Somewhat perplexed by political practice in Europe

The BDI/BDA-Mittelstand-Committee recently met in Brussels. Why?

We are currently experiencing uncertain, politically and economically difficult times. In Germany, the economy is paralysed, investments are faltering, and prospects are lacking. Confidence is waning in the face of falling orders, rising interest rates, high inflation, and foreign trade difficulties. Instead of necessary relief, the amount of additional and new burdens increases. I am thinking of energy and the environment or corporate due dilligence in foreign trade. The Mittelstand and SMEs in Germany are experiencing hard times. The truth is that some of it originates from Europe.

So how do you rate the EU from the perspective of SMEs?

On the Board of the BDI/BDA-Mittelstand-Committee, we thought about what stems from Europe and how it affects us. This ranged from issues in foreign trade to the authorisation of industrial facilities under the Industrial Emissions Directive (IED). It was always an open question as to whether we were taking a positive or negative stance. In May 2023, the BDI conducted a survey generating almost 400 responses with the following result: only 51 per cent of the companies see Europe as part of the solution and a hefty 26 per cent see Europe as part of the problem when it comes to their own competitiveness. That is an alarm signal!

What did you expect from the meeting with EU decision-makers?

In good times, we entrepreneurs endure a lot. But times are currently difficult and remain highly uncertain. We do not know what lies ahead of us in the wake of the Covid-pandemic and the war in Europe, or as a result of transformation and general de-risking. Why is the EU not sending a positive signal to our companies in this situation? Politicians need to think and act cautiously and pragmatically, just as much as we entrepreneurs do. This applies to both Berlin and Brussels. The aim must always be to categorise the many processes in terms of SME policy and to shape them in a helpful way. Sometimes, however, I am amazed at how Brussels works.

Brussels amazes you? Well then: How do you perceive the European Commission?

The European Commission seems to lack a compass for SME policy. The role of the SME Envoy has been neglected for years, and the many Directorates-General are outdoing each other in a regulatory competition. It seems as if they do not always know what the other one is doing. As a result, more and more rules are being created that could end up costing us our licence to operate. I am thinking of the sometimes difficult interaction between the "Green Deal" and "taxonomy", of technological requirements under the heading of BREF or of substance bans, for example in the context of REACH or in the framework of PFAS.

And how do you view the European Parliament?

Parliament is politically so diverse and there is so little focus on the issue of a competitive economy that the Commission's proposals are often even tightened up. One of the latest examples is the Corporate Sustainability Due Diligence Directive. The German law is already a difficult new burden. But for the European requirements, the Parliament in Brussels has added reporting obligations and liability - and we will have to implement this in practice and cope with additional burdens.

That leaves the Council of Ministers. What is the situation here?

If I understand the German EU ambassador Clauß correctly, there is little hope here either. In an urgent letter, he called on Berlin to coordinate positions within the Federal Government at an early stage in order to be able to stand up for German interests in Brussels - including for us SMEs. So far, this has apparently not been the case; abstention in the Council is now regarded as a "German vote". But as we all know: those who remain silent cannot shape decisions. So, we are not getting anywhere.

So, are you a Eurosceptic?

As a family entrepreneur and committed citizen, I am and remain above all a fervent advocate of European unity, of a functioning internal market and of international competitiveness. At the same time, it is true that I am sometimes somewhat perplexed by current political practices in Europe.

In principle, you are a supporter of the EU, but you are somewhat sceptical in concrete terms. If you had one wish for the EU, what would it be?

For competitive Mittelstand and SMEs in Germany, I would like to see a future-orientated and sustainable Europe. Only a fully functioning EU internal market offers export-orientated companies open borders. Barriers for products, services, capital and employees must be reliably removed. It is important to organise the free transfer of goods across all borders in Europe in a secure, uniform and reliable manner. SMEs and family businesses also belong firmly on the EU's political agenda in operational terms - i.e. in terms of bureaucratic relief and targeted support. The European definition of SMEs needs a fresh look; mid-cap companies should also be taken into account. Brussels must formulate a small number of EU strategies in a targeted manner, harmonise them coherently and implement them with a focus on Mittelstand and SMEs.

Together with many SMEs and family entrepreneurs, I would like to see fair competition in a reliable framework for active entrepreneurship. We want functioning markets and only necessary bureaucracy. Incidentally, when it comes to bureaucracy, it's not just Brussels that needs to act, but Berlin too: the German government should implement EU law in a standardised way - without national over-fulfilment through "gold-plating". This is the only way for companies to find a standardised legal framework in the internal market.

Are there any other wishes with regard to the EU?

The list is long. I would like to emphasise one thing here: entrepreneurial success requires fair and open foreign trade. Many Mittelstand companies and SMEs are globally intertwined through the division of labour, knowledge exchange, investment and trade. Some directly, some indirectly as suppliers in value creation networks. In Germany, one in four jobs depends on exports, in industry even more than one in two. This alone shows how important a targeted foreign trade policy is.

The conditions for success remain multilateralism, openness and fair competition. Specifically, we need further trade agreements with as many partners as possible. Severalbilateral agreements are currently in the works, for example with India as well as with countries in Central America and Asia. At the same time, the USA is challenging European policy with the Inflation Reduction Act. Entrepreneurship is supported in the USA, but restricted in the EU. China also remains an important market for us and developments there require special attention.

The next EU elections are due in June 2024. What is your perspective?

Despite criticising some of the details, there is no doubt how important Europe is for Mittelstand and SMEs and for each of us personally. What concerns me is how we can maintain the value and importance of Europe. I think like Gustav Heinemann. Like me, he is a South Westphalian and one of his thoughts has been passed down: "Those who do not want to change anything will also lose what they want to preserve". This applies to our companies, it applies to Germany as a business location and it applies to Europe.

Looking at the 2024 European elections, I believe politicians have a duty to make comprehensible proposals for forward-looking reforms. Europe must meet the level of a new era and be a tangible help in everyday life - not least in companies.

At the same time, I also see it as our duty as Mittelstand, SMEs and family entrepreneurs to constructively support developments in the EU and clearly acknowledge the many advantages of the EU in Brussels, Berlin and in our companies and make a bold commitment to Europe and campaign for a high voter turnout in our workforces.