The EU is currently facing its most severe economic crises ever, with unemployment rising and Gross Domestic Product (GDP) not returning to its earlier growth path. In the face of this situation, in April 2011, the European Commission launched 12 new initiatives under the Single Market Act with the aim of boosting the Single Market and exploiting its potential as a driver of economic growth in the EU.
However, there is a significant risk that the EU will not be in a position to reap the entire growth potential of the Single Market Act. The reason is the current poor performance of what we in this study call ‘Governance after adoption’ of EU legislation in important areas such as taxation (VAT), services, goods governed by mutual recognition and public procurement.
More specifically, we find that Member States not always fully adapt their national law framework so as to truly and completely comply with new EU legislation. In turn, this reduces the functioning of the legislation. Furthermore, we find that actual ‘real life’ application by civil servants and case handlers in national authorities is in some instances also too poor. Again, this reduces the effectiveness of the EU legislation and thus the contribution from the legislation to the EU economy.
We find rough indications that the lack of proper implementation and application in the four areas of tax, services, goods and public procurement may be reducing the expected economic gains from the core directives and regulations in these areas by 1/3; equivalent to a large two digit billion loss in euros. This is worrisome as taxation, services and public procurement are important parts of the Single Market Act.