Beyond bureaucracy: A new vision for Europe

We have long known that Germany and Europe will soon be required to spend enormous sums of money – driven by geopolitical, economic and security policy requirements. States must significantly increase their investments and secure their financing. This will not only affect EU Member States’ government debt levels (and possibly the EU’s debt as a community), but also growth rates. In addition, European companies will need to resume large-scale investments in order to create the necessary capacities and remain internationally competitive.

But does Europe measure up as a location for businesses? The Country Index for Family Businesses recently revealed that particularly the large countries are falling behind. They are facing massive declines in wealth and prosperity. So right now, just a few days after the federal elections in Germany, it is important to turn our attention to Europe.

Fundamental reforms are imperative if Europe 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. Regulatory policy must be prioritised again.

Strengthening the single market, reducing red tape and promoting mobility: this is the call to action from the Foundation for Family Businesses’ Advisory Board. In short, Europe needs to abandon its interventionist approach.

In this publication, six professors present six visions for Europe. They propose vital reforms and initiatives to ensure the European project is successful, both now and in the decades to come.

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 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 latest 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. f

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. Economic rights and freedoms deserve to be strengthened because they give rise to 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.

To summarise: for the foreseeable future, Germany will remain preoccupied with itself in the aftermath of the federal elections. Nevertheless, the global situation requires a European approach to defence and trade policy. But it is precisely in economic and fiscal policy that Europe has to be returned to its liberal founding principles and once again transformed into a prime location – especially for family businesses.