Still waiting…
…for a single European market in services. The Economist this week reports on Europe at 50, but doesn’t give enough column inches imo to the failure of the European project to create a truely common market in services; a failure that unless remedied sooner rather than later is an enormous opportunity missed to transform the old continent’s economy into a driver of global growth over the next 50 years.
Decisions promoting the single market from the European Court of Justice promoting a single market in services are heartening but enforcement being nine tenths of the law, what is really needed is for Europe’s national politicians to have some courage and to stop hiding behind parochial and protectionist barriers. The Telegraph reported on one such decision last week:
The UK companies said last week’s European Court of Justice (ECJ) “Placanica” ruling that Italy’s restrictions on Liverpool firm Stanley International Betting were discriminatory and out of step with EU law, will prove vital in their individual battles. The ECJ ruled that countries can write their own rules on gambling, but if they allow gambling companies to operate, they cannot discriminate against or restrict licensed competitors from abroad.
Financial services are at a similar impass – the nature of the product should drive innovation and competition accross borders – especially within the Euro zone. And yet anyone who has worked in a bank, securities firm or insurer in Europe understands that the free movement of capital within Europe is a long long way from being replicated with respect to the firms that offer financial services. In addition to hurting customers – especially retail customers (in the name of course of, ahem… ‘protecting’ them…) – it stifles innovation and favours incumbents and giants (who have the mass to absorb the duplication of regulatory and legal infrastructure accross a dozen or more different jurisdicitions within Europe.)
Given the even more parochial and fragmented nature of much regulation and practice on the other side of the Atlantic, there is a real opportunity for Europe to become the driving force behind the next paradigm in financial services – and reap the concomitant economic rewards that comes from hosting vibrant industry clusters. I hope the leaders of Europe have the vision and conviction to embrace this opportunity sooner rather than later.
