Marco Buschmann is frustrated. He sometimes feels like Sisyphus, the Federal Minister of Justice said recently at a conference organised by the German Chamber of Commerce and Industry (DIHK). In the fight against bureaucracy reduction, he said, the Federal Government was moving large boulders up the mountain. When they reach the top, EU Commission President Ursula von der Leyen stands there and pushes them back down again – and the stones roll even deeper than in their starting position.

Buschmann's excursion into Greek mythology had a very concrete background: on 26 September the German parliament passed the fourth Bureaucracy Relief Act (BEG IV). It is part of the „Meseberg relief package“, which the government is celebrating as the „biggest bureaucracy reduction programme in the history of Germany“. BEG IV alone is intended to cut costs of almost 1 billion euros a year for business, administration, and citizens.

However, just hours after the BEG IV vote, Parliament was moving ahead with national implementation of the EU Corporate Sustainability Reporting Directive (CSRD). As Buschmann himself puts it, this is a „bureaucratic battleship“ that overloads companies with countless additional reporting obligations. Annual new implementation costs: 1.6 billion euros.

The business community is not even satisfied with the government's new bureaucracy relief package: The law falls far short of the needs of the business location, commented Bundesverband der Deutschen Industrie (BDI) Managing Director Tanja Gönner. She pointed out that the information obligations under national law alone cost companies 66.5 billion euros a year. „Therefore, small-scale measures such as a few cancelled written form requirements, and a reduction in retention periods from ten to eight years, seem in practice like a drop in the ocean,“ said Gönner. The DIHK points out that the business community had submitted many more proposals. The handwork sector is also saying that the package is too hesitant to achieve noticeable relief effects across the board.

The negative mood across all sectors is easy to explain: In the last three years, bureaucratic costs have skyrocketed like never before. The annual compliance costs for the German legal framework are now 27 billion euros higher than in 2011, and have climbed by 16 billion euros since the start of the new government, according to the latest annual report from the National Regulatory Control Council (NKR). At 9.7 billion euros, the lion's share of this is attributable to the business sector. There are also additional billions in one-off costs related to the introduction of new laws.

„Germany is and remains a complex country that has walled itself in with a multitude of rules and procedures,“ NKR Chairman Lutz Goebel commented. According to the Ifo Economists Panel, bureaucracy and regulation is now the greatest weakness of the business location. „Germany is suffering from a bureaucracy burnout,“ said FDP Bundestag member Buschmann. And DIHK Managing Director Martin Wansleben pointed out that bureaucracy has never been such a hot topic for companies as it is today.

Politicians in Berlin and Brussels, from where, according to the Minister of Justice, 60% of bureaucracy costs originate, now seem to have understood the increasingly loud cries of alarm. In her new leadership team, EU Commission President von der Leyen has appointed the experienced Latvian Valdis Dombrovskis as „Commissioner for Better Regulation and Simplification“. One of his official tasks is to reduce reporting obligations by 25%, and even by 35% for small and medium-sized enterprises (SMEs).

The head of the EU Commission representative office in Berlin, Barbara Gessler, has promised that Brussels would in future focus more on the implementation of already adopted regulations, and not on new laws. However, scepticism in the German economy remains high: according to estimates by the DIHK, the additional compliance costs of the regulations and directives currently in the EU pipeline amount to a mid double-digit billion euro sum.

The Federal Government also does not want to leave it at BEG IV, even though the Meseberg package has brought relief totalling 3.5 billion euros in the last twelve months. Buschmann is now aiming for an annual bureaucracy reduction law. The newly introduced practical checks for laws are to be expanded, and the construction industry is to be given more room for manoeuvre with a „Building Type E Act“. Work on reform of public procurement law has begun. The 200 individual proposals are expected to bring annual savings of 1.3 billion euros.

The endeavours in Berlin are beginning to bear fruit, as the annual report of the NKR shows. The most recent „one in, one out“ balance for the past year resulted in relief from federal law (minus new burdens) totalling 1.5 billion euros. However, as EU directives once again resulted in significantly more burdens than relief, all that was left of the entire endeavour was cost reductions of around 400 million euros.

According to the NKR, compliance costs will only increase by 400 million euros in the period from July 2023 to June 2024, which in this case will have to be borne by the public administration. By contrast, the economy will be relieved for the first time since 2019 – by 433 million euros. The bureaucratic costs caused by information obligations will actually fall by 655 million euros. „Bureaucracy reduction is possible – if politicians want it,“ emphasised NKR Chairman Goebel at the presentation of the new annual report.

He is now calling on the Federal Government to set a binding target: 25% less bureaucracy costs and compliance costs within four years. This would reduce the burden on administration, companies and citizens by 5 billion euros every year. The most important starting points on this path include better legislation and more efficient administration. The NKR has just submitted 55 new proposals to the Federal Government on how this could be implemented.