STRONGER BUSINESSES,STRONGER EUROPEAN UNION

WWW.BUSINESSEUROPE.EUAPRIL 2024

STRONGCOMPANIESSTRONG EU

To deliver for society, the European Union needs strong companies asmuch as European companies need a strong European Union to succeed.
Our companies are committed to playing their role in society by
producing quality goods and services at affordable prices,
creating productive and fulfilling jobs,
contributing to the financing of necessary public services and infrastructure,
innovating and delivering enabling technologies for the green and digital transitions.

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Unfortunately, they are held back byhigh energy costs,excessive regulation,lengthy permitting procedures, andskills and labour shortages.

THE EU ECONOMY
IS LOSING GROUND
The European economy is falling behind.
In 2023, the EU GDP grew by 0.5% only vs
3.1% for the US and 5.2% for China.

GDP growth in 2023 Source: Eurostat
6%
5%

5.2 %

4%
3%

3.1 %

2%
1%
0%

0.5 %EUUSChina

FDI evolution 2019-2021
Source: BusinessEurope Reform Barometer 2023

80 %
60 %

63 %

40 %0%-20 %-40 %-80 %-68 %EUThe EU needs to put competitiveness at
the forefront because it is the basis forgrowth, employment, investment in thegreen and digital transitions, as well as ininfrastructure, security, social protection,etc.

In 2019-2021, foreign direct investment
decreased by 68% in the EU vs anincrease by 63% in the US, and greenfield
investment in the EU fell by 15% vs anincrease by 18% in the US in 2021-2022.
Europe’s investment needs are huge. The
green and digital transitions alone requirearound €650 billion per year from 2021
to 2030. Both public and private moneyis needed. I mproving the investment
climate in Europe is an essential part ofthe answer.

20 %-60 %Having a strong economy is a prerequisite
to defend our European way of life andEuropean interests abroad.

US3
REBOOT EUROPE

POLICY CHANGES ARE NEEDEDBusinessEurope is calling for a REBOOT in European policies, buildingon EU achievements, with targeted actions to tackle the structural
weaknesses that are undermining companies’ efforts to deliver for people.
POLICY CHANGES AIMING AT SOUND ECONOMIC,SOCIAL AND ENVIRONMENTAL PROGRESS IN A:ESILIENT EUROPEAN UNION WITHNERGY AT AFFORDABLE PRICESETTER AND SIMPLER REGULATIONPEN AND RULES-BASED TRADE LEADING TO MORE
PPORTUNITIES FOR COMPANIES AND PEOPLE
IN THE SINGLE MARKET THROUGHREBOOT EUROPE

4ECHNOLOGICAL INNOVATION AND
TALENT DEVELOPMENTA RESILIENT
EUROPEAN UNION
During the last 5 years, the European Union has focused on dealing withthe Covid crisis, the war in Ukraine and regulating the green and digitaltransitions. During the next cycle, the EU will need to focus on improving
Europe’s competitiveness and attractiveness as a business location by:
Pursuing an ambitious trade agenda
as there cannot be strategic
autonomy without openness:
striking the right balance between
ensuring security andenabling the European economy,
Reducing the regulatory burden
weighing on European companies
and hampering innovation,
simplifying reporting
requirements,
speeding up approval andpermitting procedures,
Flanking the Green Deal with an
Industrial Deal so that it becomes areal growth strategy delivering:
the EU’s climate neutrality
ambitions,
economic success andthe means to invest in this deeptransformation,

Rejuvenating our Single Market:
ensuring a level playing field,
removing obstacles to doing
cross-border business in allareas, andcreating the conditions that willallow European startups to scale
up from Europe,
Moving away from a regulatory
approach to social policy:
promoting mobility,
addressing labour shortages andskills mismatches,
respecting subsidiarity anddeveloping social dialogue acrossEurope,
Restoring the sustainability of
public finances, ensuring that public
debt is settled by growth:facilitating investment in Europe,
pursuing growth-friendly andeasy-to-comply-with tax policies,
Preparing for the next enlargement:
taking a merit-based approach,supporting the nine candidate
countries in their efforts tofulfil the requirements of EU
membership, andmaking the necessary adaptationsin the EU itself.
5REBOOT EUROPE

ENERGY AT
AFFORDABLE PRICES
During the next cycle, the EU will needto go beyond the reform of the European
electricity market design and address
structurally the energy cost differential
between the EU and major competitors.

Industrial energy prices
Index = S1 2019
Source: BusinessEurope staff calculations basedon Eurostat and U.S. Bureau of Labour Statistics

260

It will need to put in place a real EU energy
strategy that optimises the conditions for
public and private investment in:

240
220

production of affordable low-carbon andrenewable energy in Europe,
infrastructure that facilitates crossborder energy trade such as grids andinterconnectors and storage,
technologies that enable climate
mitigation and sustainability.

200
180
160
140
120
100

06/2019
09/2019
12/2019
03/2020
06/2020
09/2020
12/2020
03/202106/2021
09/2021
12/2021
03/2022
06/2022
09/2022
21/2022
03/2023
06/2023

80

EU

USA

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Industrial energy prices haverisen more sharply in the EU than inthe US in recent years. Both industrial
electricity and gas prices remain morethan double their pre-Covid levels in theEU compared to average increases ofaround 30% in the US, according to thelatest official data (June 2023).

Furthermore, this strategy should diversify
our energy sources, including transition
sources, and build partnerships with thirdcountry providers.

BETTER & SIMPLER
REGULATIONThe complexity and duration of permitting is
an obstacle to investing in Europe
Source: BusinessEurope survey of 240 companies on industrial
permitting in EuropeNO FOR

17%During the next cycle, the EU will needto go beyond the work started to reduce
reporting requirements for companies by
25%, put industrial permitting at the topof the agenda and develop an Omnibus
proposal to reduce burden by eliminating
contradictions and unnecessary complexity
in EU legislation.
Looking for ward, it should change
approach:

YES FOR83%

Regulator y inflation brings majorrepor ting and compliance costs for
European companies and is particularly
damaging for SMEs. In 2022, proposals
under the Green Deal alone represented
a total of almost €2 billion of additionaladministrative burden. Permits delays
are also considered to be an obstacle toinvesting in Europe by 83% of companies,
according to a recent sur vey by
BusinessEurope.

moving away from over-reliance on
regulation and better valuing otherpolicy tools,
improving the quality of legislation
by refraining from micro -managing
companies and fully implementing
better regulation principles and tools,
systematically carrying out
co m petitivenes s c hec k s, S M E tes ts
and quality impact assessments, taking
into account the cumulative effect ofregulation,
stop proposing unnecessary revisions ofexisting EU legislation.

7REBOOT EUROPE

OPEN &RULES-BASED TRADE
During the next cycle, the EU will needto carefully calibrate economic security
measures to avoid a negative impact on
Europe’s competitiveness, and refrainfrom overloading trade agreements withthe pursuit of other policy objectives.

Share of global exports Source: Eurostat
25

20

15

1050

2016

2017

2018

2019
EU

2020

2021

2022
USA

As there cannot be strategic autonomy
without openness, it will need toensure implementation of existing tradeagreements, making sure they remaineffective and stand the test of time, also
finalise the agreement with Mercosur aswell as other ongoing negotiations andopen new ones to improve market accessand investment opportunities for European
companies throughout the world.

China except Hong Kong

REBOOT EUROPE

8With 5% of the world population, the EU
accounts for 16.2% of world trade and is
the first trading partner of 80 countries
in the world. However, the EU’s sharein global exports is declining. Having
peaked at 16.3% in 2016, it fell to 13.7%
by 2022. We remain ahead of the US
but the gap with China is increasing(18.2% of global exports) and as 85% of
economic growth in the coming years
will be generated outside the EU, wewill not become stronger by turning ourback to the world.

The EU should continue to cooperate
closely with the US, which is our first
trading partner, ensuring that it brings
satisfactor y solutions to transatlantic
trade irritants.
As de-risking takes time, the EU should
not only engage with like-minded
par tners but also work for a balanced
relationship with Europe’s second trading
partner - China, ensuring a level playingfield and defending Europe’s economic
interests, using all available trade defence
instruments.

OPPORTUNITIES IN
THE SINGLE MARKET
Intra-EU flows as a share of total EU GDP
Source: Single Market Scoreboard

30 %
25 %

During the next cycle, the EU will needto put in place a fully-fledged strategy
to rejuvenate and further develop Single
Market integration in goods and services,
including for digital and defence.
This strategy will have to remove obstacles
to the free movement of goods, persons,services, capital and data, and create theconditions that will allow European SMEs
and startups to scale up from Europe.

20 %
15 %
10 %5%

2006
2007
20082009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

0Services (intra-EU)

Goods (intra-EU)

Serving over 450 million consumers
and home to more than 23 million
businesses offering jobs to EU citizens,
the Single Market is the backbone of
the EU economy but its integration isstagnating. Intra-EU trade in goods,
which represented 20% of European
GDP in 2006, only increased by 6
percentage points by 2022 (accountingfor 26% of GDP). I ntra-EU ser vices
which represented 5% of European
GDP in 2006 still only contributed to amodest 8% of GDP in 2022. Delivering
a fully-fledged Single Market strategy
removing regulator y barriers andreducing bureaucracy could unleash€713 billion by the end of 2029.

As a general principle, it should privilege
proper enforcement of existing Single
Market rules on goods and services inorder to ensure a level playing field,
and only foresee new legislation whennecessary to remove legal obstacles tofree movement and cross-border business
operations and workers mobility.
To avoid fragmentation, EU Single Marketregulation should either provide fullharmonisation or apply country-of-origin
principles, with mutual recognition among
Member States.

9REBOOT EUROPE

TECHNOLOGY &TALENT DEVELOPMENT
GDP invested in research and innovationin 2021 Source: World Development Indicators
4%
3.5 %

3.4 %

3%

It will need to defend intellectual property
and deliver a real Capital Markets Union toboost private investment in innovation andencourage companies to stay in Europe toscale up.

2.5 %
2%

2.2%

2,2 %

2.4%

1.5 %
1%
0.5 %
0%

EUChinaUS10The EU is a global leader in high-tech
exports, which rose by almost 50% injust 10 years but cannot be complacent.
The EU invests about €330 billion inresearch and innovation per year. With
2.2% of EU GDP invested in researchand innovation in 2021, we are lagging
behind the US (3.4%) and have been
overtaken by China (2.4%).

REBOOT EUROPE

During the next cycle, the EU will need toinvest more in research and innovation, as
well as improve the innovation-friendlinessof its regulatory framework by ensuring
it supports reasonable risk-taking andcreating regulatory sandboxes to allow
experimenting.

I t will need to focus EU social polic y
on helping to tackle labour shor tages
and skills mismatches, with educationand training measures, paying special
attention to the skills required for thegreen and digital transitions and policies
to ac tivate unemployed and inac tive
persons.
I t will need to implement the Sk ills
and Talent Mobility package to attract
needed skilled workers from third
countries and make fur ther proposals
to simplify administrative proceduresthat employers have to undertake to hire
third-countryworkers.These are the policy changes that BusinessEurope
deems essential to build a:ESILIENT EUROPEAN UNION WITHNERGY AT AFFORDABLE PRICESETTER AND SIMPLER REGULATIONPEN AND RULES-BASED TRADE LEADING TO MORE
PPORTUNITIES FOR COMPANIES AND PEOPLE
IN THE SINGLE MARKET THROUGH
ECHNOLOGICAL INNOVATION AND
TALENT DEVELOPMENTThese are the policy changes that are needed to allow competitive businesses tocontribute to a strong European Union that delivers an economically successful greenand digital transition and stands up for European values and interests in the world.

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REBOOT EUROPEBusinessEurope is the leading advocate for growth and competitiveness at theEuropean level, standing up for companies across the continent and campaigningon the issues that most influence their performance. A recognised social partner,
we speak for enterprises of all sizes in 36 European countries whose
national business federations are our direct members.

Austria

Belgium

Bulgaria

Croatia

CyprusCzech Republic

Denmark

Denmark

Estonia

FinlandFranceGermany

Germany

GreeceHungary

Iceland

Iceland

IrelandItaly

LatviaLithuania

Luxembourg

Malta

Montenegro

NorwayPolandPortugal

Rep. of San Marino

RomaniaSerbia

Slovak Republic

Slovenia

Spain

SwedenSwitzerland

Switzerland

The Netherlands

TurkeyTurkeyUkraineUkraineUnited Kingdom

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