The European Economic and Social Committee (EESC) demands urgent action from the European Commission and EU Member States to dismantle barriers fragmenting the single market and keeping living costs high, even as inflation rates fall.
Despite steadily decreasing inflation in Europe, cost of living remains a concern, as millions of Europeans — especially the 94.6 million people at risk of poverty or social exclusion — continue to struggle with elevated prices.
In its opinion How single market dysfunctionalities contribute to the rising cost of living, adopted at its plenary session on 29 April, the EESC identified single market fragmentation as a major driver of persistently high costs and called for swift measures to strengthen competition, lower prices and boost investment.
‘The cost of living in Europe is fuelled by dysfunctionalities in the single market. We call for urgent action to tackle barriers that affect the costs of products (such as territorial supply constraints), and to speed up proceedings against national rules that infringe EU law,’ said Emilie Prouzet, rapporteur of the opinion.
Beyond territorial supply constraints (TSCs), the EESC pointed the finger at geo-blocking and diverging national rules as two of the main culprits of the dysfunction and fragmentation plaguing the single market. Despite the European Commission’s efforts to prohibit geo-blocking and address TSCs, these practices continue to create disparities in prices and product availability across Member States.
Fragmentation not only increases costs for businesses and consumers but also limits the variety of products available. The lack of harmonisation in financial markets, telecommunications, energy and pharmaceuticals further exacerbates market fragmentation.
The EESC pointed out that despite the fact that the single market boosts the EU’s GDP by 6-8%, fragmentation still costs the economy up to EUR 500 billion every year, which could be unlocked if the single market were completed. This figure can be broken down into EUR 228 billion each year for goods, and EUR 279 billion for services.
According to IMF estimates, non-tariff barriers within the EU are equivalent to customs duties of around 44% for goods and 110% for services. New barriers continue to emerge, further driving up costs for businesses and consumers.
To tackle this, the EESC has called for the following:
Immediate removal of regulatory and non-regulatory barriers limiting the free movement of goods, services, capital, and people.
Faster enforcement of EU rules that would see the Commission speed up infringement proceedings and use interim injunctions against clear violations of EU law.
Elimination of territorial supply constraints that artificially inflate prices for consumers.
Completion of the Capital Markets Union to unlock private and public investment across the EU.
Promotion of labour mobility and digitalisation to enhance worker protection and economic opportunities.
Better infrastructure integration in the energy and telecommunications sectors to create a truly unified market.
Assessment of housing market barriers to tackle rising housing costs.
Removal of healthcare market restrictions to guarantee affordable access to medicines.
This opinion is part of a wider EESC initiative tackling the cost-of-living crisis across seven policy areas, providing targeted recommendations for EU and national policymakers, civil society and stakeholders.
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