Preserving Britain's access to the European Single Market is cited as one of the main reasons for continued membership of the EU – the single market essentially being the market for services, which has developed much more recently than the single market for goods.
The idea here is that the UK is a big net exporter of services, whereas it is a big net importer of goods, so it is in our self-interest to preserve access. That is a perfectly sound argument, but there is a problem. It is that the single market for services is not functioning very well. Indeed there are areas where it is in retreat.
The most obvious area of retreat is in banking. Banks everywhere have been pulling back from cross-border lending since the collapse of 2008. For example, nearly half of all home loans in the UK before the crash came from fringe lenders, mostly foreign. If you wanted a mortgage and the big four or five UK-based lenders would not give you the money you went, so to speak, to Iceland. Similarly the largest single problem of both the Royal Bank of Scotland and HBOS has been property loans in Ireland. The same is happening all over Europe, with most recently deposits being withdrawn from southern European banks, for obvious reasons in the case of Cyprus.
That is all understandable. But there is another area where the single market is not working at all well: telecommunications. There has been a steep decline in revenues across Europe, in contrast to those in North America and Asia, and this is projected to continue. Europe is the only region in the world where revenues are falling. The reason seems to be a mixture of inappropriate regulation, failure to monetise traffic, and market fragmentation. At least two of those could be attributed to policy. The EC wants to create a fully functioning digital single market by 2015, as well as a single market in information and communications technology as soon as possible. But it does seem a bit rum that the whole process is taking so long.