Today the EU Commission released its competitiveness Compass. This proposal comes as Europe’s industrial base continues to struggle to remain competitive on a global scale. 

The proposal rightly highlights the difference between Europe’s innovation and productivity gap, the price of energy which has been weighing on Europe’s industrial base and draws a comparison with the US and China. There are crucial issues which this new strategy encompasses.

Recently, when the EU institutions have had new ideas on regulations and directives, the result has been increased administrative reporting for businesses not just with regards to corporate sustainability, but also regarding AI, CBAM etc. While the commission aims for a 25% decrease in reporting and 35% decrease in reporting for SMEs the speed at which this will be achieved remains to be seen. Increasing simplification and reducing bureaucracy is the goal of the Simplification Omnibus Package proposal for ESG files which is due to streamline the CSRD, CSDDD and EU Taxonomy.

While we fully agree that EU policies and national policies must be better aligned around the same objectives and reinforce each other, we will remain attentive as to how this will be accomplished.

We have been calling for a mid-cap category for years and we are looking forward to the small mid-cap definition. According to the Commission by creating such a new category of companies, bigger than SMEs but smaller than large companies, up to 31.000 companies in the EU will benefit from tailored regulatory simplification in the same spirit as SMEs. While we are happy to know that the new definition of small mid-caps will be released next month, we would like this to lead to an EU mid-cap category.

We are pleased to see that the Important Projects of Common European Interest (IPCEI) procedures will be made simpler and faster. It is vital that EU innovation is supported on a national level and at EU level. With this in mind, it is vital that we change the situation on EU patents and remove the barriers for researchers and entrepreneurs in this regard. We need a symbiotic system that encourages universities, researchers and entrepreneurs to innovate in Europe.  Thus, we are pleased that the Commission will act on all aspects of the innovation lifecycle.

The Commission’s announcement of a 28th legal regime, which aims to simplify applicable rules and reduce the cost of failure, including aspects of insolvency, labour law, and tax law is welcome. So long as companies can choose to adopt the 28th regime on a voluntary basis, we agree that it could be an interesting solution provided it is done in a timely and simple manner.

While this is not an exhaustive explanation of the proposal, we will follow these points and seek to, where possible, communicate with the Commission on particular topics.