The single market was introduced with Maastricht Treaty in 1992; it removed the barriers to the movement of people, goods, capital and services.
There are a number of benefits of the single European market:
- Firms are able to achieve greater economies of scale.
What will happen to a firm’s average costs if it is able to achieve greater economies of scale?
What is a possible impact upon consumers?
- It is made cross border mergers and takeovers easier.
- Firms will be forced to become more competitive as they are exposed to more competition.
How should this impact consumers?
- An increase in foreign direct investment should take place by firms wanting to produce within the single European market.
- Individuals have the right to work, study or retire in any of the member countries.
- A decrease in red tape for businesses that wish to export to other countries in the single market.
- It should reduce price differentials.
There are also a number of disadvantages of the single European market:
- The increased competition may lead to some firms not being able to compete and there will be job losses.
- Some markets have not been completely opened up, for example, gas and electricity supply.
- Differences in taxation laws can still make trade with and working abroad somewhat complicated.
- There are still significant differences in prices between countries in the single market.