- Only 20% of services in the EU are provided cross-border
- 60% of barriers in the EU single market have persisted for more than 20 years
- EU action to remove these long-standing barriers is insufficient
The European Commission has not taken sufficient action to remove the significant barriers that EU businesses have faced for years when providing services in another EU country, according to a new report by the European Court of Auditors. The Court criticizes the Commission for the lack of clear objectives and strategic ambition. At the same time, it notes that the EU member states themselves bear part of the responsibility for hindering the integration of the single market for services through the regulatory or administrative measures they introduce. The audit is set against the backdrop of major analyses on this issue, such as Mario Draghi’s report on European competitiveness and Enrico Letta’s report on the future of the single market, both published in 2024.
Services, ranging from construction and transport to architecture, IT and employment services, account for around 70% of the economic output (GDP) of EU member states, yet only 20% of services are provided across borders. As pointed out in the Letta report, significant barriers still need to be removed in order to fully unlock the potential of the single market for services. At the heart of the problem are major differences in national licensing and certification requirements, divergent national rules, burdensome administrative procedures and restrictions on posting workers abroad, all of which contribute to the persistence of long-standing barriers that make it harder for businesses to provide services in another member state and increase the associated costs.
“Businesses in the EU still struggle to provide services across borders,” said Hans Lindblad, the member of the Court responsible for the audit. “The Commission’s efforts to remove barriers remain insufficient.”
Around 60% of the barriers to providing services in the single market identified in 2002 still existed in 2023 and continued to hamper business activity and price competition. The Commission did take action to address this issue, but by 2025 those measures were not based on a strategic approach, nor was there a proper procedure for removing the barriers with the greatest potential impact. Little changed with the Commission’s adoption of a single market strategy in 2025, as it relies on tools that are unlikely to be highly effective.
Although the Commission supported member states in facilitating cross-border service provision, businesses still do not have full access to the information needed to provide services in another member state. In addition, the EU’s annual cycle of economic policy coordination, known as the European Semester, did not lead to significant regulatory reform in the services sector, and very few member states used the post-COVID recovery fund to reform the services sector and remove regulatory barriers.
Overall, enforcement of the rules governing the EU single market for services was unsatisfactory. Above all, the Commission encountered serious difficulties in this area and relied mainly on infringement proceedings against member states to enforce single market rules for services. However, it did not always act quickly when countries failed to comply with the EU Services Directive. There were also shortcomings in the Commission’s handling of complaints submitted by businesses against states alleged to have breached EU rules: the handling of such complaints was sometimes lengthy and placed small businesses at a disadvantage.
Studies show that removing existing barriers could bring substantial benefits. However, the Commission does not have a full and up-to-date picture of the barriers related to cross-border services and has not yet sufficiently analyzed the costs, benefits and possible effects of removing those barriers.
The auditors proposed several ways for the Commission to improve its effectiveness in integrating the single market for services. In particular, the Commission should develop a clearer and more ambitious strategy, make more active use of the European Semester, and more effectively encourage member states to carry out the necessary reforms. It should also clarify the rules, target enforcement at cases with a major impact on the single market, strengthen tools that facilitate the cross-border provision of services, and monitor and assess progress in building a true single market for services.
Background information
In the EU, individuals and businesses have the right to provide and receive services across borders without discrimination or unjustified restrictions. The free movement of services supports competition and economic growth and strengthens the EU single market. The Services Directive is the main legislative instrument for removing the most important national barriers to trade in services within the EU.
In terms of the intensity of cross-border trade in 2023, imports and exports accounted for 0.4% of turnover in the wholesale and retail sector, 0.8% in construction, 4.6% in legal and accounting services, 6.6% in engineering services, 8.1% in transport, 15% in IT services, and 31.8% in advertising and market research. In its own analysis, the Commission estimated that ambitious new reforms would generate additional growth potential of 2.5% of EU GDP by 2027.
The European Court of Auditors (ECA) is the institution of the European Union responsible for auditing EU finances. It was established in 1977 and is based in Luxembourg. The Court operates independently of the EU’s other institutions and serves as the external auditor responsible for ensuring that EU funds are spent lawfully, efficiently and soundly.
The ECA examines the accounts of all EU institutions, bodies and agencies, audits the way member states use EU funds, and presents its findings in annual reports published for the European Parliament and the Council. The Court’s conclusions form the basis for the so-called discharge procedure, that is, the approval of the implementation of the EU budget by the European Commission.
The Court is composed of one member from each member state, appointed for a six-year term. The European Court of Auditors does not have judicial powers, but its reports carry significant political and administrative weight, influencing how EU funds are managed and how financial irregularities are addressed.
