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ECB official urges removing Single Market barriers to cut EU costs
He said restrictions on cross border goods and services limit firms' expansion and investment, weighing on demand and adding uncertainty that complicates long term planning.
An ECB official, in comments published by ilsussidiario.net, argued that the European Union should better leverage its “huge” Single Market to help companies achieve economies of scale and lower production costs, particularly in areas such as IT, finance and manufacturing, including automotive.
According to the interview, barriers to the free movement of goods and services within the Single Market prevent firms from expanding and reaching the efficiency needed to compete with global “giants,” and the first step should be removing internal Single Market restrictions.
The official also said the EU should start by reducing barriers to cross border expansion for firms, noting the region’s market of about 450 million consumers and arguing that making expansion easier can allow companies to build production at international scale. He added that domestic demand matters too, pointing to the euro area’s current account surplus as evidence there is room for domestic demand to grow without creating external imbalances.
On the economic outlook, the interview said that when investing and expansion are difficult, it becomes harder to increase investment, contributing to a demand gap. The ECB has a statutory price stability mandate, the official said, and he warned there is a risk of a rapid rise in cost push inflation, which could affect broader macroeconomic stability and firms’ ability to plan as nominal interest rates shift.