Difficulties accessing financing prevent EU businesses from expanding - Dombrovskis

RIGA - Difficulties accessing financing is one of the main problems preventing businesses in the European Union (EU) from expanding their operations, Valdis Dombrovskis (New Unity), the Latvian candidate for the post of EU Commissioner for Economy and Productivity, Implementation and Simplification, told MEPs during his confirmation hearing on Thursday.

He stressed that the EU is facing monumental challenges unlike any other in the bloc's history. Dombrovskis pointed out that war has returned to the continent - Russia's brutal and illegal aggression against Ukraine threatens its freedom and existence, as well as the entire European security architecture. In his view, this is a sign of a larger geopolitical shift that is changing the world as we know it.

The EU's Economy and Productivity Commissioner-designate said that these changes threaten the international rules-based order. In addition, the EU faces many other serious challenges. These include climate change, increasing global competition for critical technologies.

In this complex environment, Dombrovskis believes the EU needs a flexible, innovative and competitive economy. This will guarantee Europe's ability to defend its values and freedoms, withstand future challenges and remain a cohesive society.

Dombrovskis said that Europe's economy is being held back by a number of factors, which is why European Commission (EC) President Ursula von der Leyen has made sustainable prosperity and competitiveness the main priorities of the new EC. Addressing MEPs, Dombrovskis said that while increasing competitiveness and productivity, several factors have to be taken into account, such as both public and private investment. He stressed the need to make it easier to start and grow a business, help people develop the skills they need and cut red tape, while continuing to improve social justice and cohesion.

The politician stressed that, if confirmed as Commissioner, his work would be shaped by four key elements: more coherence in economic policy-making and investment, clear foundations, less red tape, and a stronger European voice in global economic policy-making.

In his introductory speech, Dombrovskis pledged to improve the coherence, social fairness, and cohesion at the core of Europe’s economic model.

The new economic governance rules are fit for purpose, Dombrovskis said, adding that he will make sure that they are enforced "in a credible and even-handed way". Dombrovskis stressed that the EU must stand united at international economic fora due to today’s "more fragmented world", and that the euro should become a bigger force on the world stage.

MEPs asked about Dombrovskis’s plans to ensure the full enforcement and implementation of economic governance rules, taking into account social and cohesion concerns. Others warned that the EU governance framework would condemn countries to never-ending austerity since the fiscal receipts side of budgetary stability was not modified.

There were questions on commitments for prescribing the phase-out of fossil fuel subsidies, improving the democratic accountability of the European Semester (the EU’s economic coordination mechanism), the impact assessment for the digital euro, and specific programs for Eastern member states suffering the brunt of Russia’s attack on Ukraine.

MEPs raised concerns about the likelihood of an investment gap, notably at the end of the Recovery and Resilience Facility, and asked about funding EU investment through common Union debt. They also asked for a specific instrument for building the defense Union and questioned whether a roll-over of the NextGeneration EU debt may be possible.

Dombrovskis said that the EU needs "simpler rules that are easier to implement," assuring MEPs that policy objectives would not be compromised. To cut red tape for companies, he plans to use digital technology such as the digital wallet and e-identity.

To reduce reporting obligations for companies by at least 25 percent (35 percent for SMEs), the Commissioner-designate said all existing rules would be stress-tested and their impact on competitiveness and SMEs properly assessed.

Sustainability reporting being a key concern, he said the EU needs to avoid large companies transferring their duties to SMEs, adding that the EU has tools, such as the SMEs support program, to address compliance costs.

Dombrovskis said implementation issues will be discussed in the new Implementation Dialogues with affected businesses and committed to using infringement procedures when member states do not implement agreed rules. He will renew the Interinstitutional agreement on better law making to improve the impact and costs assessment of legislation, not just of proposals.

The European Parliament (EP) holds hearings of Commissioners-designate from November 4 to 12. Each hearing lasts three hours, according to the EP website.

The EP is expected to vote on the new EC at its next plenary, scheduled for November 25 to 28.