The European Union is to launch a series of full-scale competition inquiries this year into financial services such as retail banking in a long-delayed move to promote cross-border consolidation and genuine consumer choice, it emerged yesterday.

Philip Lowe, director general of competition at the European commission, said that the aim was to start two or three inquiries this year in the face of evidence that restrictive arrangements in the sector were anti-competitive and raised prices for consumers.

He told a Europe Forum conference on financial services that half the EU's productivity gap with the US resulted from the failure to be competitive in this sector.

"The overwhelming trend in mergers has been national consolidation and this has been encouraged by political will at the national level to create national champions.

"These do not go out into other people's markets; it's about everyone scratching each other's back and no one getting to grips with competition," he said.

The commission, which today announces its main economic priorities for the next five years, is determined to make the single market a reality for EU consumers who will be encouraged to seek financial products such as credit cards, mortgages and insurance across national borders.

It is understood to be concerned that the removal of regulatory barriers, including a promised bonfire of directives, could simply result in stronger anti-competitive practices - mainly in financial services but also in the energy and transport sectors.

The former competition commissioner, Mario Monti, said the EU faced a threefold battle on the cultural, regulatory and marketplace fronts to break down the practice of national politicians, regulators and banks which were trying to ensure that there was little or no cross-border consolidation.

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