The report was commissioned by the European Financial Services Round Table (EFR), the group made up of Chairmen and Chief Executives from many of Europe's leading banks and insurers. It is published today as a contribution to the preparations for the Barcelona summit.
The report identifies a range of economic benefits from a single market:
- Faster economic growth within Europe. On conservative estimates, closer integration of the European financial services market would create additional economic growth across Europe of at least 0.5% per annum, or euros 43 billion per
annum, based on year 2000 figures.
- Substantial reductions in industry costs, resulting in lower prices for consumers. For example, potential annual cost savings of euros 5 billion in the European mutual fund industry alone have been identified.
- Increased competition, for example forcing lenders to respond more quickly to falling market rates. In an integrated market, it is estimated that households in various countries could have saved between euros 800 and euros 2,500 per annum through lower interest payments on a €100,000 mortgage loan in the period 1995-1999.
- Better risk/return profiles for investors through diversified Europe-wide portfolios.
- Higher acceptance of the Euro, leading to falling liquidity premiums and lower transaction costs.
The report also identifies policy-induced obstacles to the completion of a single market, for example discriminatory tax practices and the wide variations between Member States in the national rules governing pension provision and consumer protection.
Pehr Gyllenhammar, the Chairman of the Round Table, said:
"This independent report is a robust economic analysis of the potential benefits of the single European market, by a group of distinguished economists. Its careful analysis identifies substantial benefits for European consumers, emphasises the economic importance of making further progress to remove barriers to choice and competition, and highlights the importance of policy makers tackling these issues swiftly and decisively.
"Progress on financial services is an important objective for the forthcoming Barcelona summit. We in the financial services industry will play our part in working with the European Commission, the European Parliament and the Council to design and implement the practical reforms required to complete the vision of a single European Market. Planned enlargement makes it even more urgent to complete this task."
"Claude Bébéar, Chairman of the Supervisory Board of AXA, and Michel Pébereau, Chairman and CEO of BNP Paribas, both members of EFR, welcome with great interest this independent research paper and fully support its conclusions. The completion of a truly unified market for financial services shall promote economic growth and increase the satisfaction of consumers, two key elements for BNP Paribas and AXA."
The full text of the report, together with supporting academic papers, is available at www.zew.de/erfstudyresults.
The European Financial Services Round Table website can be found at www.efsrt.org