The European Central Bank published an Economic Bulletin article assessing the EU Single Market’s remaining barriers in goods and services and quantifying the potential economic gains from deeper integration. Using gravity-model estimates expressed as ad valorem tariff equivalents, it finds that cross-border trade within the EU remains materially more costly than domestic trade, with services substantially less integrated than goods. In 2024 intra-EU goods trade accounted for over 40% of EU GDP, while intra-EU services trade reached 16% of GDP, broadly in line with extra-EU services trade. The article groups persistent impediments into regulatory fragmentation, administrative burdens, inconsistent enforcement and gold-plating, competition-related discrimination, and other constraints including limited information, slow judicial processes and incomplete financial integration. Model estimates put intra-EU trade frictions at 67% for goods in 2022 (54% for manufacturing) and around 95% for services in 2023, with particularly high costs in sectors such as food products (150%) and construction (over 120%). Benchmarking against the Netherlands as a “friction-light” EU comparator, the analysis suggests average scope to reduce intra-EU trade costs by around 8 percentage points for goods and 9 percentage points for services, translating in simulations into higher intra-EU trade (4.4% for goods and 14.5% for services) and welfare gains of 1.3% and 1.8% respectively; it also estimates that a 2% reduction in barriers for goods and services could, in the long run, offset an ECB staff-projected cumulative 0.7 percentage point GDP drag from higher tariffs and uncertainty over 2025 to 2027. The article cautions that gravity-based measures are upper bounds because they also capture non-policy frictions such as preferences and limited tradability, and notes that structural adjustments would take time. It calls for more granular data on remaining barriers and points to European Commission work identifying persistent “Terrible 10” obstacles and its Single Market Strategy targeting their removal.
European Central Bank 2026-01-14
European Central Bank research estimates intra-EU trade frictions at 67% for goods and 95% for services and models welfare gains from further Single Market integration
The European Central Bank's Economic Bulletin article highlights persistent barriers in the EU Single Market, revealing that cross-border trade remains significantly more costly than domestic trade, particularly in services. The analysis suggests potential economic gains from reducing trade frictions, estimating that a 2% reduction in barriers could offset a projected GDP drag from higher tariffs and uncertainty between 2025 and 2027.