Luxembourg: Nearly two years after Mario Draghi warned that Europe risked a slow economic decline, the effort to complete the single market has become the clearest measure of whether his call to action changed anything.

The former central banker’s report on competitiveness landed in 2024 as a blunt diagnosis. Europe, it argued, was falling behind the United States and China on productivity, innovation, and scale, and only a burst of investment and reform could close the gap. Among its sharpest points was the cost of the Union’s own internal barriers.

Those barriers are not tariffs but rules. Diverging national standards, licensing regimes, and administrative hurdles fragment what is meant to be one market of more than 440 million people. The International Monetary Fund has estimated that the friction inside the single market is equivalent to a tariff of around 45 percent on goods and 110 percent on services, a hidden tax that falls hardest on companies trying to grow across borders.

Progress on the report’s recommendations has been uneven. By most assessments only a small share have been implemented, and several flagship sectors, from energy to pharmaceuticals, have seen little concrete movement. The Commission responded early in 2025 with a Competitiveness Compass, a roadmap meant to translate the analysis into a work programme, and has since pointed to 2028 as the target for finishing the single market.

Services remain the toughest nut. Goods move relatively freely, but the sectors that dominate modern economies, from finance to professional services to digital platforms, still run into national rulebooks that vary from one member state to the next. A firm that can sell a product across the bloc without friction may still struggle to offer the same service in a neighbouring country without navigating a fresh set of authorisations.

The politics prove difficult because the barriers exist for reasons. National licensing rules protect professions, guard consumers, and reflect local preferences, and dismantling them asks governments to surrender control they have long defended. Every proposal to harmonise standards runs into constituencies that benefit from the status quo.

Business groups keep up the pressure, arguing that Europe cannot lecture itself about competitiveness while maintaining internal frictions that would embarrass a trade negotiator. They point to the difficulty European firms face in reaching the scale of American rivals, and link it directly to a home market that behaves like twenty-seven smaller ones.

Supporters of the reform drive insist the direction is right even if the pace frustrates. Completing the single market, they argue, is the cheapest growth strategy available, since it demands political will rather than fresh borrowing. The question Draghi posed still hangs over Brussels, whether Europe can summon that will before the gap with its competitors grows harder to close.