The reduction in bureaucracy planned by Brussels is becoming a dream

The author

Rainer Kirchdörfer is on the board of the Foundation for Family Businesses and Politics.

(Photo: IMAGO/Monasse Th/, Marco Urban )

A few years ago, former Bavarian Prime Minister and EU advisor Edmund Stoiber identified a new way of thinking about reducing bureaucracy. Many things should change, for example through the introduction of a new bureaucracy check at European level.

In the meantime, disillusionment has set in. From the point of view of family businesses, the regulatory requirements continue to increase and are hardly manageable. Calls for a moratorium on stress are also getting louder from parliaments.

The focus is on the EU because it sets a large part of the national legislation. Brussels wanted to do a lot better. Existing laws should be reviewed regularly and upcoming projects aligned with new standards.

In spring 2021, the EU Commission presented its program for better regulation. This includes a good idea with the so-called “one in, one out” principle.

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In order to relieve companies, an existing burden in the same policy area should be eliminated for each additional burden from new regulation. The EU decided that, but the implementation is still missing.

Only one rule has been deleted for every four new legal acts

The introduction of this modern measure of legislation began in 2021 with a trial year. The EU Commission reports that helpful insights into working with the “one in, one out” principle have been gained in relation to ten legislative projects. In the same year, the number of new legal acts compared to the number of legal acts that were abolished was already around two to one.

Since 2022 things have been taken seriously: “One in, one out” applies – with a few exceptions – as the guideline for all relevant legislative initiatives of the EU Commission. At least that’s the theory.

Legislative practice speaks a different language. A look at the number of laws from Brussels shows this: for the past year (2022), the EU database shows more than 2000 adopted legal acts. This is opposed to the elimination of 534. A blatant mismatch. “One in, one out” is therefore “four in, one out”.

One might say about this comparison that new regulation and burden are not necessarily congruent. But often one thing leads to another.

Family businesses groan under the increasing amount of documentation from Brussels

The inconsistent implementation of the legislative principle also affects family businesses in particular. Many companies report a massive increase in documentation costs due to the Brussels specifications.

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And this is likely to increase drastically in the future. An example of this is the sustainability reporting guideline (CSRD), which is about to be finalized.

The family businesses support the sustainable transformation of the economy and are in the midst of change. But the EU goes into far too much detail here and prescribes 2000 reporting points on how companies should become more sustainable. If this bureaucratic colossus becomes reality, many family businesses will be faced with documentation and reporting obligations that can hardly be managed.

New due diligence requirements for companies are emerging everywhere.

The EU Commission is also relying on new bureaucracy in other areas. The planned supply chain directive is likely to lead to new burdens, as are upcoming specifications for batteries.

New due diligence requirements for companies are emerging everywhere. In 2023, for example, a European ecodesign regulation is about to be passed, which will gradually oblige companies to provide their products with a digital product passport. The list could be continued endlessly.

The Commission must now put its money where its mouth is

However, companies are waiting in vain for the promised relief. So if you draw a first conclusion, it seems as if the EU Commission is itself thwarting its still young principle of reducing bureaucracy.

For 2023, it must be applied consistently if the “one in, one out” principle is not to degenerate into a European castle in the air after a short time. Family businesses are still pinning their hopes on this approach in order to break the waves of bureaucracy in Brussels.

After all, for them it’s all about “the nitty-gritty” when there are always new burdens. Excessive bureaucracy not only causes costs, but also prevents companies from being able to concentrate on their actual business. Capacities are needed for innovation and the development of new environmental technologies instead of dealing with ever new bureaucracy.

What gives at least some hope: “One in, one out” is mentioned in the work program of the EU Commission for 2023. The EU Commission is called upon to finally put its words into action. Generations of politicians have been working on this – Edmund Stoiber sends his regards.

The author:
Rainer Kirchdörfer is on the board of the Foundation for Family Businesses and Politics.

More: “Incredible effort” – Many companies are poorly prepared for the supply chain law

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