The European Union had set out to reduce the state-imposed administrative burden on businesses by 25 percent. However, for German companies, relief is nowhere in sight. Instead, expenses related to bureaucratic requirements continue to rise.
Last year was supposed to mark a turning point: The German federal government and the European Commission had solemnly promised to rein in red tape and reduce new burdens on businesses. But the opposite has occurred. In response to a parliamentary inquiry by the AfD parliamentary group, the federal government was forced to admit that the burden has been increasing year by year.
According to the government’s response, the annual bureaucracy costs for businesses in 2023 amounted to around €67 billion, which is approximately €1 billion more than in 2022.
The government explicitly noted that EU law is also responsible for the increase in bureaucracy. The stated amount includes “all costs incurred through the implementation of EU law at the federal level.”
Robert Habeck causes the greatest burden
Most of the laws that impose bureaucratic burdens on businesses originate from the Federal Ministry for Economic Affairs and Climate Action, led by Robert Habeck (Green Party). These include 82 laws and 368 regulations concerning information preservation and reporting obligations. Following this, the Federal Ministry of Finance, headed by Christian Lindner (FDP), is responsible for 112 laws and 109 regulations. The Ministry of Transport (63 laws, 135 regulations) and the Ministry of Health (57 laws, 70 regulations) also contribute significantly. Overall, the federal government reports 613 relevant laws, 1,029 regulations, and 33 other norms that create bureaucratic burdens.
EU misses its targets
The EU is also clearly failing to meet its goal of reducing bureaucracy by 25 percent, as outlined in its official priorities for 2024. Most of the economically relevant laws now originate in Brussels. However, the federal government has so far been unable to advocate effectively for economically sensible and balanced rules within the European Commission. Moreover, the goal of implementing EU regulations in a streamlined and practice-oriented manner in Germany is increasingly being missed.
Many existing EU laws, such as the General Data Protection Regulation, the regulations on employee secondment, and the chemicals regulation, are considered by businesses to be disproportionately bureaucratic in design and implementation. New regulations, such as sustainability reporting, the EU Supply Chain Act, and industrial policy initiatives, create additional reporting and disclosure obligations, directly opposing the stated goal of reducing reporting requirements.
The best recipe for reducing bureaucracy would be a three-pronged approach: First, no new laws that further burden businesses, meaning initiatives like the EU Supply Chain Act would need to be significantly streamlined. Second, existing bureaucracy should be consistently reduced rather than continuously expanded. And third, better methods and processes for practical legislation should be developed, considering the feasibility of regulations in business operations and preventing the creation of new bureaucracy from the outset. After decades of debate about reducing bureaucracy, it is disheartening to read that, in reality, the bureaucratic burden is continuing to grow.
