24 January 2025 | By Marten Männis
Internal Market
Significant measures to cut European red tape coming soon
The European Commission is planning significant measures to “cut red tape” over the next five years, aiming to address the Union’s economic challenges. The initiative, set to be unveiled next week, proposes reducing reporting obligations by 25% for private companies and 35% for SMEs. This move responds to long-standing demands from business interest groups—ranging from regional to supranational organisations—to simplify operations within the Internal Market.

While calls to reduce bureaucracy are not new, the upcoming proposals appear more ambitious than previous efforts. Notably, the initiative targets mid-cap companies, proposing a tailored regulatory framework better suited to their needs. It also seeks to ease operations for companies under the “28th legal regime”—those active in multiple member states—by addressing cross-border complexities.
Dubbed the “North Star” of the current Commission’s term by President Ursula von der Leyen, this initiative aims to satisfy mounting pressure from industries and member states. In 2023, Germany and France issued a joint declaration to reduce bureaucracy, emphasising the need to “…accelerate approval procedures, facilitate investments, and create room for innovation and creativity without compromising essential standards of protection.”
The Commission has already proposed innovative measures, including a voluntary single digital portal for companies posting workers across member states. This tool would allow service providers to replace 27 national forms with a single, unified process. If successful, it could streamline cross-border services significantly.
Furthermore, recent developments in France could potentially limit both the reporting requirements and the scope of companies falling under the Corporate Sustainability Reporting Directive. This follows similar calls from Germany which also see the Directive as too stringent and needlessly costly for businesses to follow.
However, the call to cut red tape is neither new nor unique. Similar efforts have been proposed before, such as the 2006 initiative to reduce administrative burdens by 25%, and comparable calls in 2014. These past efforts raise the question of whether such initiatives genuinely deliver long-term benefits or serve more as political gestures.
Discussions around Internal Market bureaucracy often oversimplify the issue. For instance, recent claims that EU citizens are missing out on benefits because American companies cannot provide certain AI solutions in Europe overlook the limited utility of these tools at present. Similarly, debates about EU competitiveness frequently fail to acknowledge that much of the US’s economic success in recent decades stems from a small group of companies in a single industry, rather than broad-based growth. Additionally, the US’s reliance on deficit spending contrasts sharply with the more fiscally conservative approach of most European member states.
Critics also point to the role of von der Leyen’s party, the EPP, in diluting other Commission initiatives, such as the Farm to Fork Strategy and aspects of the Green New Deal. This adds to concerns that the push to cut red tape often reflects the interests of groups seeking to minimise costs and maximise profits, rather than fostering genuinely balanced economic growth.
One thing is for certain – there will be calls in 2040 to cut red tape by 25% for private companies and by 35% for SMEs. It will be accompanied by calls from several business industries, together with larger member states, who seek to reduce reporting requirements, confidently stating that this is at the very core of European competitiveness.