Redeveloping Europe’s services economy

Services are crucial for the European Union’s economy since 70% of the EU’s Gross Domestic Product (GDP) comes from this sector, accounting for some 90% of job creation.

The services sector is still underperforming however. Productivity growth in the sector is low and the rest of the world is catching up. Barriers prevent firms from being set up and expanding while also leading to higher prices for consumers.

Moreover, the performance of manufacturing is increasingly linked to the competitiveness of services. Barriers to trade in services in the Single Market are therefore barriers to the competitiveness of manufacturing in the EU. To reverse this trend and create additional jobs and growth, member states need to stimulate the development of the services economy and make better use of the potential of the Single Market for services.

The EU is constantly working towards removing barriers for companies looking to offer crossborder services and to make it easier for them to do business. In fact, on 10 January, the European Commission presented an ambitious package of measures that should make it easier for companies and professionals to provide services to a potential customer base of 500 million EU citizens.

The underlying idea that led to the creation of such a package should deliver a fresh boost to the services sector and should benefit consumers, jobseekers and businesses, while generating economic growth across the continent.

Four concrete initiatives have been earmarked by the Commission in its newly launched package.

The creation of a new European Services e-card, a simplified elec- tronic procedure, will make it easier for providers of business services (for example, engineering firms and IT consultants) to complete administrative formalities required to provide services abroad.

The Commission is also proposing to streamline and clarify how member states should undertake a comprehensive and transparent proportionality test before adopting or amending national rules on professional services. Unnecessary burdensome and outdated rules that can make it unreasonably difficult for qualified candidates to access jobs will therefore be lessened.

An evaluation exercise that member states undertook between 2014 and 2016 showed that those that have opened up their services markets now benefit from a wider choice of services at better prices, while maintaining high standards for consumers and workers. The Commission will offer guidance on national reform needs in the regulation of professional services with high growth and jobs potential. This guidance will complement the European Semester evaluations by specifically addressing the requirements applicable to certain professions (architects, engineers, lawyers and accountants, among others).

Finally, the Commission is proposing improvements to the mechanism through which member states notify changes to national rules on services to the Commission. Member states will also be provided with the opportunity to raise potential concerns about possible inconsistencies with EU legislation early in the process.

Boosting the Digital Single Market and removing barriers in the Single Market are essential means for driving economic growth across the Union. As the smallest EU member state with an open services economy, Malta remains a strong advocate for the internal market and, during its Presidency of the Council of the EU, will work to strengthen it for the benefit of European businesses, particularly SMEs, as well as consumers. The Maltese Presidency also welcomes the Commission’s plans, in the framework of the Single Market strategy, to present its Services Package. It will seek to take forward the debate on the legislative initiatives under this package.

Considered as being an essential part of the roadmap laid out in the Single Market Strategy, this pro- posal delivers on President JeanClaude Juncker’s commitment to unleash the full potential of the Single Market, thus making it a launching pad for European companies to thrive in the global economy.

This goal was confirmed once more in the European Council Conclusions of December last year. The proposed measures aim to make it easier for service providers to navigate administrative formalities, and to help member states identify overly burdensome or outdated requirements on professionals operating domestically or across borders. Rather than amending existing EU rules in the area of services, the Commission focused on ensuring they are applied better, as evidence shows that implementing them to their full potential would provide a significant boost to the EU economy.

These proposals will now be sent to the European Parliament and Council for adoption. The implementation of the guidelines will be the responsibility of the member states. The Commission will monitor and assess progress and may turn to other enforcement measures if progress is unsatisfactory.

The European Council called for the different Single Market strategies to be completed and implemented by 2018.