If red tape could be said to have a spiritual home, it would be the corridors of the European Commission in Brussels. The beating heart of the “regulatory superpower” that is the EU, it is there that the rules which guide how business is done in the 27 member states are made. The EU produced nearly 14,000 legal acts between 2019 and 2024. Perhaps not coincidentally the bloc’s economy has stalled. Bosses gripe about spending more time filling forms than filing patents. A plan to lessen their burden is expected to be released on February 26th. Hopes for radical deregulation, however, will have to wait.
Everybody agrees a dose of simplification is needed. That was one of the messages from a recent report by Mario Draghi, a former Italian prime minister, about how to stop European businesses falling behind international rivals. Each year European firms spend about €150bn ($156bn) on administrative costs. The commission wants to cut that by a quarter overall and by even more for small businesses.
To achieve this, cumbersome edicts will be made easier to comply with. That includes those that demand firms disclose their inner workings—whether goods were sourced ethically or in an environmentally sound way, say. At least three flagship laws will be watered down into one “omnibus” law, with the hope of cutting reporting requirements for firms. Several more “omnibus” laws are expected this year.
While the likes of Argentina, America and even India—whose “license raj” bureaucrats rival Europe’s in their passion for regulation—are slashing red tape willy-nilly, the EU is taking a more measured approach. The commissioner in charge, Valdis Dombrovskis, is not the chainsaw-wielding type. Europe “needs to maintain its high environmental and social standards”, he says. The preferred term for what is happening is “simplification” and not the more radical “deregulation”.
That is perhaps to spare the blushes of those who first suggested the edicts—often the same people who are now “simplifying” them. For whereas politicians elsewhere are scrapping decades-old laws, some of the regulations Europe is amending are so fresh they have not yet fully entered into force. Mr Dombrovskis admits a “protracted period of legislation” in recent years piled too much on to businesses. In particular, rules that were meant to apply only to big companies were in effect applied to their (smaller) suppliers.
Amending already-agreed texts will take time. The simplification push will need the approval of the European Parliament and the bloc’s member states. Some will take convincing. “There is no impact assessment that shows these texts are harmful to European competitiveness,” argues Pascal Canfin, a French liberal MEP who backed the original legislation.
Businesses might be disappointed; many had been lobbying for a more complete overhaul. But some may find solace in the EU’s new Clean Industrial Deal, also due to be unveiled on the same day, in which the commission will suggest sops such as subsidised energy. If business can’t be made simpler, it can at least be made more profitable.
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