Former European Commissioner Mario Monti says the single market is “more unpopular than ever” and there is a real danger that it will fail.

Speaking at two conferences in Brussels last month, Monti said that Europe is suffering from “integration fatigue, market fatigue and reform fatigue”.

Monti said integration fatigue is the decreasing enthusiasm for more integration in Europe, while market fatigue can be described as a lack of confidence in the market. Reform fatigue is the lack of interest in reforming the single market. He said the financial crisis has enhanced this fatigue.

He said: “What makes the single market suffer most is that it takes for example, 30 years to agree on patents. That is due to the Council mainly.

“Also, the election of smaller parties means the larger centre right and left parties begin to feel the pinch of electoral competition and feel forced to take less adamant pro-European positions. So this pro-Europeanism is evaporating. I’m very pessimistic about it. A stronger single market will not fall from heaven.”

He added: “What we cannot afford is that the single market is perceived as a straightjacket which prevents national governments from pursuing their social objectives.”

In October 2009, Monti was invited by European Commission President Barroso to prepare a report on the re-launch of the single market. Originally established in 1992, the single market is one of the original core ideas behind the European project, but has never been fully completed and there are many gaps and bottlenecks that hinder its proper functioning.

The Monti Report was released and presented to the Commission President Barroso and to the President of the European Council Herman Van Rompuy on 10 May 2010. Its aim is to give new political impetus to the single market, by setting out a comprehensive strategy that will make such a re-launch a political, economical and social success.

The Report identifies three challenges that the single market faces today: the erosion of the political and social support for market integration in Europe; uneven policy development for an effective and sustainable single market; and a sense of complacency as if the single market was already complete.

Speaking at CEPS about his report, and also at the Madariaga Foundation, another Brussels think tank, Monti indicated his concerns about the rise of economic nationalism. Not only citizens and consumers, but increasingly also member states and politicians advocate such nationalism. Monti said: “The single market is less popular than ever, yet it is more needed than ever.”

He advocates new initiatives to strengthen the single market. As examples he mentioned the digital single market and achieving a low-carbon economy. He called the single market “a cornerstone of European integration.”

College of Europe Economics Department director Jacques Pelkmans noted “an unbelievable difference” between the Monti Report and the November 2007 Commission Communication on ‘A single market for 21st century Europe,’ with the Monti Report giving a strategic outline for the future.

But he identified two complexities in the internal market: horizontal issues where gaps such as the energy market and the digital economy remain, and horizontal issues which are sensitive to harmonisation and impact heavily on the socio-economic legitimacy of the internal market, such as taxation and services of general economic interest.

Although tax harmonisation is identified as a very sensitive issue and is seen by member states as a purely domestic issue, the Monti Report addresses the tax dimension of the European single market. In the light of the financial crisis Member States are likely to increase their tax rates to find sources of funding when they are restructuring their budgets, but this will not be done throughout Europe in a coordinated fashion.

Asked about the dangers of this development and how uncoordinated action can be socio-economically harmful, Monti said: “Competition in itself is not necessarily a bad thing, but in the case of taxation it is asymmetric. This might be good for mobile capital, such as corporations and highly skilled professionals, but bad for less mobile capital, for example unskilled labour.”

The danger therefore lies in capital flowing from one to another, cheaper location at the expense of jobs and income elsewhere. Monti has repeatedly stressed that he is not calling for a common tax in the European Union, which due to its sensitive nature could completely stall European integration. Tax cooperation between Member States however is in Monti’s view necessary for a “smooth functioning” of the single market.