EU Auditor Demands Reforms to Unlock Cross-Border Services Across the Bloc
The European Union’s external auditor just sounded an alarm that deserves attention: the EU’s single market for services is still far from working the way it should. And the numbers backing up that conclusion are, to say the least, concerning.
On March 25, 2026, the European Court of Auditors (ECA) published a special report calling on the European Commission to take a much firmer stance in removing the barriers that still hold back the free movement of services between member countries. The document is blunt: there is a lack of strategic ambition, a lack of clear targets, and above all, a lack of political will to turn long-standing commitments into real results.
Services account for no less than 70% of GDP across EU countries, yet only 20% of them are provided on a cross-border basis. This includes sectors like construction, transportation, architecture, information technology, and employment services. Even worse: roughly 60% of the barriers identified back in 2002 are still standing, more than two decades later. This is not just a bureaucratic issue. It is money, growth, and competitiveness left on the table due to a lack of coordination and, according to the court itself, a lack of strategic ambition from the European Commission.
The economic potential at stake is real and significant: making cross-border trade in services easier could generate an additional 2.5% GDP growth for the EU by 2027, according to the Commission’s own analysis. 📊 But for that to happen, concrete reforms need to move off the page and into the daily reality of businesses and professionals trying to operate beyond their national borders.
What the European Court of Auditors Report Revealed
The document published by the European Court of Auditors does not hold back on criticism. According to the auditor, the European Commission has failed to exercise effective leadership in ensuring the single market for services actually works. The report notes that, despite decades of negotiations, commitments, and directives, the real ability of businesses and professionals from one member state to access the market of another still faces concrete and persistent obstacles.
In many cases, those obstacles are created and maintained by national governments themselves. This includes professional qualification requirements that vary wildly from country to country, authorization processes that duplicate procedures already completed in another member state, and restrictions that, in practice, protect local markets rather than foster healthy competition.
As the ECA itself summarized in its press release, the EU’s financial watchdog criticizes the European executive for lacking clear objectives and strategic ambition, while also acknowledging that member states themselves bear their share of responsibility for undermining single market integration for services through regulatory or administrative measures.
Another critical point raised by the report is the lack of enforcement mechanisms with real teeth. The European Commission has tools to open infringement proceedings against countries maintaining illegal barriers, but the court found that those instruments are used timidly and inconsistently. The practical result is that many member states simply do not feel pressured enough to push through the necessary reforms.
There is a kind of regulatory comfort zone that benefits locally established players but severely hurts smaller companies and professionals who would like to expand their services beyond their own national borders. It is a self-reinforcing cycle: without real pressure, there is no change. Without change, fragmentation deepens.
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The court also pointed out that the absence of reliable, up-to-date data on the actual state of barriers in the single market makes any monitoring or course-correction effort difficult. Without clear metrics, it is impossible to know whether the actions being taken are working or not. The auditor recommends that the Commission develop a robust tracking system, with specific indicators and measurable targets, so that both citizens and member states themselves can follow progress — or the lack of it — in a transparent and objective way.
Why Free Access to Services Matters So Much
When we talk about the free movement of services within the EU, we are talking about something far more tangible than it might seem at first glance. Picture a Portuguese architect who wants to provide services to a company in Germany, or an Italian IT consultancy looking to serve clients in Poland. In theory, the European single market should make that kind of operation simple and seamless. In practice, what these businesses and professionals encounter is a series of additional requirements, credential revalidation processes, and authorizations that, combined, form a bureaucratic barrier capable of making the entire operation economically unviable before it even starts.
The cost of regulatory compliance for operating across multiple European markets can be prohibitive, especially for small and medium-sized enterprises — which happen to be the economic engine of most countries in the bloc. When these businesses give up on expanding to other markets because of red tape, the entire European economy loses.
The impact goes far beyond the bottom line of individual companies. When cross-border access is made difficult, the very principle of competition that underpins the single market is compromised. Less competitive markets tend to have higher prices, slower innovation, and stagnant quality. Consumers and businesses that hire services end up paying more for fewer options, simply because the competition that could have come from another country was blocked by unnecessarily complex regulations.
The Court of Auditors report makes it clear that this is not a marginal problem — it is a systemic distortion affecting the European economy as a whole. And it is worth remembering that the issue is not limited to traditional services. With the accelerating digitalization of the economy, new types of remotely delivered services — such as digital consulting, software development, and AI-based services — also run into these same regulatory barriers when trying to cross borders within the EU.
The fact that only 20% of services cross borders within the bloc signals that there is massive economic potential being wasted. The reforms the auditor is calling for are not technical nitpicking — they represent a real opportunity for economic growth that Europe needs to seize, especially in an increasingly competitive global landscape where economies like China and the United States are investing heavily in their own high-value service sectors.
Shared Responsibility Between the Commission and Member States
One of the most important points in the report is the acknowledgment that the blame for the current situation does not fall solely on the European Commission. Member states themselves play an active role in maintaining these barriers. In many cases, national regulations are created or upheld with the goal — not always explicitly stated — of shielding domestic markets from foreign competition.
This happens in a variety of ways. Some countries impose local establishment requirements, demanding that foreign service providers open subsidiaries or physical offices before they can operate. Others create specific licensing processes that, in practice, function as filters to discourage the entry of outside competitors. There are also cases where technical standards are set in ways that favor local suppliers, creating a competitive imbalance that contradicts the principles of the single market.
The Court of Auditors emphasizes that the European Commission should use the European Semester — the annual cycle of economic policy coordination among EU countries — more actively to pressure member states into eliminating these barriers. Today, recommendations made in that context are frequently ignored without any real consequences, effectively stripping the instrument of any transformative power.
On top of that, the report notes that the Commission needs to offer better incentives for member states to carry out the necessary reforms. This could range from tying European funding to the implementation of market-opening measures to creating public rankings that expose which countries are contributing to integration and which are holding up the process. Transparency, in this case, can serve as a powerful driver of change.
What Needs to Change in Practice
The European Court of Auditors did not stop at identifying problems — the report includes specific and actionable recommendations for the European Commission. Among the top priorities is the need to develop a clearer and more ambitious strategy for the single market in services, complete with well-defined goals and realistic timelines.
The auditor also recommends that the Commission revise and strengthen the Services Directive, which since 2006 has been the main legal instrument for ensuring access to the single market in this area. The understanding is that the directive, while a significant step forward at the time, no longer addresses the complexity and diversity of barriers that persist today. A legislative update with a broader scope and more effective enforcement mechanisms would be a critical step toward unlocking this market.
Another central recommendation involves the clarification of existing legislation and focusing enforcement efforts on cases with significant impact. Rather than spreading resources thin across minor disputes, the Commission should target cases that, if resolved, would have a cascading effect on similar barriers in other countries and sectors.
Beyond legislative revision, the report highlights the importance of improving notification and cooperation systems among member states. Currently, when a member state intends to introduce a new regulation that could affect access for foreign service providers, there is a process for notifying the Commission in advance. But the court found that this process is frequently bypassed or poorly used, with countries approving restrictive regulations without proper European scrutiny. Strengthening this mechanism — making it faster and with real consequences for non-compliance — is one of the most urgent reforms in the auditor’s view.
The report also stresses the need to strengthen the tools that facilitate cross-border services and to continuously and transparently monitor and evaluate progress toward completing the single market for services. Without that kind of follow-through, any strategy risks remaining just words on paper.
Professional Qualifications: A Bottleneck That Needs to Be Fixed
Finally, the report draws attention to the need to simplify the processes for recognizing professional qualifications, which are one of the main sources of barriers in the services sector. A doctor trained in Spain, an engineer certified in France, or a lawyer licensed in the Netherlands still faces a long and uncertain path to getting their credentials recognized in another EU country.
Digitizing and harmonizing these processes — creating common minimum standards recognized across the entire bloc — could drastically reduce the time and cost of accessing new markets, benefiting professionals, businesses, and ultimately European consumers themselves.
The Context of Cross-Border E-Commerce in the EU
It is worth noting that the challenges facing the single market for services do not exist in a vacuum. When it comes to cross-border e-commerce, the situation also presents significant hurdles. The EU offers enormous opportunities, but dealing with 27 member states, 24 official languages, varied economic profiles, and quite distinct consumer behaviors is a complex task that requires localized planning even within a theoretically unified market.
This reality reinforces the importance of the reforms the Court of Auditors is calling for. The more fragmented the regulatory environment, the harder it becomes for businesses of any size to efficiently tap into the opportunities the European market offers. True integration of the services market would not only benefit traditional service providers but also tech companies, digital platforms, and startups that depend on seamless access to multiple markets to scale their operations.
The Role of the European Court of Auditors
For those unfamiliar with the EU’s institutional structure, here is a quick overview. The European Court of Auditors is the EU’s external auditor. Its mission is to carry out audits that improve governance, accountability, transparency, and financial management across the bloc. When the ECA publishes a special report like this one, it carries significant institutional weight. This is not an opinion piece or an informal analysis — it is a technical, evidence-based, and independent assessment that serves as a foundation for legislative and policy decisions within EU institutions.
The fact that the court dedicated an entire special report exclusively to the topic of cross-border services shows that the issue is considered a priority. And the sharpness of the criticism signals that institutional patience with the lack of progress is running thin. 🚀
What to Expect Going Forward
With the report now on the table, the pressure on the European Commission ramps up considerably. The document does not just identify problems — it offers a clear roadmap of actions. The expectation is that the Commission will formally respond to the recommendations and present an action plan with specific timelines and targets.
The global geopolitical and economic landscape also adds urgency to the matter. With international competition intensifying and digitalization rapidly transforming how services are delivered, Europe cannot afford to maintain a fragmented internal market. Every barrier left standing is a lost growth opportunity, a job that was never created, and an innovation that never reached the market.
The big question now is whether there will be enough political will — both within the Commission and among national governments — to turn this diagnosis into concrete action. The coming months will be decisive in determining whether the EU’s single market for services will finally work as originally promised, or whether it will remain an incomplete pledge costing the bloc billions every year.
