The competitiveness of the EU’s small and medium-sized enterprises in light of new administrative burdens/obligations

Background

Rising bureaucracy is discouraging businesses. The Draghi Report highlighted that EU companies were facing tougher regulations than their competitors in China and the US, and described Europe’s regulatory burden as heavy and growing. A European Investment Bank survey backed this up, with 61% of companies seeing excessive regulation as a major long-term barrier to investment.

SMEs, especially in manufacturing, hospitality and agriculture, are frustrated by the time and money they have to spend on excessive bureaucracy. In 2023, 55% of SMEs called regulatory obstacles their biggest challenge. It was also a major issue for start-ups (52%, second only to funding) and mid-sized companies (36%, after hiring struggles and supply chain problems).

EU legislation on sustainability reporting can indirectly affect SMEs by creating unnecessary hurdles and making it harder for them to innovate and grow. Moreover, the complexities of the EU’s requirements relating to green investment and the uncertainty among regional banks with regard to their ability to comply with such requirements leads to faltering financing for SMEs.

In its opinion, produced at the request of the Polish Presidency of the Council of the EU, the EESC identifies the causes of cumulative regulatory burden and the areas of EU law that most affect the competitiveness of SMEs. The EESC gives concrete proposals for what action can be taken to reduce the burden on SMEs.

Key points:

In its opinion, the EESC:

1. points out that further reductions in the regulatory burden are still required, given that SMEs are facing double and triple legislative requirements as a result of the additional wave of regulation and existing requirements, including in relation to the Green Deal;
2. highlights that reducing the regulatory burden must not jeopardise compliance with social, environmental and consumer safety rights and standards established at international and EU levels, or with the principle of transparency and the rule of law in the EU;
3. recommends creating an easy-to-use ‘single reporting tool’ that can provide SMEs, mid-caps and other companies with all EU-relevant reporting obligations, deadlines and sanctions;
4. also recommends that the SME test and the competitiveness check should be merged into one procedure and that the Regulatory Scrutiny Board (RSB) should be significantly strengthened and made more independent.

You can read the opinion on the EESC website.

Additional information

Section: Single Market, Production and Consumption

Opinion number: INT/1075

Opinion type: exploratory opinion

Rapporteur: Paul Rübig

Reference: Polish Presidency of the Council of the EU

Date of adoption by section: 12/2/2024

Result of the vote: 64 in favour/3 against/4 abstentions                                                   

Date of adoption in plenary: 26/2/2025 – 27/2/2025

Result of the vote: 236 in favour/5 against/4 abstentions

Contacts:

Press officer: Laura Lui          

Tel.: 00 32 2 546 9189

Email:  laurairena.lui@eesc.europa.eu

Administrator: Marco Manfroni

Tel.: + 32 2 546 9140

Email: Marco.Manfroni@eesc.europa.eu