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New Open Europe report: How to reignite the EU's services market and boost growth by €300bn

(PresseBox) (London, ) Open Europe has today published a new report showing that fully implementing the EU's existing Services Directive and further liberalising EU services markets would produce a permanent increase to EU-wide GDP of up to 2.3% or €294bn.

The report argues that, in order to break the political deadlock currently holding back an ambitious EU Services Directive, now is the time for a smaller group of countries to use a quirk under EU law - the so-called 'enhanced cooperation' procedure - to remove barriers to cross-border services trade amongst themselves. This could still provide a permanent boost to the EU economy of over 1% of GDP, or more, depending on which countries sign up.

Open Europe's Director Mats Persson said,

"EU-mandated reform programmes are already being used to open up and liberalise the services sector in places such as Greece and Portugal so, logically, the very same reforms should happen at the EU level. Governments now have the chance to show they're committed to 'more Europe' in the area where it really matters - reigniting economic growth and boosting employment."

In a foreword to the report, Gustav Blix, Swedish Member of Parliament (Moderate Party), Ranking Member, The Committee on European Union Affairs, said,

"The EU is plagued by unsustainable levels of unemployment, deficits and debt - problems that can only be met by economic growth. This timely report shows the huge potential economic gains to be had from liberalisation and boosting cross-border trade in services, and explores several different avenues to achieve this."

In response to the report, Dr Adam Marshall, Director of Policy and External Affairs at the British Chambers of Commerce, said,

"The single market in services, which would benefit Britain, has barely started - in contrast to the single market in goods, which has benefited Germany for years now. Open Europe has made a strong and robust case for action in Brussels and national capitals across Europe. Its proposals for real liberalisation in services, and for enhanced cooperation between those countries who believe in free trade in services, deserve the attention of policy-makers and businesspeople across the EU."

Key points:

- Fully implementing the existing Services Directive and implementing a new "country of origin" principle, a trade-boosting measure that was removed when the Directive was originally negotiated, would boost EU cross-border trade and produce a permanent increase to EU-wide GDP of up to 2.3% or €294bn, in addition to the €101bn already gained under the Services Directive (0.8% of EU GDP).

- If agreement among all 27 member states isn't possible, a smaller group of EU countries should now press ahead with greater integration in services under the EU's so-called 'enhanced cooperation' procedure, which is being used to pursue the financial transaction tax. This was an idea first floated by Mark Rutte, the Dutch Prime Minister, in 2011.

- In a "pro-growth" letter in February 2012, twelve member states - the UK, the Netherlands, Italy, Estonia, Latvia, Finland, Ireland, Czech Republic, Slovakia, Spain, Sweden and Poland - all committed themselves to "open up services markets".

- We estimate that if only this group of countries were to fully liberalise their services markets, it would still produce a lasting boost to EU GDP of up to 1.17% or €147.8bn. If other countries, such as Germany, were persuaded to join, the economic benefits would be increased further. Ultimately, this measure should serve as a springboard to achieve services liberalisation for the entire EU.

- The political benefits of further services liberalisation are threefold:

1) It would be a positive, constructive, and pro-European means by which to secure continued engagement in the EU from non-euro countries, particularly the UK.

2) It would provide a new legally enforceable framework to improve competitiveness and growth in the Southern euro member states and therefore boost the economic prospects of the eurozone, but without costing an extra cent of Northern countries' taxpayers' money.

3) It would improve EU-wide growth, competitiveness and employment at a time when Europe is at risk of global economic decline.