The business services industry in most EU countries has not grown in productivity for the past 20 years, lagging behind the US. The lack of competition is a major reason for this stagnation. Small and large firms in Europe's business services sector do not compete well. Countries with flexible regulations and low costs for starting or closing businesses perform better. Opening up to foreign competition boosts productivity. Lowering regulatory barriers for firms to grow or shrink has the biggest positive impact. The EU aims to improve the business services market as part of its Europe-2020 strategy, which could benefit the overall economy.