Reducing regulatory burden to restore the EU's competitive edge

Introductory remarks 

Regulatory burdens are one of the two top problems named by businesses operating in the EU when it comes to the investment climate. BusinessEurope agrees with the analysis provided by the high-level reports of Mr Enrico Letta and Mr Mario Draghi who put the challenge of regulatory burdens and EU law simplification among the top priorities. Regulation is seen by more than 60% of EU companies as an obstacle to investment, with 55% of SMEs flagging regulatory obstacles and the administrative burden as their greatest challenge. The majority of BusinessEurope member federations considers administrative burdens to have increased over the past year as a consequence of legislative changes introduced and implemented by the European Commission, let alone the incoming mass amount of delegated and implementing acts.

Companies operating in Europe urgently need a bold signal that the EU is set to cut the regulatory burden as its major priority. Therefore, BusinessEurope welcomes the new focus of the European Commission, as well as the European Parliament and the EU Council, on competitiveness and reduction of burdens. We welcome President von der Leyen’s initiative to reduce reporting requirements by at least 25% (and 35% for SMEs) and her mission letters mandating the Commissioners to contribute to this endeavour as well as perform the “stress test” of the entire EU acquis. We support the President’s commitment to the so-called “Omnibus” approach that should address a number of pieces of legislation to reduce reporting requirements in one or a few targeted steps to follow.

The proposal to integrate the CSRD-CS3D-Taxonomy ‘triangle’ into the first omnibus proposal is welcome. Although they have their own specificities, these three texts aim to establish a common European framework on business sustainability. Without calling this objective into question, legitimate questions arise about their cumulative cost, the complexity of their implementation and ultimately the competitiveness impact for our companies. It is therefore urgent to simplify these texts so that they become more operational and in line with business reality. This revision must move fast to quickly reduce burdens and provide clarity to businesses on this simplified framework.

At the same time, we urge the policy makers to go beyond reduction of mere reporting put on the shoulders of companies, because reporting represents just a fraction of all regulatory burdens which translate into high costs on doing business in Europe. The EU should also urgently cut overall regulatory compliance costs, remove the burdens stemming from barriers in cross-border business operations in the Single Market, and get rid of excessive bureaucracy. We call to set an overall regulatory burden reduction target with a dedicated program to achieve it within clear deadlines.

The governance of such an initiative should also include a regular dialogue with stakeholders, learning from the lessons of last mandate’s challenges faced in the Fit-for-Future Platform. Meaningful consultations and the bottom-up approach allowing societal stakeholders to identify priorities should be the driving force in this endeavour to reduce regulatory burdens and improve our investment climate. Today’s urgent need for a dedicated burden reduction program following recent legislatures also demonstrates the need to reinforce application of better regulation principles in policy and law-making, with effective ex-ante impact assessments, ex-post evaluations and independent regulatory oversight by the Regulatory Scrutiny Board.

BusinessEurope is tabling 68 identified most pressing burdens in 11 areas and suggestions how to address them as contribution of our members to the action on reduction of regulatory burdens. The measures bearing an asterisk mark are those which BusinessEurope has not been actively working on, still put forward by our members as very relevant for the burden reduction programme. The key pressing burdens are concentrated in the regulations on:

• energy and climate
• circular economy
• consumer policy
• sustainable finance and company law
• taxation
• financial reporting
• international value chains and trade
• digital economy
• employment and social policy
• food law
• financial services

We structured the identified 68 burdens around 3 pillars of origin of disproportionate compliance costs: administrative burdens (including reporting requirements), excessive adjustment burdens and crossborder regulatory barriers. The major share of burdens stretches beyond mere reporting requirements.

Businesses operating in the EU need a swift action across all the three pillars of burdens. We urge the European Commission to put forward a clear plan of action that would define the scope, timetable and governance of the measures to be taken. BusinessEurope remains open for a constructive dialogue with policy makers and will keep updating or supplementing this set of suggestions.