Europe’s competitiveness depends on maintaining democratic standards while streamlining its administrative system
As global competition accelerates and geopolitical tensions reshape trade and investment flows, Europe’s economic and democratic model is being tested.
While the EU prides itself on high standards, many argue that excessive bureaucracy has become a structural drag – weakening competitiveness, discouraging investment, and eroding trust in institutions.
Voices from both regional and EU levels underline how administrative overload is now shaping Europe’s attractiveness, converging on a central warning: Europe can no longer afford a system that slows down innovation and alienates citizens.
Brake on competitiveness
For Sari Rautio, president of the EPP Committee of the Regions Group, the impact is felt most intensely at regional level, where Europe’s economic backbone – its small and medium-sized enterprises – operates.
“Excessive bureaucracy affects both our economic competitiveness and the health of our democracy,” she tells Euractiv.
SMEs, she notes, are the engine of regional economies but the least able to cope with administrative layers. “The burden falls especially heavily on SMEs […] yet they are the least equipped to handle layers of complex EU and national procedures.”
When obligations grow, the economic consequences are immediate. “When rules, reporting obligations or funding applications become too heavy, SMEs simply step back – and when that happens, regions lose innovation, investment and growth.”
But Rautio stresses that the damage is not only economic. When local actors struggle to access EU support or navigate complex procedures, citizens begin to see the EU not as a partner but as what can resemble a “distant bureaucratic machine”.
These pressures land at a moment when Europe’s competitiveness has been “chronically waning”, as highlighted in the Draghi and Letta reports. For Rautio, cutting bureaucracy is not merely about efficiency – it is fundamental.
“Reducing bureaucracy is essential for strengthening Europe’s attractiveness as a business model and destination for investment […] and for restoring citizens’ confidence that the EU is there to help them, their communities and their SMEs thrive.”
Growth discouraged
At national and EU level, Renew Europe MEP Engin Eroglu offers an equally stark diagnosis. Europe’s regulatory environment, he argues, is actively undermining the ability of companies to compete globally.
“Under today’s regulatory framework, very few European companies can achieve the growth rates necessary to compete internationally – or grow at all,” he tells Euractiv.
For businesses, the rising cost of compliance is no longer manageable. “Companies must reduce personnel costs, particularly by minimising the share of unproductive administrative work caused by regulatory requirements.”
The underlying issue is not only the volume of rules but their increasing complexity and slow implementation. “More and more sectors in Europe are dominated by oligopolies. This severely reduces innovation, as SMEs have very limited opportunities to start or scale their businesses.”
For Eroglu, simplification is no longer enough. “After many years of increasingly complex regulation, now is the time for deregulation, not just simplification […] so that new European global companies can emerge.”
Rethinking rules delivery
Rautio believes the problem is not Europe’s values or standards, but the way they are implemented across territories. Regions are on the frontline of EU delivery, responsible for 70 per cent of legislation.
This means implementation must be “less costly, smarter, more proportionate and more place-sensitive”.
Strong governance standards must remain intact. “Rule-of-law conditionality is essential – it protects taxpayers’ money, ensures trust among Member States, and guarantees that EU programmes are delivered fairly and transparently,” she says.
But to make the system work, delivery must change. Rautio calls for “fewer overlapping reporting obligations, more proportionality in controls, and a genuine commitment to multilevel governance and the partnership principle”.
Trusting well-governed regions more would allow investment and innovation to flourish “without undermining the foundations of our democracy”.
No trade-off – democracy, speed
Eroglu stresses that protecting democratic standards does not require procedural excess. “Democracy and efficiency are not mutually exclusive – the key is how democratic processes are organised.”
Reducing burdens is part of strengthening legitimacy. “Protecting democratic standards means making decisions understandable, efficient, and citizen-friendly – not overloading companies and citizens with bureaucracy.”
A system that is “faster, simpler and more focused”, Eroglu argues, is both more democratic and more competitive globally.
Strategic vulnerability
The takeaway is clear: bureaucracy is no longer an internal technical flaw, but a strategic vulnerability at a time when Europe is competing with regulatory superpowers, state-capitalist models and economies capable of swift policy action.
For Europe to remain an attractive destination for investment, innovation and democratic participation, reforms must go beyond symbolic simplification. They must reshape how rules are designed, delivered and experienced by businesses and citizens.
Europe’s ability to thrive in global competition will depend on whether it can uphold high governance standards while building an administrative system capable of speed, clarity and proportionality. The cost of failing to do so, stakeholders warn, is not only economic stagnation but a deeper erosion of trust in the democratic model itself.
(BM)