Macroeconomic Effects of the Services Directive

Making the Single Market more dynamic has been identified as one of the top priorities to improve the EU’s growth performance.1 In contrast to manufacturing industries, where the Single Market appears to be working quite well2, an assessment by the European Commission3 on the state of the internal market for services has identified a large gap between the vision of an integrated European economy and reality in service industries. There are still many impediments to the free movement of services in the EU. Particularly for small and medium-sized enterprises, the bulk of service providers, entry barriers in new EU markets are often prohibitive. With the Directive on Services in the Internal Market (SD) the European Parliament and the Council aim at removing the remaining barriers in this area to enable firms to exploit the full potential of cross-border services. This would be an important step forward in bringing the EU closer to its Lisbon targets.