By Kinga Grafa

Businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. This over-regulation holds back their growth and prevents them from keeping pace with competitors from other parts of the world. Europe can’t keep going round in circles – entrepreneurs need real change, not more analysis of the same barriers we have known about for years. This is a key moment to move from words to deeds, writes Kinga Grafa of the Polish business confederation Lewiatan.

The European Commission recently unveiled the Competitiveness Compass, a roadmap for the next five years that seeks to strengthen the EU’s economic position and support European businesses. The course of action put forward by the Commission is the right one. Business has long called for such changes, making ‘competitiveness’ and the ‘single market’ their top priorities. But if the EU wants to be a global competitor, it must act now. Taking a strong economy as a basis, we urgently need to streamline regulation, lower energy costs and ensure effective support for investment and innovation. Faced with a volatile geopolitical environment, we also need free trade agreements with key partners to be finalised, such as those covering access to critical raw materials.

Today, businesses in Europe are still facing excessive red tape, regulatory fragmentation and rising costs. Competitors from other parts of the world are growing faster, while over-regulation holds back the growth of European businesses. The European Commission must put forward specific reforms that will genuinely improve the EU’s business environment. The Competitiveness Compass addresses the main barriers to growth and productivity in the EU, such as high energy costs, over-regulation and skills and labour shortages. This is the right course of action, but the most important thing is to put it into practice. This means legislative proposals and action plans that promote competitiveness and do not act as a brake on it.

The single market is one of European integration’s greatest success stories, but its potential must be fully realised. It is unacceptable that the barriers in the single market, identified 20 years ago, remain in place. The Polish Presidency of the Council of the EU has the chance to change this, with the freedom to provide services a key priority. This is vital not only for the transport sector, but also for the growing group of companies offering professional services. Unfortunately, the Letta and Draghi reports do not pay sufficient attention to this issue. Letta focused only on construction and retail, while Draghi did not take into account the Commission’s estimates for the additional steps that could unlock the services market’s potential. Positively, Niinistö’s report highlighted the role of services in building resilience and security. No one needs convincing how important this is in the current geopolitical landscape. It is against this backdrop that the Commission is proposing the ‘28th regime’ – a single set of rules covering taxation, labour law and corporate law. This initiative aims to simplify cross-border activities, especially for SMEs, but we do not know enough about the proposal at this stage to be able to assess it.

The announcement of deregulation and streamlined legislation is clearly a step in the right direction. Now, however, is the time to put the proposals into practice, and this must be about more than simply reducing the reporting burden. We hope that the Commission will carry out a thorough ‘audit’ of EU legislation that will translate into specific proposals to rapidly improve the EU’s regulatory environment.

We look forward to the Single Market Forum in Kraków and await the conclusions of the public consultation involving Lewiatan members. The aim will be to prepare the next single market strategy.

This is a key moment, moving from words to deeds and implementing solutions that truly unlock the development of European business. Dialogue between the EU institutions and the social partners will be essential if there are to be solutions that meet businesses’ real needs. Unless we take bold decisions, we will lose valuable time and lag behind the global competition.

Kinga Grafa is Deputy Director-General for European Affairs at Lewiatan Confederation and a Permanent Delegate to BusinessEurope. A political scientist and journalist by education, she attained her experience regarding the functioning of the EU while working for the Office of the Committee for European Integration (2008-2009) and the European Parliament (2009-2014). She is also a co-author of a book about the Polish aristocracy and author of scientific publications on American foreign policy, the American elite and cultural diplomacy.