The EU is losing support from the German economy

Europe column

Every week Moritz Koch, head of the Handelsblatt office in Brussels, analyzes trends and conflicts, regulatory projects and strategic concepts from the inner workings of the EU. Because anyone who is interested in business needs to know what’s going on in Brussels. You can reach him at [email protected].

What would the German economy be without Europe? And on the other hand: what would Europe be without the German economy? Germany’s companies, large and small, have benefited immensely from the European unification process. The EU has abolished customs barriers and border trees, opened the European market and opened up other regions of the world with trade agreements.

In return, the economic successes of German companies strengthen the EU. Europe includes many wealthy nations, but the Federal Republic stands out economically – and significantly increases the international bargaining power of the Union.

That is why the development that has started in recent years is so worrying: The EU is losing the support of German SMEs and, increasingly, of industry. It is a process that cannot be tied to a single initiative, but rather results from the sum of the regulatory projects currently being pushed forward in Brussels. Each justified in itself, perhaps even necessary. But taken together, they seem overwhelming, even overwhelming, for companies.

The European supply chain law is flanked by new regulations for the protection of primeval forests and an import ban for products from forced labor. The taxonomy for green investments is linked to the implementation of the Basel 3 rules. And of course there is the “Fit for 55” climate package with its CO2 prices, its climate tariff and the factual ban on the combustion engine.

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From the perspective of German companies, an avalanche is rolling in from Brussels. A feeling of powerlessness spreads. The impression: Everything will be different, but not better, but more expensive and more complicated.

When German business representatives, across all industries, come to Brussels these days, they let out a suspicion of planned economy regulation zeal. They fear competitive disadvantages, on the world market, but also within Europe.

Not only because Germany, with its industrial structure, is particularly badly affected by all the initiatives for climate-friendly restructuring of the economy and the redesign of supply chains. But also because, unlike large corporations, medium-sized companies, which form the backbone of the German economy, can hardly afford to commission entire departments to navigate through the web of EU rules.

There is a lack of balance

Of course, the complaint about the Brussels bureaucracy and its alleged tendency to attack is as old as the EU itself. But in the past it was not alone. The EU concluded trade agreements, harmonized technical standards, introduced the euro and exchange rate risks disappeared.

The balance was right for companies, but now it seems to have slipped. What worries companies and associations in particular is the concern that the interests of small and medium-sized enterprises are no longer taken into account when laws are being forged in the Commission. They lack the contact person. There is now a European SME representative, but he has little influence.

In addition, positive initiatives from an economic point of view are stuck – the trade agreement with the Mercosur states, the planned deals with Chile and New Zealand and, yes, the controversial investment pact with China.

It is also true, of course, that the misery is itself to a large extent to blame. In contrast to the French, who represent their interests in a robust and centrally coordinated manner, Germany appears in Brussels with the usual polyphony. Each federal state, each association for itself. Even the federal government does not always have a uniform position – see 5G debate.

But that doesn’t change the finding that the alienation between the German economy and the EU is alarming, even dangerous. For both sides.

More: So far, the EU has only countered China’s Silk Road by swirling

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