Europe must abandon its interventionist approach

Europe is in grave danger of being left behind. Fundamental reforms are imperative if it is to remain competitive. Instead of increasingly complex corporate governance requirements, there needs to be a return to the vision set out in the original EU treaties and the guiding principle of free markets. According to the Advisory Board of the Foundation for Family Businesses, regulatory policy must be prioritised again.

Berlin, 11 March 2025. Six professors, six visions for Europe: in the wake of the German federal election, the Foundation for Family Businesses and its Advisory Board are drawing attention to necessary reforms and promising initiatives for the European Union.

Prof. Gabriel Felbermayr calls for efforts to deepen and expand the single market with the aim of lowering barriers to trade and mobility to the same extent as between the US states. Doing so would enable major efficiency gains and economies of scale. At the same time, a greater emphasis must be placed on the principle of subsidiarity. According to Felbermayr, the EU should focus solely on those matters that the Member States cannot manage on their own, such as the protection of external borders, common defence, cross-border infrastructure and cutting-edge research.

Prof. Clemens Fuest Prof. Clemens Fuest calls for a more disciplined fiscal policy in Europe. The government debt levels of some EU Member States are truly alarming. Violations of the rules set out in the Maastricht Treaty are not consistently penalised. The reform of the EU’s Stability and Growth Pact was a step in the right direction, but it contains numerous exceptions and vague legal terms. Europe will not become more competitive through debt-financed community investments, but rather by reducing reporting requirements and through reforms at the Member State level. The EU should only act and coordinate to address cross-border inefficiencies.

Freedom breeds initiative

Prof. Udo Di Fabio sees the EU sliding into a tendency towards a more critical view of the market, with increased ambition to monitor and control the economy. He reminds us of the model of an open market economy with free competition, as set out in the EU treaties. An individual should never be reduced to a mere instrument serving a collective plan. According to Di Fabio, economic rights and freedoms deserve to be strengthened because they breed initiative and value creation. What Europe urgently needs is a capital market that enables high-growth companies to flourish.

In his criticism of Germany’s unilateral approach to energy policy, Prof. Hans-Werner Sinn reveals just how far the EU still is from a common energy market. In his view, the country’s approach virtually forces deindustrialisation without producing any benefit for the climate. Prof. Kay Windthorst draws attention to the totality of family businesses that are particularly affected by EU regulations far removed from actual practice. They often have the impression that the EU does not understand their concerns and views them with suspicion. Prof. Rainer Kirchdörfer sheds light on how much the entrepreneurial families have internationalised and at the same time, how much their mobility is still restricted by German and European law. The free movement of entrepreneurial families has so far been largely ignored in the context of exit taxation.

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©Stiftung Familienunternehmen/Dirk Michael Deckbar