No idea why, tbh.Well, that's fairly straightforward. All European co-operation and regulatory is implemented through the EU. It didn't used to be like that, there used to be quite a lot of separate organizations that coordinated countries and helped them work together, but over time they were all absorbed into the EU power structures.
That's a problem because the EU agenda is extremely dominated by France and Germany to the extent that the priorities of the other members don't matter much. The German economy is of course famously driven by export of goods, so not surprisingly, the EU has spent great effort on ensuring that goods can flow freely throughout the EU. There was also a big economy that was services driven - the UK. Equally unsurprisingly the EU never cared about creating the single market in services, despite sometimes promising to do so, largely because it would mean requiring France and Germany to open their markets to British companies, something they saw no reason to do.
In later years another problem emerged, which is that the EU developed a taste for power and began using whatever limited control it had over services markets to try and control neighbouring states. In particular trade in financial services is (somewhat) controlled by the EU which has a concept it calls "regulatory equivalence". We must call this a concept and not a real thing because designation of a nation as having "equivalent" regulations has nothing to do with the actual regulations or how similar they are to the EU's own, it is an entirely political and ideological matter that's used as a negotiating lever by the Commission, which can and does declare countries "equivalent" or "not equivalent" at any time, without any changes to actual financial regulations being required.
For example, despite the UK having 100% aligned financial regulations because it only just left the EU, the Commission has declared its financial services regulations to be not "equivalent" to the EU's. That is obviously a lie, but when you understand that the bureaucracy doesn't really care what words mean and treat it as an arbitrary label or tool, then it makes more sense: the EU wants to hurt the British economy so bans its services from its own markets by claiming the identical regulations somehow aren't the same.
This problem is not specific to the UK or Brexit. Financial equivalence was being used as a bartering tool in trade negotiations for years before that. The EU also likes to ban the Swiss financial firms from EU markets from time to time as part of trying to force Switzerland to accept EU rules in unrelated areas like how trade unions are handled.
Thus the lack of any unified services market in Europe can be understood as having three inter-related origins:
1. All international cooperation in Europe is controlled by the EU which means ultimately by the agenda of just one person (Currently von der Leyen).
2. That persons is appointed via presumably complex back-room deals of which little is publicly known, but which appear to usually be the result of some kind of horse trading between France and Germany. For example von der Leyen is a notoriously incompetent aristocrat famous mostly for screwing up the German military - nobody knows on what basis she got the job of Commission president, beyond some vague comments from people close to the process that the next Commission President had to be a woman, but we can assume she was placed there due to her political acceptability to Merkel and Macron and her willingness to prioritize their interests. The same can be seen for how Christine LaGarde (a French woman) ended up running the European Central Bank. Certainly, the views of other nations had little to do with it, given their track records.
3. The EU then not only fails to prioritize services integration but actively abuses service markets as part of waging trade wars, in particular, to try and force non-member states to effectively become pseudo-members in which they obey the EU in unrelated areas without actual full membership.