## Lifting Binding Constraints on Growth in Europe: Actionable Priorities to Deepen the Single Market

_IMF Working Papers, June 13, 2025_

## Source details

**Canonical URL:** [Lifting Binding Constraints on Growth in Europe: Actionable Priorities to Deepen the Single Market](https://www.imf.org/en/publications/wp/issues/2025/06/13/lifting-binding-constraints-on-growth-in-europe-actionable-priorities-to-deepen-the-single-567610)

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## Bibliographic details
- Authors: Nathaniel G Arnold, Allan Dizioli, Alexandra Fotiou, Jan-Martin Frie, Burcu Hacibedel, Tara Iyer, Huidan Huidan Lin, Malhar S Nabar, Hui Tong, Frederik G Toscani
- Published: June 13, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229010986.001

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### Key findings
- Identifies four key binding constraints that hinder firms’ ability to innovate and scale up within the EU single market:
  - fragmented regulations
  - inefficient financial intermediation
  - limited labor mobility
  - fragmented energy market
- A small set of actionable steps to deepen integration could deliver a meaningful initial payoff:
  - increasing the EU GDP level relative to baseline by around 3 percent over 10 years
  - this is sizable given that the EU potential growth is projected to be just above 1 percent annually over this horizon

### Action areas and policy recommendations
- Lowering regulatory fragmentation to ease cross-border activity and scale-up by firms
- Advancing the capital markets union to improve financial intermediation and cross-border financing
- Enhancing labor mobility within the EU to alleviate labor market frictions that constrain scaling and innovation
- Integrating the EU energy market to reduce fragmentation and support cross-border investment and competitiveness

### Analytical perspective and scope
- Focuses on a cross-border perspective to identify constraints to firm investment, innovation, and scaling within the single market
- Emphasizes actionable priorities for deeper single market integration rather than a comprehensive reform package

### Illustrative scenarios and quantitative emphasis
- Through illustrative scenarios, the paper shows that targeted measures along the four action areas could:
  - raise the EU GDP level relative to baseline by around 3 percent over 10 years
- Contextual numeric point:
  - EU potential growth is projected to be just above 1 percent annually over this horizon

*IMF Working Paper No. 2025/113 (June 13, 2025).*

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2025/06/13/lifting-binding-constraints-on-growth-in-europe-actionable-priorities-to-deepen-the-single-567610_