The European Union wants to spark more innovation and investment with a special new business rulebook billed as making it easier for companies to launch and thrive across Europe.
The rules are set to be unveiled next week and are part of intensified efforts to help firms in the EU compete against Chinese and American rivals.
It will be a voluntary regime the EU argues will allow companies to overcome fragmentation and barriers to business in the 27-country bloc — but some labour groups fear it could erode workers’ rights.
‘The goal is straightforward: to make it easier to start a business, scale it up and attract investment across Europe,’ the EU’s justice commissioner, Michael McGrath, said in a statement to AFP.
McGrath is to announce the proposal on March 18, a day before EU leaders discuss how to make the bloc a more attractive place for business.
It will become law after approval by EU countries and the European Parliament.
The rulebook’s champions list an array of advantages: it will make it easier to trade across the bloc, make it faster to set up a company through a fully digitalised process and cut the risk — and cost — of failure.
All too often, they say, innovative European companies are forced to leave the bloc to grow bigger, often citing the example of Sweden’s Spotify.
‘If we want Europe to compete globally, we must ensure that great ideas are not only born here but have the space to grow, attract investment, and scale in the union,’ EU lawmaker Rene Repasi told AFP.
‘It’s really all about improving Europe’s innovation capacity,’ Reinhilde Veugelers of Bruegel think tank said.
Giving AI as an example, she said the key reason Europe was ‘lagging’ behind the United States and China was a failure to foster ‘new companies that come up with new ideas that ride on new technology waves.’
Repasi of the EU’s Socialists and Democrats group does not support the proposal — referred to varyingly as the ‘28th regime’ and ‘EU Inc’ — at any cost.
‘The 28th regime must under no circumstances become a backdoor for circumventing the social fabric that underpins our union,’ said the German MEP, who will lead parliament’s negotiations on the issue.
He called for a proposal that struck ‘a fair balance between lowering market entry barriers and social safeguards’.
Corporate Europe Observatory researcher Olivier Hoedeman said civil society groups and trade unions worry the proposal will allow firms ‘to bypass workers’ rights anchored in the legislation of member states’.
Ultra-fast company registration would make proper scrutiny ‘impossible, enabling a boom in dodgy ‘letterbox’ companies that facilitate tax avoidance and social dumping’, he added.
Hoedeman told AFP he had ‘little confidence’ there would be strong safeguards.
The European Trade Union Confederation (ETUC) has been campaigning to stop a proposal that it says puts ‘workers’ conditions, pay and say at work at risk’.
The new rules could create loopholes that would allow firms ‘to dodge European and national labour law and collective agreements’, the ETUC says.
Alongside workers’ concerns, there are warnings of potential detrimental effects including reduced regulatory oversight of EU companies.
The push for unified business rules is not new.
A ‘European company’ status introduced in 1988 came into force in 2004, but was not popular because of administrative burdens. It was criticised for allowing firms to circumvent employees’ rights.
There is fresh impetus after two 2024 reports on how to boost Europe’s competitiveness said the rulebook would be a gamechanger.
There is also drama over the legal basis.
Business groups say it should be a regulation — a binding rule that applies in all EU member states — rather than a directive, which sets a goal for each country to achieve using their own laws.
This, supporters say, would avoid having 27 versions of the rulebook.
But experts warn it won’t be a silver bullet.
Deepening EU capital markets whose size could better match the United States’ markets would be the key to unlocking more money, they argue.
‘Having financial market integration is absolutely key for Europe’s competitiveness for its transitions: green, digital — also for security and defence,’ analyst Philipp Lausberg of European Policy Centre think tank said.
