Opinion of the European Economic and Social Committee – How single market dysfunctionalities contribute to the rising cost of living (own-initiative opinion)
Date: 2025-04-29
Institutions: European Economic and Social Committee
Subjects: approximation of laws, competition policy, cost of living, energy market, inflation, labour mobility, liberalisation of trade, national implementing measure, price increase, single market








C_202503189EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/3189


2.7.2025






Opinion of the European Economic and Social Committee
How single market dysfunctionalities contribute to the rising cost of living
(own-initiative opinion)
(C/2025/3189)


Rapporteur: 
Emilie PROUZET






Advisor


Niccolo CIULLI (for the rapporteur)




 


 




Plenary Assembly decision


5.12.2024




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Single Market, Production and Consumption




Adopted in section


8.4.2025




Adopted at plenary session


29.4.2025




Plenary session No


596




Outcome of vote (for/against/abstentions)


158/4/4






Preamble



This opinion is part of a wider package of EESC opinions on the cost-of-living crisis. With this package, the EESC is examining the different facets of this policy challenge and presenting a comprehensive and wide-ranging set of recommendations to European and national policy-makers, civil society organisations and other stakeholders. The package includes seven ‘sectoral opinions’
            
             (1)
, each dedicated to issues in a specific relevant policy area. In addition, an ‘umbrella opinion’
            
             (2)
presents the overarching policy recommendations to address the cost-of-living crisis as a whole and build resilience against future crises.
1.   Conclusions and recommendations









1.1.


The European Economic Social Committee (EESC) finds it regrettable that the cost of living in Europe is being fuelled by persisting dysfunctionalities in the European Single Market, and believes that more decisive action by the European Commission is needed to safeguard it.












1.2.


The EESC calls on the European Union to urgently tackle persisting barriers that decrease competition and affect the cost of living, such as territorial supply constraints.












1.3.


The EESC encourages Member States to establish safeguards against unnecessary gold-plating. While regulatory simplification can enhance efficiency, it should not lead to a weakening of essential social and labour protections.












1.4.


The EESC urges the Commission to ensure that Member States respect their notification obligations (e.g. under TRIS), speed up proceedings against national rules which infringe EU law and explore the possibility of interim injunctions against clear violations of EU rules to prevent harm while the Commission assesses the compatibility of a national rules with EU law.












1.5.


The EESC urges the EU institutions to take decisive action to complete the Capital Markets Union as a first step to cover the EU’s investment needs and mobilise private and public investment.












1.6.


The EESC calls for action to promote labour mobility and improve social security coordination, for example through digitalisation.












1.7.


The EESC calls for further integration and better infrastructure across the EU to fully realise the potential of unified energy and telecommunications market.












1.8.


The EESC invites the Housing Commissioner to assess whether a lack of harmonisation in rules for construction services or building permits, or in other national rules on housing (e.g. access to social housing), has contributed to higher housing prices (3).












1.9.


The EESC urges the European Commission to remove barriers in healthcare markets (for example to safeguard free movement of pharmaceuticals) to guarantee access to affordable medicines.




2.   Background to the opinion









2.1.


The cost of living is the ‘monetary cost of maintaining a particular standard of living, usually measured by calculating the average cost of a number of specific goods and services’ including food, housing, energy, transport, phone and internet, clothing, healthcare, education and mandatory contributions and taxes (4).












2.2.


The cost of living significantly increased due to inflation, which in the Euro area reached a peak of 10,6 % year-on-year in October 2022. It has steadily decreased since then to 2,5 % in January 2025, but remains higher in several EU Member States (5).












2.3.


Inflation is often subject to the phenomenon of ‘rockets and feathers’, whereby the cost of living rises rapidly when inflation increases, but falls slowly when inflation decreases. While inflation is steadily decreasing in Europe, the cost of living remains a key concern for EU citizens (6).












2.4.


‘Effective inflation’ (i.e. the impact of inflation on specific categories of citizens) varies across households (7) and has been felt the hardest by the 94,6 million Europeans living at risk of poverty or social exclusion (8).












2.5.


Social dialogue and collective bargaining in line with national industrial relations practices and the autonomy of the social partners can help address risks of loss of purchasing power and ensure fair wages that take into account inflation and productivity. Member States should seek ways to mitigate the effects of the loss of purchasing power and focus on preventing inequality, exclusion and marginalisation. The European Semester framework and the Social Scoreboard remain one of the most relevant tools for tracking what policies and /measures Member States have adopted to address the crisis.




3.   General comments









3.1.


The EESC acknowledges that many factors contribute to the high cost of living, such as the international economic context, energy costs, climate change, trade barriers and the end of COVID-19 support for businesses and citizens, but notes that it can also be fuelled by persisting dysfunctionalities in the European Union Single Market.












3.2.


Such dysfunctionalities are regulatory and non-regulatory barriers that constitute an obstacle to free movement of goods, services, capital and persons in the EU and prevent its citizens from fully benefiting from the European project in their daily lives.












3.3.


The EESC welcomes the fact that our Single Market has raised the European Union’s GDP by 6-8 % by removing barriers and increasing competition (9).












3.4.


The EESC notes that persisting barriers within the Single Market are preventing businesses from unlocking up to EUR 500 billion of additional GDP a year (EUR 228 billion a year for completing the Single Market for goods and EUR 279 billion a year for completing the Single Market for services) (10).












3.5.


The International Monetary Fund (IMF) estimates that non-tariff barriers within the EU equate to tariffs of around 44 % for goods (three times more than barriers between US states) and 110 % for services (11).












3.6.


The EESC notes with regret that in addition to existing barriers, the Commission’s recent Annual Single Market and Competitiveness Report highlights that new barriers and sources of fragmentation continue to appear in both goods and services markets (12).












3.7.


The EESC considers that fragmentation in the Single Market leads to higher costs for businesses and reduces competition, which could decrease consumer welfare given that competition can contribute to better prices, better quality and more choice and innovation.












3.8.


In this Opinion, the EESC explores fragmentation a) deriving from private operators, b) by Member States or c) lack of action by the EU institutions; the EESC also assesses d) specific markets relevant to the cost of living and calls for immediate action to address these dysfunctionalities.




4.   Fragmentation of the Single Market by private operators increases the cost of living









4.1.


Refusals by businesses to offer their products and services to consumers in other Member States (‘geo-blocking’) may also be caused by diverging national rules which may create costs that those businesses are unwilling to take on.












4.2.


The European Commission prohibited geo-blocking through a Regulation (13) in 2018, prohibiting discrimination against consumers based on their nationality, residence or establishment. In his 2024 report on the EU Single Market, Enrico Letta recommended tackling persistent geo-blocking restrictions with urgency (14).












4.3.


Other practices by businesses can fragment the Single Market: in the retail and wholesale sector, for example, large manufacturers prevent retailers or wholesalers from buying products in one Member State and resell them in other Member States – a practice referred to as territorial supply constraints (TSCs) (15).












4.4.


In 2021, the European Commission found that TSCs can lead to a wide range of prices charged across the EU by manufacturers to retailers for branded products which cannot be fully explained by different national taxation regimes (such VAT), labour and other input costs. Because of TSCs, some EU consumers pay higher prices or have access to a smaller variety of products than they would if retailers and wholesalers were able to source cross-border. In a 2021 study, the European Commission estimated that TSCs cost EU consumers EUR 14 billion a year – a figure likely to have increased due to inflation.












4.5.


The Commission and Member States are currently conducting a fact-finding exercise via the Single Market Enforcement Taskforce on TSCs. Retailers and wholesalers have reported having faced difficulties in sourcing cross-border in relation to products such as food, toiletries, pharmaceuticals and textile.












4.6.


In a period where the cost of living is rising and purchasing power is decreasing, the EESC believes it is important that consumers benefit from a better functioning of the Single Market in terms of price and choice of products.




5.   Fragmentation in the Single Market by diverging national rules can increase costs for businesses and consumers









5.1.


The EESC considers that the Single Market may also be fragmented by the lack of harmonisation or diverging national rules.












5.2.


This also occurs in the context of implementation of EU legislation through the practice referred as ‘goldplating’. While national rules going beyond what may be prescribed in a Directive may be well-intentioned and serve important social protection or other goals, they can at times have negative unintended consequences.












5.3.


Each country may have its own set of rules and standards for goods, for example for labelling and environmental compliance. This fragmentation increases the cost of doing business, particularly for companies that operate in multiple countries, ultimately harming consumers through higher prices and lower choice.












5.4.


An example is the wide range of national schemes on Extended Producer Responsibility for a number of types of products and packaging (for example electrical and electronic equipment, batteries and textiles). More than 100 different EPR regulations exist in the EU Single Market.












5.5.


The EESC is also concerned about the fragmentation in the services market, where operators often cannot provide services across borders without authorisation. This is exacerbated by a lack of information available online and inadequate digitalisation of administrative procedures.












5.6.


Such heavy administrative burden may lead to inefficiencies, increasing the costs of operating in the Single Market and hence prices to consumers and discouraging small businesses from expanding cross-border.












5.7.


National specifications and cultural differences between Member States (for example linked to languages) may also contribute to market fragmentation. While these differences do not fall within the EU’s competence and must be safeguarded, the EU and Member States should commit to the principle of mutual recognition.












5.8.


Ensuring a balanced approach between preventing the erosion of high standards on sustainability, welfare and labour protection and reducing unnecessary administrative burdens and facilitating cross-border trade is key to fostering a fair and competitive Single Market.




6.   Fragmentation of the Single Market requires the Commission to act as the Guardian of the Treaties









6.1.


In recent years, the Commission has been criticised for a decrease in enforcement activities against measures enacted by Member States which infringe EU law. In his Report, Enrico Letta notes that ‘official figures point indeed at a sharp drop in infringement cases, which is not compensated by the number of EU Pilot cases or proportionate to the drop in the number of new complaints’ (16).












6.2.


Stakeholders complain that the Commission takes too long to address the complaints it receives and open infringement proceedings when appropriate.












6.3.


A recent audit by the European Court of Auditors (ECA) revealed that complaint handling times have increased, with the average reaching 28,4 months in 2023. Some Member States have been paying penalties for years without correcting violations of EU law (17). Slow enforcement allows certain countries to maintain unlawful rules that hinder the Single Market. The EESC urges the Commission to explore the use of interim powers (such as injunctions) to prevent consumer harm.




7.   Specific comments









7.1.


The EESC regrets that slow progress in creating a real Capital Markets Union endangers the competitiveness of the Single Market and the benefits that consumers can derive from it. According to a Finance Watch study, a real Capital Markets Union would enable existing financing channels to cover about a third of the EU’s investment needs; while further initiatives will therefore be necessary, the first key step is true integration of financial markets in Europe, which, according to the Letta Report, ‘is crucial for achieving overarching goals that are otherwise unattainable, such as the fair, green, and digital transition’ (18).












7.2.


As an example, rules on short-term debts (such as commercial papers) are not harmonised at EU level, leading European businesses to issue debts on national markets, to which fewer investors have access, or abroad.












7.3.


This persistent fragmentation often leads EU companies to seek financing abroad. As a result, European companies are not able to scale up in Europe to the benefit of EU businesses, workers and consumers. Mario Draghi urges Europe to ensure ‘adequate financial conditions for companies interested in expanding their businesses or for investors interested in exiting their ventures’ (19).












7.4.


The free movement of people is one of the four freedoms of the EU Single Market; however, labour mobility within the EU remains low when compared to the United States (20) also because labour movement costs between EU countries are eight times higher than between US states (21).












7.5.


Enrico Letta highlights a number of actions, such as smoothening procedures for labour mobility (for example by simplifying recognition of professional qualifications within the EU), ensuring a level playing field in labour law and improving social security coordination (22), for example through digitalisation (23). Ensuring fair mobility requires robust enforcement of the principle of ‘equal pay for equal work in the same place’ and the elimination of abusive practices.












7.6.


The market for telecommunications is another area where dysfunctionalities in the Single Market increase costs for consumers. Telecom services in Europe remain fragmented, with each country having its own pricing, regulatory standards and infrastructure. In his report, Mario Draghi refers to ‘the multi-country (rather than pan-EU) set-up of the sector’ having led to ‘a costly proliferation of different obligations for EU telecom operators’ (24).












7.7.


Although the EU has abolished roaming charges for travellers, many consumers still face high mobile and broadband prices due to national pricing policies that are not harmonised across borders. It is also not possible for consumers to sign cross-border contracts. Such fragmentation also creates barriers to entry for other operators, reducing competition which could drive prices down.












7.8.


National energy markets within the EU also remain fragmented due to differences in infrastructure, regulations, and pricing structures, as well as different national regimes on energy consumer cooperatives which allow consumers to jointly purchase energy.












7.9.


The EESC welcomes the European Commission’s February 2025 Action Plan for Affordable Energy (25), which includes a number of actions to complete the Energy Union, such as harmonised rules on network charges and better coordination and governance of wholesale markets.












7.10.


The EESC finds it unfortunate that numerous barriers in the pharmaceutical sector continue to hinder a fully integrated Single Market for medicines.












7.11.


Growing protectionism from Member States and insufficient enforcement by the European Commission have led to a proliferation of trade restrictions and supply quotas in several Member States, often in breach of EU law.












7.12.


Cross-border trade restrictions prevent the efficient allocation on medicines across Member States, reducing competition and increasing prices for healthcare systems and patients. Additionally, such barriers can increase inefficiencies, as medicines may expire before they can be redirected to areas where they are needed, further exacerbating cost pressures.












7.13.


The EESC reiterates that affordable housing is key for EU citizens and welcomes the fact that the European Commission now has its first ever Housing Commissioner, tasked with creating a European Affordable Housing Plan.












7.14.


Other policies relevant for the cost of living, such as taxation, transport, welfare and education, are national competences. A balanced taxation system is essential for ensuring that economic benefits are shared fairly. Strong measures as agreed within the OECD to prevent tax avoidance and enforce tax collection (with better coordination among Member States) can provide vital funding for public services such as welfare and education. Public investment in housing, energy, and transport is a necessary condition for an inclusive Single Market, and ensuring that these essential goods are affordable is vital for workers, businesses, and consumers alike.






Brussels, 29 April 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  CCMI/239 
               ‘
            

Reindustrialisation of Europe – opportunity for businesses, employees and citizens in the context of the cost-of-living crisis


               ’
             (ongoing), EESC opinion on 
               ‘
            

Leaving the crises behind – Measures for a resilient, cohesive and inclusive European economy

            ’ (OJ C, C/2025/3195, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3195/oj), EESC opinion on ‘
            
How single market dysfunctionalities contribute to the rising cost of living


               ’
            , EESC opinion on ‘
            
Phasing out fossil fuel subsidies while ensuring European competitiveness, mitigating the cost-of-living crisis, and promoting a just transition

            ’ (OJ C, C/2025/3191, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3191/oj), REX/596 ‘
            
Fragmentation of supply chains and impact on the cost of living

            ’ (ongoing), SOC/823 ‘
            
How to address the loss of purchasing power and the risk of rising inequalities, exclusion and marginalisation

            ’ (ongoing), EESC opinion on ‘
            
Price hikes in transport, energy, housing: role of quality public services in tackling high cost of living

            ’ (OJ C, C/2025/3192, 24.6.2025, ELI: http://data.europa.eu/eli/C/2025/3192/oj).

(2)  ECO/660 ‘
            
Recommendations of organised civil society to address the cost-of-living crisis

            ’ (ongoing).

(3)  See for example https://ec.europa.eu/newsroom/growth/items/48657/en or https://single-market-economy.ec.europa.eu/publications/study-costs-involved-accessing-markets-cross-border-provisions-construction-services_en.

(4)  
            https://www.britannica.com/money/cost-of-living.

(5)  
            https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-03022025-ap.

(6)  Including young people; see: https://europa.eu/eurobarometer/surveys/detail/3392.

(7)  
            https://op.europa.eu/en/publication-detail/-/publication/4e938983-a07a-11ee-b164-01aa75ed71a1/language-en.

(8)  
            https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20240612-1.

(9)  
            https://www.europarl.europa.eu/RegData/etudes/IDAN/2020/642837/EPRS_IDA(2020)642837_EN.pdf.

(10)  
            https://www.europarl.europa.eu/thinktank/en/document/EPRS_STU(2023)734690; other studies have calculated that persisting barriers for businesses to operate in the Single Market leave around 10 % of potential GDP on the table – see: Quantifying the Economic Effects of the Single Market in a Structural Macromodel.

(11)  
            Regional Economic Outlook for Europe, October 2024: A Recovery Short of Europe’s Full Potential.

(12)  
            The 2025 Annual Single Market and Competitiveness Report - European Commission.

(13)  Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing unjustified geo-blocking and other forms of discrimination based on customers' nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC (OJ L 60 I, 2.3.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/302/oj).

(14)  
            https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf.

(15)  EU consumer organisation BEUC identifies TSCs as the first issue to be tackled by the Commission as part of the upcoming Single Market Strategy.

(16)  
            https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf.

(17)  
            https://www.eca.europa.eu/ECAPublications/SR-2024-28/SR-2024-28_EN.pdf.

(18)  
            https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf.

(19)  
            https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en.

(20)  
            Labour Market Adjustments in Europe and the US: How Different?


(21)  
            Europe’s Choice: Policies for Growth and Resilience.

(22)  
            https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf.

(23)  There is an ongoing Commission project on digitalising social security coordination.

(24)  
            https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en.

(25)  
            https://commission.europa.eu/document/download/9db1c5c8-9e82-467b-ab6a-905feeb4b6b0_en.


ELI: http://data.europa.eu/eli/C/2025/3189/oj
ISSN 1977-091X (electronic edition)