be a tendency, at general level, to particularly look at the EU as a solution to the problems being faced in the financial and economic crisis, but perhaps the solution should be provided by the national governments,” she said.

Ms Cini also explained that opposition to the EU by some countries like the UK within the EU is a risk as it could trigger fragmentation and a shaper “two speeds EU”. She also worried about the critical voices who oppose a dominant role for the market.

“These voices perceive the single market as an example of the EU adopting a neoliberal approach, even if the language of the reports and the Single Market Act is very much the language of social Europe,” she pointed out.

To face these criticisms Henrik Morch, from the European Commission, highlighted the achievements of the single market, particularly in terms of opportunities for business within the EU, such us the huge potential of ecommerce. Mr Morch said that for the across border market, ecommerce is still insignificant, making up about a 3 per cent in the EU market, but if it were to double by 2050, the economic benefit of that would be huge, up to €700 billion.

“The single market is now part of the solution, is even more important now than ever because of the economic crisis, but at the same time, it is seen as part of the problem. This is the risk and I think it is important to highlight the very confident benefits that inter-markets give,” he said.

Mr Morch added: “There is not a single bullet to revitalise the single market and create thousands of jobs and economic growth in one goal. It doesn’t exist: the single market is built piece by piece.”