The department for Business, Innovation and Skills has released a report about the sharing economy, noting the EU needs to set out guidelines in order to make it a fair market.
The non-paper (discussion paper) suggests that the regulatory environment around services such as Uber should be aligned across the whole of Europe to ensure no single state has an unfair advantage.
"Sharing economy firms exploit new technologies, and sometimes they are constrained by or confront regulations designed without the internet in mind. We must not respond by tabling new regulation designed to protect the status quo, or to halt technological progress," the report said.
"We need a measured approach: putting a hold on reactive bans which don't recognise the reality of internet-enabled commerce, and instead looking carefully at the new challenges posed by the sector."
It detailed how the UK has already commissioned an independent review of the sharing economy and the government will continue to examine where the barriers to the sharing economy are and how they can be overcome.
The department for Business, Innovation and Skills has now said the EU should carry out a similar review to ensure regulations across the whole area are fit for purpose and are not stunting innovation.
The report continued: "The Commission must enforce existing EU legislation and infract MS [member states] who are disproportionately and therefore unlawfully imposing barriers to the free movement of services."
Another recommendation put forward relates to traditional service sectors and how these are being affected by the introduction of technological advancements. Any traditional sector looking to introduce new technologies should be assessed to ensure it remains to be competitive, the department advised.
This is a particularly important aspect of the sharing economy after the introduction of Uber in some countries has caused conflict with local taxi drivers who believe the on-demand vehicle booking service has an unfair advantage.
