Simplification: Remarks by EU Commissioner Dombrovskis at Forum Europa

Ladies and gentlemen, it is a pleasure to join you here today to address such an esteemed audience in a critical time  for the European Union. On one hand, we are faced with existential threats to Ukraine and to the entire post-Cold-War security order. On the other, we need to take bold steps in securing our own future and in boosting the competitiveness of the European economy.

Of course, those two challenges are intrinsically linked. Our security and our prosperity are interdependent and mutually reenforcing.

Today, I would like to speak to you about the Commission’s implementation and simplification agenda which is an important part of those efforts.

And this time around we are serious about it.

Last Tuesday, the Commission took the first important step towards making EU rules simpler and easier for citizens and businesses:

We adopted our strategy on implementation and simplification for the next five years, entitled “A simpler and faster Europe”, and our 2025 work programme, announcing a number of specific measures to cut red tape.

This signalled the start of a change in the regulatory culture of the European Commission, focused on two goals: making sure that EU rules are as simple and cost-effective as possible, and that they deliver on the ground to achieve our economic, social and environmental goals.

Under this new approach, we aim to tackle all sources of regulatory burdens for citizens, companies and administrations.

This includes not only reporting but also other administrative costs, related, for example, to permitting, labelling or certification, as well as broader compliance burdens generated by EU rules.

We have set out ambitious targets for administrative costs: reducing them by 25% for all companies and 35% for SMEs.

This translates into cutting roughly EUR 37.5 billion in annual administrative costs by the end of this Commission’s mandate.

Commissioners will gradually stress test existing EU rules to deliver proposals for simplification, and they will be reporting regularly on progress, including to the European Parliament and to the Council.

They will also carry out at least two “implementation dialogues” with stakeholders per year, and Commission services will liaise regularly with practitioners on the ground through “reality checks”.

These two new consultation approaches will help us to identify what works and what needs to be improved in the application of EU rules, foster good practices and prepare meaningful simplification proposals.

When it comes to new legislative proposals, we will apply stronger checks to avoid hurting our competitiveness or SMEs.

And we will scrutinise delegated and implementing acts to avoid creating more costs.

The work to deliver real change has already started.

11 out of the 18 new initiatives in the Commission work programme for 2025 are aimed at simplification, and they are complemented by 37 evaluations and fitness checks, which will in turn feed more simplification work.

Over the coming months, the Commission will be delivering simplification packages in the areas of sustainability reporting, EU investment instruments, small mid-caps, digital tools and agriculture, and not only.

Our proposals will focus on the “triangle” formed by the Taxonomy Regulation, the Directive on Corporate Sustainability Due Diligence and the Corporate Sustainability Reporting Directive.

They will combine targeted changes to primary legislation, as well as to secondary and implementing rules.

They will seek to simplify each piece of legislation, as well as to ensure full coherence among them.

They will pursue:

• a better alignment of the requirements with the needs of investors,
• proportionate timelines,
• financial metrics that do not discourage investments in smaller companies in transition,
• and more proportionate obligations relative to the scale of activities of different companies.

They will also address the trickle-down effect so that smaller companies present in supply chains are not subjected to excessive reporting requirements that were never intended by the legislators.

In addition, we will also put forward targeted changes to the carbon adjustment tax to avoid excessive burdens on smaller players.

In the current economic and geopolitical context, the Commission believes that these changes are urgent.

Hence, we are moving fast and are working intensely with the Parliament and the Council also for this purpose.

We will also outline, on the same day, proposals to simplify the functioning and optimise the lending capacity of InvestEU, and alleviate the burdens on final recipients.

Ladies and gentlemen, with this, I hope that I have given you a good snapshot of what the Commission is working on, and of what is coming up.

But I would now like to address a couple of broader questions.

First, it is fair to say that the Commission’s simplification agenda has attracted a lot of attention.

This has raised hopes among many, but also some concerns.

Much of this hinges on the difference between simplification and deregulation.

The European Council has called for a “simplification revolution”, for drastically reducing administrative, regulatory and reporting burdens, and for adopting an enabling mindset based on trust, allowing business to flourish without excessive regulation.

The Commission has laid out the ambitious approach that I have just explained and is committed to delivering far-reaching simplification.

And we have also been clear that our simplification agenda will not be aimed at deregulation.

Our proposals will not promote private profits built on negative externalities, or undermine our social or environmental goals.

But they will be ambitious.

As highlighted in the Draghi report, the accumulation of rules over time, their increased complexity and implementation challenges are limiting our economic potential and our prosperity.

Our engagement with stakeholders confirms this.

Today, regulation is seen by more than 60% of EU companies as an obstacle to investment, with 55% of SMEs flagging regulatory obstacles and administrative burdens as their greatest challenge.

The past five years were a period of very intense regulatory activity, when Europe showed its determination to tackle the challenges and opportunities from the green and digital transitions.

However, this intense regulatory activity also generated a large and still expanding regulatory burden.

As we take stock of the impact of this regulatory activity, a major problem has now become apparent.

The accumulation of burdens creates a volume of demands on people and companies that freeze innovation, deter investment and encourage economic activities to move to other jurisdictions.

This, in turn, makes our citizens poorer and undermines our ability to collectively reach our economic, social and environmental goals.

It also makes us more vulnerable to outside demands and influence.

It is therefore imperative that we drastically reduce those burdens – not to abandon our objectives, but rather improve our ability to reach them in practice.

In addition to this internal reality, the international environment has also changed radically over the past months.

Some of the most powerful economies around the world are now pursuing regulatory approaches that are diametrically opposed to those that we have been rightly pursued by the EU.

In some cases, those jurisdictions are prohibiting their businesses to comply with EU requirements, which in turn hurts the ability of our companies to source scarce and essential inputs and raw materials.

This in turn puts our ability to secure the green and digital transitions, and to develop a new European industrial leadership at risk.

This problem is compounded by the restrictions that we place on the exploitation of those natural resources at home, outsourcing possible environmental damages to third countries, without reaping the economic or security benefits.

Let me be clear: To preserve our prosperity and our security, we have no choice but to confront these external realities.

Our regulatory framework must become more agile and responsive to this changing environment.

Without pursuing, in earnest, the interests of European workers and companies, we will not be able to deliver on the green deal.

Ladies and gentlemen, over the past five years, I was responsible for delivering – together with the Commissioner for employment at the time – the most ambitious ever implementation of the European Pillar of Social Rights.

I am deeply convinced that Europe’s unique social market economy is one of our strongest competitive advantages.

I also believe that our values and standards of democracy, equality, shared prosperity and protection of the environment have driven and will continue to drive economic and social progress here.

Yet, fundamental changes are needed in some other areas, in line with the Competitive Compass:

First, we need to make the EU an easier place for innovative companies to grow.

Second, we need to make Europe a better place to invest.

And third, we need to make doing business in Europe cheaper, both in terms of energy costs and regulatory burden.

The difficult realities that I have laid out in my speech today demand a bold change to our policy making.

Changing is hard. It requires looking with a critical eye at what has been done.

It requires clarity of purpose.

It also needs to be clearly explained.

The European Commission remains deeply committed to the green and digital transitions, and to building and even fairer and more prosperous continent for all our citizens.

The simplification of our regulatory framework is an important part of this puzzle.

In this context, I feel honoured to have been given the responsibility to coordinate the Commission’s efforts to deliver on our ambitious simplification agenda.

I hope to count on your support and cooperation to make a real difference for Europe’s companies and workers.

Thank you very much.

Source – EU Commission