Brussels – Expanding across borders in the EU means navigating a maze of conflicting VAT rules and paperwork, driving up costs. Small and medium-sized enterprises (SMEs), in particular, face disproportionate compliance burdens, making it harder to scale up and compete. To cut red tape and boost competitiveness, the EESC calls for urgent reforms in two opinions adopted during its February plenary, building on the Letta and Draghi reports. Proposals include harmonised financial regulations, AI-driven reporting and a coordinated industrial policy.
‘The single market is the backbone of European economic prosperity, yet it remains incomplete in key sectors such as finance, energy and digital services,’ said EESC president Oliver Röpke. ‘Today’s debate highlights the urgent need for reforms to remove barriers and strengthen the services sector, ensuring a level playing field for businesses across the EU. We must work together to foster innovation, investment and economic resilience while upholding the European Pillar of Social Rights.’
Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union, agreed with the EESC’s call to action: ‘My vision for the Savings and Investment Union is to create wealth for our citizens and growth for our companies by bringing them together in a safe, competitive, well-regulated and well-supervised environment. It is time to take action, and everyone has a role to play. The EESC represents all the relevant stakeholders to which the Savings and Investments Union aims to bring value. I count on your support to achieve those goals.’
Michał Baranowski, Polish Undersecretary of State, Ministry of Economic Development and Technology, echoed this sentiment: ‘Creating a regulatory framework conducive to EU competitiveness is one of the priorities of the Polish Presidency. We support the Commission’s efforts to simplify EU regulations, shorten procedures, and reduce reporting obligations, particularly for SMEs. It is important to take into account the perspectives and contributions of stakeholders in this process. Here, the Presidency highly values and hopes to leverage the expert knowledge of the Committee and its commitment to dialogue between civil society, social partners, and entrepreneurs.’
Representing Matteo Carlo Borsani, rapporteur for the opinion on the Letta and Draghi reports, Mira-Maria Danisman said: ‘Our greatest obstacle to our competitiveness is not necessarily external pressures—it is our own over-regulation, protectionism and reluctance to integrate, harmonize and simplify.’
The EESC’s opinions have identified two critical challenges to competitiveness: fragmentation in the single market, highlighted in the Letta and Draghi reports (INT/1070), and excessive bureaucracy that particularly burdens SMEs (INT/1075). Both of these factors stifle innovation and economic growth.
What’s the problem?
Businesses across Europe are overwhelmed by complex and overlapping regulations. This wastes time and money, slows down the Green Deal and restricts access to financing for mid-sized companies. It results in frustrated businesses, higher consumer costs and weaker economic growth.
‘With over 13 000 EU legal acts, SMEs spend more time on paperwork than on growth. Simplifying these rules is crucial to help them succeed,’ explained Paul Rübig, rapporteur for the opinion on SME competitiveness.
Beyond regulatory burdens, Europe faces deeper structural challenges that undermine its competitiveness. Slow progress in completing the single market, disparities in digital and energy infrastructure and a lack of coordinated industrial policy are limiting the EU’s ability to compete globally. While other economic blocs move swiftly to attract investment and foster innovation, Europe risks falling behind.
In many parts of the EU, weak competitiveness and territorial disparities are closely linked, making regional policy essential for economic strength. Stefano Palmieri, rapporteur for the opinion on the Letta and Draghi reports, highlighted this connection: ‘EU cohesion policy plays a vital role in strengthening European competitiveness. The rationalisation of the EU regulatory system must safeguard working conditions, consumer safety, economic and territorial cohesion and sustainable growth.’
How can it be fixed?
Strengthening competitiveness requires a comprehensive approach, which includes removing barriers in key sectors like finance and energy, accelerating digital transformation and ensuring that SMEs can scale up and compete on a level playing field.
The EESC opinions propose:
- Simplifying regulations without lowering environmental and social standards.
- Creating a single AI-powered platform to streamline reporting for SMEs and mid-sized companies, making compliance faster and easier.
- Harmonising rules across sectors to cut down on repetitive paperwork.
- Standardising financial regulations across Member States with a coordinated EU industrial policy.
- Reforming the Carbon Border Adjustment Mechanism (CBAM) for a fairer, less burdensome system.
Will the EU rise to the challenge, or will businesses continue to struggle under outdated rules?
With global markets evolving rapidly, Europe must act now to stay competitive. The EESC has put forward clear solutions, but turning proposals into reality requires political momentum and swift implementation.
Giuseppe Guerini, rapporteur for the opinion on the Letta and Draghi reports, stressed that, just as with the quick response to the COVID-19 crisis through NextGenerationEU, the EU must act fast without cutting corners: ‘We need the same urgency for competitiveness and defence of democracy.’
English version by the Translation Service of Withub
