Overregulation is one of Europe’s core problems, which was also highlighted by the former central banker Mario Draghin in the competitiveness report.
The increase in the regulatory burden is among the top concerns of many companies. Regulation is needed, but it is felt that EU regulation has already gone so far that it is no longer just a retarder, but an obstacle to operations and investments.
As the 21st century progresses, economic growth and new leading companies have increasingly been born outside the EU. Leading where the US innovates, the EU regulates.
Based on the gap in growth and productivity between the continents, the EU’s line has not been a winning card.
China plays by its own rules. It has taken big development steps and has risen to challenge developed western countries in several sectors.
In the EU, the intentions have been good. Among other things, there has been a desire to be the first in the world to achieve a clean economy. However, changing old processes requires huge investments that can only be made by competitive and profitable companies.
The EU is now suffering from the effects of the war, but the goals have also run away from reality. For example, energy prices are many times higher than in China and the United States, which affects companies.
In Germany, Fortune 500 companies had announced plans to lay off more than 60,000 employees by the end of December. This is suspected to be just the beginning. Last Wednesday, the industrial giant Bosch said that they are planning to lay off 8,250 people.
During the previous EU Commission, the pace of regulation only accelerated. In the United States, between 2019 and 2024, approximately 3,500 laws and approximately 2,000 resolutions were passed at the federal level. At the same time, around 13,000 regulations were approved in the EU.
Calculating the costs of regulation for companies is difficult. However, it has been attempted. For example, the European Chemical Industry Council Cefic has calculated that the costs are approximately 3–4 percent of turnover.
The costs of regulation would thus rise to an estimated 23–30 billion euros per year in one industry alone. Ceficin applied to the Finnish chemical industry the estimate would mean 495–660 million euros on an annual basis. (CL 12.12.)
In Finland, according to the interest organization of the chemical industry, even a conservative estimate of the price tag is hundreds of millions of euros per year. The industry is aiming for carbon neutrality in Finland by 2045, which would require billions of investments annually. As regulation increases, uncertainty increases, which weakens companies’ competitiveness and makes it difficult to make investments.
The EU’s Green Deal now seems to lead to the carbon neutrality of industry not being realized. China is taking the lead. Europe is losing its competitiveness and technological edge.
In the United States, the new administration has promised to deregulate. If Europe is going to somehow succeed in the competition in the future, it has to jump on the bandwagon of the United States.