VP Ansip’s Funky Maths (or The Fastest Growing #DigitalSingleMarket in the World)

A market that grows from €17 Billion to €415 Bn in nine months? That’s where I would put my money! Except of course this growth only exists in EU Commission documents, the digital single market is an abstract concept. When the Juncker Commission took office last autumn, its expected this abstract concept to contribute “€250 billion of additional growth over the next five years”*. First look, this may look like €250 billion per year, but it’s over five years. Now, that does not mean €50 billion added per year, but only just short of €17 billion! (17+34+51+68+85=255).

Now, only nine months later DSM VP Andrus Ansip talks about a contribution of €340 billion, but when I asked his office for details, I was informed the number has been adjusted to €415 billion. That is a 2441% growth in nine months! Where will this end? The sky is surely the limit in digital economic forecasts.

What’s the substance here? The number €415 billion refers to the report The Cost of Non-Europe from European Parliament, but this is the efficiency gain expected from the digital single market – not the GDP contribution. Of course efficiency gains can allow different economic activity that contributes to GDP, but in itself it’s a saving – less economic activity, not more. That is a familiar pattern – digital economies of scale can give lots of efficiency gains – not least because users themselves do some of the work that bank clerks, travel agents and encyclopedia editors used to do. But that does not automatically equate to more jobs and growth. So far, the conclusion is rather that it gives limited growth and no net increase in wages, but great profits for the owners of the “free” services. Those who think that’s a great recipe for Europe, please stand up.

Tomorrow, we take a closer look at the projections for jobs in the Digital Single Market.