How important is the single market?

The surprising answer is "not much" as, according to a study of some standing publicised by Adam Tooze of the Wall Street Journal, the long term impact of the single market is "negligible"*. The cumulative impact on gdp growth of the single market, averaged over the number of years since each EU member state joined the single market is a totally underwhelming 0.79%. Not 0.79% a  year, 0.79% in total. Even Germany's economy has benefited by a total of only 1.55% since the single market started in 1993. I picked up on this from the website eurointelligence (a pro-EU source, note) which said**:

For a policy to boost GDP per capital by 0.79% on average over a period of 25 years, essentially means that it has had virtually no effect. The slightest measurement error would blow this result out of the water. And even if the numbers are correct, expect there to be real losers as a result of a massive re-distributional effect that resulted from the single market - from smaller to larger companies and from the periphery to the centre. 

Some countries, like the Baltic States and Romania, have only benefited by about 0.1% and for Greece the single market has been negative.

I found this conclusion gobsmacking. I had taken it for granted that the single market had brought enormous benefits. My economics guru, David Smith, waxes lyrical about its impact. So I checked out the background for myself. The study was carried out by London Economics, one of Europe's leading specialist policy and economics consultancies. (Who says so? They do, on their website). The London Economics report was commissioned by the American Chamber of Commerce to the EU (which snappily calls itself AmChamEU), a body which says it "speaks for American companies committed to Europe on trade, investment and competitiveness issues. It aims to ensure a growth-orientated business and investment climate in Europe. AmChamEU facilitates the resolution of transatlantic issues that impact business and plays a role in creating better understanding of EU and US positions on business matters." The report is 136 pages long (I didn't read it all) and can be downloaded free if you want to read it for yourself***. But, to save you the trouble, it says that:
"The Single Market has brought jobs, opened new opportunities for citizens, consumers and businesses, made their life easier and this study shows it in detail. The contribution of the Single European Market to people’s wellbeing is significant. The researchers calculated how many new jobs were created thanks to being in the Single Market, how much more money consumers could spend and companies could invest and how much the wealth of each one of the EU countries has increased."

Reading on, it quantifies the extent of this enormous wellbeing: "The resulting estimates show that EU GDP per capita is 1.0% higher than it would have been without an increase in integration since 1995." Wow! Double wow! That is is the noise in terms of the accuracy of economic data. It's two-thirds of sodall (sorry, nothing at all)!

The report does say that "the single market has brought jobs": there are estimated to be around 1.9 million additional jobs. Wow again! That doesn't sound very much either! So I checked for myself - and you can look up the EU eurostat website**** also if you are sad enough. Most of the stats are about employment rates but after a fascinating few minutes I found that, of the EU's total population of 510 million in 2016, 219 million are aged 15-64 and in employment. There will be a small number of over 64s in employment but, to a first approximation only around 2 million of 220 million employed  people owe their jobs to the single market.

I tried to understand how the analysis had been done. They used an "econometric model" (me neither) to try to distinguish the benefit from the greater integration provided by the single market. So my take on the study is that it is attempting to assess not the benefit of being in the EU, but rather the marginal benefit of the "frictionless" single market compared to the previous status quo, effectively the customs union. As there are disbenefits as well as benefits from the customs union (for example, we pay tariffs on satsumas to protect fruit growers in Spain) I'll take the conclusion at face value. The single market is actually a bit of a raspberry.

 The surprising take away conclusion, as I said at the start, is the single market doesn't seem to have added very much to Europe's prosperity, though with the caveat that the larger countries (like Britain) have benefited the most, though still not that much.

That doesn't mean our transition away from the single market will be painless, but my opposition to a very soft Brexit has just hardened. And I think a lot of other people would think the same if this amazing statistic gets broader publicity.

* The reference to the Wall Street Journal is https://www.wsj.com/articles/from-german-faucets-to-italian-chocolate-trade-barriers-are-rising-again-in-europe-1513185466?mod=djemlogistics&mg=prod/accounts-wsj but I haven;t read the piece as it's a subscription only site. However the original source document by London Economics is referenced below.

**http://www.eurointelligence.com/public/briefings/2017-12-15.html?cHash=6c3b1505ff78fef255f1d6c0c177ffa7

*** https://londoneconomics.co.uk/blog/publication/eu-single-market-impact-member-states-december-2017/ full document is at
http://www.amchameu.eu/sites/default/files/publications/files/amcham_eu_single_market_web.pdf

**** EU employment stats are at http://ec.europa.eu/eurostat/statistics-explained/index.php/Europe_2020_indicators_-_employment#Data_sources_and_availability
The detailed table showing the number of people in work aged 15-64 is at http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfsa_pganws&lang=en