Not Even One In, One Out

Politics - April 21, 2024

In her 2023 State of the Union Address, European Commission President Ursula von der Leyen proposed to reduce reporting obligations at the European level by 25 per cent and committed to work with Member States to reach the same goal at the national level.

More recently, in January 2024, the Policy Department for Economic, Scientific and Quality of Life Policies in the European Parliament has published a study on EU regulatory burden and its impact on business.

The report starts by stating that “there remains scope for the Commission to increase the transparency underpinning its methodology”.  It is certainly not a good start, to reveal that the European Commission does not appear as transparent when reducing the Union’s paperwork for undertakings and citizens, the so-called ‘one in, one out’ approach.

The European Conservatives and Reformists would prefer at least a ‘two out, one in’ approach, given the already excessive number of regulations, directives and decisions that European authorities already load markets and individuals with; the minimum we require is that such bulk is not further increased.

The analysis concludes that the Commission’s alleged reduction of regulatory costs needs to be interpreted with caution, since the supposed improvements face “important methodological challenges”.  In other words, the Commission is not to be believed very seriously.

That is why the European Parliament recommends to provide for an independent evaluation of the ‘one in, one out’ principle, as if the internal assessment of the Commission services were biased.  Indeed, businesses, particularly small and medium enterprises, also think that there has been a net increase of the EU regulatory burden in recent years, in contrast with the proportionality principle that should guide Union action.

Some other nations are doing what the EU is ignoring.  For instance, the United Kingdom launched as early as 2010 a ‘one in, one out’ mechanism in order to enhance the competitiveness of British firms.  In 2013, Britain’s government upgraded the objetive to ‘one in, two out’, which was further tightened to ‘one in, three out’ in March 2016.  To the discredit of the current party in power, the excellent strategy was later abandoned.

Interestingly enough, both Poland and Hungary, as well as Italy, all rank below the EU average in terms of impact of the regulatory burden as reported by companies in 2021 and in evolution since 2018, when conservative governments have been in power for those three Member States.

Out of 18 Directorate-Generals in the European Commission, 11 are applying the ‘one in, one out’ principle when performing their respective impact assessments for new legislation; which means that 7 are not doing so, either explicitly or because, as the Parliament puts it, we do not know, lack a minimum of transparency that we deserve.  One can ask oneself whether the Commission would actually know, at all.

It will come as no surprise, as the study reveals, that the policy area where more administrative burden has been caused is the European Green Deal, with 15 legislative proposals, followed by the Europe Fit for the digital age, with 13.

In terms of net cost/savings, the European Green Deal has also been the most expensive for business and individuals, with an impressive negative bottom-line of EUR 2 billion per year.  In other cases, the Parliament report recognises that “a number of examples demonstrated that the expected costs of new proposed regulation seem to be higher than their potential benefits” and that “it is unclear whether the net burden has been reduced or even contained”.

In particular, representatives of businesses, including SMEs in the Netherlands, Germany and Czechia have reported increasing obligations stemming from EU interventions.  This trend needs to stop and be reversed in the 2024-2029 parliamentary term or else the credibility of the Union institutions will descend to a minimum ever.

Source of image:  IMAGO/Future Image