The European Commission (EC) has published a fact sheet outlining its ambition to make regulations clearer and more straightforward.
The EC is run by an appointed body of policymakers that aims to establish pan-European rules to build a stronger and more cohesive Europe. This includes the EU’s Capital Markets Union. The EC proposes legislation that the European Parliament and the EU Council then approve.
Reportedly, the EU adopts or proposes roughly 2,000 to 4,000 rules and legal acts annually,
As “red tape” can make it more difficult and more costly to start or operate a business, the EU is now focusing on improving the European economy by reducing this cost.
According to the Fact Sheet:
“Businesses of all sizes made this clear during the strategic dialogues the Commission launched over the past year. We have heard their call and are acting on it. This is why simplification is at the heart of our agenda for competitiveness and prosperity. Our goal is to support those who create value in Europe and to tell the world that Europe means business, while maintaining our high standards in terms of protection of consumers, suitability, and climate.”
Our objectives are clear – cutting reporting obligations by at least 25% for all businesses (an expected saving of €37.5 billion) and by at least 35% for small and medium-sized enterprises (SMEs) by the end of the mandate.”
There have been memes circulating on social media that claim the US innovates, China replicates, and the EU regulates. While perhaps a bit harsh, there is an element of truth to this. Excessive regulation can become a hidden tax upon the populace, stifling innovation and slowing economic growth.
The Draghi Report, a document quickly shelved by Eurocrats, called for a dramatic policy change at the EU level. The report claimed that Europe is “stuck in a static industrial structure” with too few new companies emerging in the EU. Innovation is sparse, and disruption is challenged.
While reducing bureaucratic bloat is an admirable goal, the other side of the equation should be addressed as well: lowering taxes on income and capital gains and further encouraging entrepreneurship and innovation. The populace should be incentivized to support both early-stage ventures as well as more established firms while shouldering risk (including investment crowdfunding).
It is a heavy lift, though. In France, government spending is around 57-58% of GDP. In Germany, this percentage is around 49% of GDP. In the US, it is too high as well, at around 37% to 40%, but obviously better. In brief, changing this dynamic is very difficult for all.