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Red tape – less is more - 23/10/2009

Woman replacing pile of folders with paper showing EU symbol ©EC

EU businesses could save more than €40bn a year under proposals for cutting red tape.

In 2007 the commission gave itself until 2012 to reduce by 25% the annual administrative costs on business from EU legislation.

Now, with the deadline still two years away, the EU is well on the way to achieving that goal and may even exceed it, according to its latest progress report.

The commission estimates that the total annual burden on business from EU legislation and the resulting national laws cost companies about €124bn a year in red tape.

Currently businesses are set to save €7bn a year in administrative costs under measures either in place or approved. And they could pocket another €31bn a year if EU leaders and lawmakers agree to measures already tabled and awaiting their approval. These include simpler accounting rules for companies of up to 10 employees and the removal of restrictions on using electronic invoices to report value-added tax.

Another €2.1bn would be cut under upcoming proposals, including measures making it easier for businesses to be recognised as shippers; simplifying balance sheets and profit and loss statements; and exempting hotels and B&Bs from statistical reporting.

Together the measures – planned, proposed and approved – add up to more than €40bn, or 33% of the administrative burden.

“The commission is fully on track to deliver on its goals to reduce red tape for businesses,” president Barroso said.

Cutting red tape is key to the commission’s strategy for pulling the economy out of recession, giving business a boost at a time when credit is still tight. Many of the measures are tailored to small businesses, which provide most of the jobs in the EU. These firms often struggle with administrative hurdles and difficulties securing financing.

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