The reasons are high energy prices and growing regulatory requirements

Europe is under pressure as an industrial and economic center. This opinion was expressed by Markus Beyrer, CEO of the BusinessEurope business association, in an interview with Euractiv.

Among the reasons, Beyrer named high energy prices and a «regulatory tsunami» of numerous new directives from Brussels over the past few years.

In recent years, Europe has been growing much slower than key competitors such as the United States, which has seen higher rates of investment in new businesses. Thus, in 2023, the EU’s GDP grew by only 0.5%, while the US economy grew by 2.5%, according to the IMF.

«“The main point is that we have grown much more slowly than the US – for seven years out of the last ten years. So this is not just a snapshot,» Beyrer said.

The BusinessEurope CEO also said that the European Trade Union Confederation is increasingly joining business representatives in emphasizing the urgent need to strengthen Europe’s industrial and business environment.

In addition, according to Beyrer, European reporting requirements have increased dramatically in the past few years, despite the promises of European Commission President Ursula von der Leyen to cut red tape.

The promise to reduce reporting obligations for European companies by 25% was first announced in the European Parliament in March 2023, reiterated in the September State of the Union speech by the EC President, and then supplemented with more detailed commitments in the European Commission’s work program for 2024.

The bloc’s executive has said it is proposing measures to rationalize administrative requirements and simplify reporting requirements that have limited application, for example by consolidating overlapping obligations, increasing digitalization, etc.

However, according to Beirer, the recently adopted EU Corporate Sustainability Due Diligence Directive, which requires large companies to ensure social and environmental standards throughout their value chain, has imposed additional «unworkable reporting requirements.»

This echoes concerns expressed by other business groups such as the German Chamber of Industry and Commerce (DIHK). They believe that the directive will lead to a narrowing of customer and supplier choice, undermining the goal of diversifying markets and securing raw materials for the energy transition.

Ahead of the European Parliament elections to be held in June this year, business groups have presented their wishes for the next legislative cycle, focusing on simplifying rules and paperwork, but not calling for abandoning climate policy.

Earlier, BusinessEurope stated that most companies indicate that the time required to obtain permits is a barrier to investment in Europe, and that speeding up this process should be an EU priority.