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Small and medium-sized enterprises (SMEs) in Germany do not complain. They work. They adapt to external circumstances and are successful with their products against all odds. Many of them worldwide. This is the secret of their success. But the current economic situation gives cause for concern. We launched our DATEV SME Index a year ago. Our index provides up-to-date, fact-based and broad insights into German SMEs in a way that has not been available before: it is based on the advance VAT returns of more than one million SMEs and the payroll accounts of more than eight million employees. As an IT service provider for the tax consulting profession, this effectively lets us look directly into the engine room of German SMEs. But this detailed view is not very pleasant at the moment. The figures we publish each month based on data from tax advisors paint an almost worrying picture. The increase in the minimum wage that has already been decided is likely to exacerbate this situation for small and micro-enterprises. Sales are falling, wages are rising The German economy is in a difficult situation. Since September 2024, we have observed declining sales in SMEs. Concurrently, wages are increasing. Our latest statistics show that this trend is continuing — in all German federal states, industries and company sizes. There is currently no indication of a change in this trend. As previously described, SMEs rarely voice dissatisfaction. Instead, they seek pragmatic solutions. This challenging situation is no different. There are in fact a number of ways to resolve this issue. Many SMEs are looking to the federal government with high expectations. They expect it to pursue business-friendly policies to strengthen the backbone of the German economy. Small and medium-sized companies represent 99 percent of it and employ around half of the workforce in Germany. Without relief and incentives, the existence of many SMEs is increasingly at risk. Above all, we need to reduce bureaucracy and implement a bureaucracy moratorium: meaning the standardization and reduction of documentation and retention requirements. > Above all, we need to reduce bureaucracy and implement a bureaucracy > moratorium: meaning the standardization and reduction of documentation and > retention requirements. Financial incentives for greater productivity The regulatory frenzy of recent decades in Germany and in the EU makes it difficult for companies to catch their breath. It not only costs SMEs time and money, but it also hinders innovation. But there are now initial indications that something is being done about this. The importance and necessity to modernize the administration has been recognized and will be supported financially. A separate ministry for digital transformation and state modernization is a positive first step. > The German government has also already decided on the so-called investment > booster. However, this will only help to a limited extent The German government has also already decided on the so-called investment booster. However, this will only help to a limited extent. The investment booster allows for declining balance depreciation of up to 30 percent, which enables companies to write off higher amounts, especially in the first few years. This is intended to accelerate investment and secure liquidity for businesses. However, this only helps if there is still enough substance or capital available for further financing. And in many cases, this is no longer the case for SMEs. In order to boost productivity, financial incentives must be provided as quickly as possible. It is our hope that there will be extensive investments in infrastructure and the digitalization of administration as well. Artificial intelligence creates greater efficiency Another encouraging sign: new technological advancements facilitate operations for business. Artificial intelligence (AI) is more than just a buzzword. As Germany’s second largest software company, we are dedicated to developing innovative products and solutions for tax firms, so that they can provide even more exceptional counsel to their clients — mostly small and medium-sized businesses. For me, it is evident that AI will positively transform work in tax consulting firms, creating significant opportunities. AI helps to simplify monotonous, repetitive tasks, allowing for more efficient workflow. It is a valuable tool for supporting individuals rather than replacing them. This is especially important in a time of pressing issues such as skilled worker shortages. The use of AI thus also offers new opportunities for all companies that wish to prioritize their core business over bureaucracy. Digital and AI-supported processes with tax advisors will provide sustainable support in this. The acceptance and use of AI tools is steadily increasing in tax consulting firms. Among the most widely used industry-specific offerings, the DATEV appeal generator and specialist research tools are highly regarded. It is clear that we have only just begun to see the full extent of the situation. We are working every day on new solutions that make it easier for tax consulting firms to better advise their client companies to improve their successes. We also use our detailed knowledge that we generate from our DATEV SME Index. > The smart use of AI can also enhance the success of German SMEs and strengthen > their ability to compete globally — despite existing regulatory challenges, > bureaucratic hurdles and complicated tax systems. Ultimately, it depends on how we deal with the challenges in our daily work. How we successfully shape the path to the digital future with the possibilities offered by AI. We have learned from major American software providers over the past 20 years that those who best understand the data business enjoy great economic success. Now comes the second chance. The smart use of AI can also enhance the success of German SMEs and strengthen their ability to compete globally — despite existing regulatory challenges, bureaucratic hurdles and complicated tax systems. So, enough whining. Let’s proceed! Robert Mayr, tax advisor, auditor and doctor of business administration, is CEO of DATEV eG since 2016. From 2014 to 2016, he was on the board of the Nuremberg-based data processing cooperative, responsible for finance and purchasing, and had already been responsible for internal data processing and production since 2011. After studying business administration at Ludwig Maximilian University in Munich, he began his professional career as a consultant at Treuhandanstalt Berlin. Mayr worked for Deloitte from 1994 to 2001, after which he spent nine years as managing partner of Solidaris Revisions-GmbH in Munich. Since 2012, Mayr has been vice president of the Nuremberg Chamber of Tax Consultants. DATEV eG is a data processing cooperative with more than 850,000 customers. Founded in 1966, it now employs a staff of about 9,000, working at its headquarters in Nuremberg and 22 branch offices throughout Germany. Its legal structure as a cooperative guarantees continuity, meaning no investor can buy DATEV. For more information on the DATEV Small and Medium-Sized Enterprises Index, please visit mittelstandsindex.datev.de (in German).

BERLIN — Less than five months since he became chancellor, Friedrich Merz’s options for ending Germany’s long economic stagnation already look slim. Merz came to power on a promise to bring a speedy end to Germany’s industrial malaise, but the economic outlook has only turned grimmer since he took office, and his political frailties aren’t helping. Business leaders are publicly venting their frustration. “The mood in our industry is no longer just tense —  it is furious, and it is disappointed,” Bertram Kawlath, president of VDMA, a lobby group for machinery and equipment manufacturers, said at a recent event in Berlin as Merz looked on. “The fear of reform looms large like the proverbial elephant in the room. This hesitation comes at a high price. More and more companies are facing deep cuts. Jobs are being lost.” Merz already faces an uncomfortable reality: He has few weighty options for delivering the sweeping reforms and the rapid turnaround that he staked his election victory on. Manufacturing firms that once powered the country’s postwar economic boom are shedding jobs. The total number of unemployed people reached 3.02 million in August — the highest figure in a decade. Following two straight years of economic contraction, economists expect little if any growth this year. German business morale is on the decline. A historic move by Merz and his allies to unleash hundreds of billions of euros in borrowing for infrastructure and defense last March is having a beneficial economic effect — but it’s not enough to fully make up for larger structural problems, economists say. That spending will help bring back anemic growth of 1.3 percent in 2026 and 1.4 percent in 2027, a group of German economic institutes predicted this week. “The German economy is still on shaky ground,” said Geraldine Dany-Knedlik of the German Institute for Economic Research. “It will recover noticeably in the next two years. However, given ongoing structural weaknesses, this momentum will not be sustained.” None of this can rightly be blamed on Merz’s government. The massive structural problems the chancellor is confronting — U.S. President Donald Trump’s tariff wars, high energy prices, increased competition from China, an aging population — long predated his arrival or seem largely beyond his power to resolve. But that hasn’t stopped Merz from suffering the political consequences. Dissatisfaction in his government is growing, with a new poll showing only 26 percent of Germans approve of his performance. Merz’s main political opponent, the far-right Alternative for Germany (AfD), the largest opposition party in parliament, is increasingly hitting the chancellor hard on the economy and on his efforts to revive it through borrowing. In September, the AfD surpassed Merz’s conservatives and became the country’s most popular party for the first time since its inception more than a decade ago. | Ying Tang/Getty Images “You will go down as the most bankrupt of all chancellors in the history of the Federal Republic of Germany,” AfD co-leader Alice Weidel said in the Bundestag this week before going on to bemoan how “deindustrialization and exodus are affecting all industrial sectors.” The approach appears to be working. In September, the AfD surpassed Merz’s conservatives and became the country’s most popular party for the first time since its inception more than a decade ago, according to POLITICO’s Poll of Polls. ‘AUTUMN OF REFORMS’ Merz is keenly aware of the rising alarm among industry leaders and appears to have realized that his political survival depends on speedy action. After spending the first months of his chancellorship largely focused on foreign policy issues — particularly on rallying military aid for Ukraine in the face of the Trump administration’s faltering support — Merz has turned to domestic matters, conducting a series of high-profile meetings with business leaders and addressing the economy head-on. “We haven’t seen any real growth for many years,” Merz told members of a chamber of trade during a visit to his home region in western Germany earlier this month. “The first step toward improvement is to recognize that we are not just dealing with a temporary economic downturn, but with a structural growth crisis.” Merz then vowed to launch fundamental reforms in the fall. Some of his conservatives have dubbed the initiative “the autumn of reforms.” The problem for Merz is it’s unclear whether his coalition ― consisting of his conservative alliance and the center-left Social Democratic Party (SPD) ― will be able to push through consequential legislation in the coming months. Lawmakers are considering granular moves to trim long-term unemployment benefits and to increase financial incentives for pensioners to work. But proposals on the most far-reaching and politically sensitive reforms — including a structural overhaul of the pension system and a more sweeping reform of the country’s constitutional spending restraints — have been outsourced to expert commissions. That makes quick, bold reforms unlikely given the complexity of the tasks involved.  Some SPD politicians are also expressing doubt that much will materialize from the “autumn of reforms,” calling it an empty political stunt. “I don’t really understand the term,” said Dagmar Schmidt, a SPD lawmaker. “We have not even entered negotiations.” In the meantime, Merz has called for more high-profile meetings, including a two-day coalition summit in a villa on the outskirts of Berlin focused on competitiveness. He is also planning talks with representatives of the troubled car and steel industries. This week, Merz also appointed a commissioner for foreign investment who said one of his first orders of business will be to organize an investor conference.  “I don’t really understand the term,” said Dagmar Schmidt, a SPD lawmaker. “We have not even entered negotiations.” | Britta Pedersen/Getty Images Meanwhile, business representatives say time for the truly ambitious reform needed is running out. “It’s like our economy is in intensive care and we need immediate treatment,” said Jörg Dittrich, president of the German Confederation of Skilled Crafts. Dittrich called on the government to immediately do away with unnecessary bureaucracy and overhaul Germany’s social security system to control surging costs. “We must not lose our competitiveness because we cannot afford to pay for all this,” Dittrich said. “We must ensure that we can continue to invest.” ‘THERE IS NO PLAN’ One reason Merz’s options are limited is his relative political weakness. With the rise of the political extremes, the chancellor’s ideologically divergent coalition has one of the narrowest parliamentary majorities in Germany’s postwar history. It was that weakness that forced Merz to undertake what may well end up being his most ambitious reforms even before taking office. In March, Merz used the outgoing parliament to push through a historic package of spending reforms that partially untethered Germany from the self-imposed spending restraints of its constitutional debt brake, creating a €500 billion infrastructure and climate fund and allowing for massive defense spending to face down the threat posed by Russian President Vladimir Putin. Merz decided to act at that moment because the country’s centrist parties still had the two-thirds majority needed to amend the constitution while the previous parliament was still in power. That’s a majority he no longer has, limiting his ability to undertake similarly sweeping constitutional reforms. But the bigger problem for Merz is that the spending reforms already passed are likely not enough to drive robust growth, economists say. For one thing, there are doubts as to whether Germany’s massive defense spending increase will stimulate much economic growth, as some have hoped. In the short term, every euro the German government spends on defense will lead to only 50 cents of additional economic activity, according to a study by economists at the University of Mannheim. In the longer term the effects are hard to predict, according to the authors. “To go out and say that this is really the recipe for the boom is really overselling it from an economic perspective,” said Tom Krebs, one of the authors of the study. “We can’t have that many tanks to compensate for all the other stuff that’s going wrong in the manufacturing sector.” While infrastructure spending has a greater multiplier effect, the €500 billion package is also not enough on its own to stimulate strong growth, as it is spread out over 12 years — and much depends on how it is used. “It’s still good, but it’s much less than people think it is,” said Krebs. Many economists agree that what Merz has done so far is not enough. A majority of economists rated the performance of Merz’s coalition as “rather negative” in a survey conducted by a leading economic institute.   “I think we need a sensible and strategic industrial policy, and we don’t have it,” Krebs said. “There is no plan.”

Ursula von der Leyen’s State of the Union speech is one of the big set-piece events in the EU political calendar — and what better way to mark the occasion than to play a fun game? So switch on EBS, pour yourself a strong coffee (maybe with a shot of rum in it), and enjoy a game of State of the Union bingo. If you get a full line of correct answers, please stand on the roof of your office block/house and shout “bingo!” really loudly.

Get comfortable with failure, create a local startup ecosystem and build regulation to support business success, says Lithuanian entrepreneur Tomas Okmanas of NordVPN. Despite having access to an abundance of talent, European tech companies often struggle to achieve the global scale enjoyed by competitors in the U.S. and China. Kicking against the trend is Tomas Okmanas, co-founder of several highly successful international businesses in his native Lithuania. These include cybersecurity group Nord Security, valued at more than $3 billion and best known for virtual private network provider NordVPN. His latest venture, nexos.ai, is a secure, all-in-one AI platform for enterprises and governments. Tomas Okmanas, co-founder, Nord Security Okmanas tells POLITICO Studio how the EU can help startup founders compete on the world stage — and why institutions and enterprises in the EU should be concerned about cybersecurity vulnerabilities. POLITICO Studio: Despite enjoying worldwide success, your companies remain firmly rooted in Lithuania. Have you ever been tempted to move them to the U.S.? Tomas Okmanas: It’s been a long journey since we bootstrapped our first business in 2012. Those were early days for the startup scene in Lithuania, and we didn’t have the luxury of big checks from Silicon Valley VC firms. Along the way, I’ve met lots of people who told me we should open an office in the U.S., arguing that’s where the best management talent is. But all our management is based in Lithuania, and we’ve shown that global tech companies can be built out of this country and Europe. Today, Nord Security employs more than 2,000 experts across our offices in Vilnius, Kaunas, Berlin, Warsaw and Amsterdam. All the big U.S. investment firms have now opened offices in Europe, so access to capital is here. And talent is also certainly here, which can compete and win globally, as Nord’s 400 international patents secured in fewer than four years demonstrate. PS: When you launched NordVPN in 2012, virtual private networks were a niche market, but today you have millions of global users. What’s the secret to growth on that scale? TO: The simple answer is that if you create products that people love and that are very effective, success comes naturally. In the early days, we were fortunate enough to spot the emerging market trends. At that time, viruses were usually spread by floppy disks or CD-ROMs or USBs, but we realized that the threat would ultimately come from the web. Today, if you use a VPN, it’s your ultimate network guardian. Over the years, we’ve blocked billions of scams and phishing and malware attacks. Just in the past three months, we’ve blocked 103 million malware attacks in the U.K., 72 million in the Netherlands and 34 million in France. > If you create products that people love and that are very effective, success > comes naturally. Today, Nord Security is a fully fledged cybersecurity company, guarding users and organizations against all kinds of threats. Our products provide network security, threat visibility, smart password management and secure data roaming with Saily, our eSIM solution. PS: How do you perceive the current state of cybersecurity readiness in Europe? TO: Our research shows that companies tend to be better prepared for cyber threats than governments. We analyzed publicly available data from around 400 major companies and public institutions across the EU, and the overall picture is not great. Sectors such as aviation and oil and gas performed reasonably well, but others, including public institutions, less so. We identified multiple vulnerabilities, ranging from stolen credentials and email spoofing risks to critical system weaknesses. That’s something that needs to be addressed urgently. PS: A new security risk has arrived in the form of generative AI. How does your latest venture, nexos.ai, aim to mitigate that risk? TO: More and more critical data is leaving companies and other organizations, ending up with large AI companies that are mostly based in the U.S. For instance, someone in the European Parliament can upload a confidential document to ChatGPT, which would immediately be processed on OpenAI’s servers in the U.S. Essentially, nexos.ai enables an organization to harness large language models while keeping security and cost management front and center. We provide a choice of using multiple LLMs, including on-premise models for handling sensitive information. The platform can also detect and block any unauthorized sharing of sensitive documents, which further reduces security and compliance risks. PS: GenAI is one of several new technologies in which Europe is perceived as lagging behind other parts of the world. How can Europe become more competitive in the tech sector?  TO: In Europe, we create regulations and then try to build businesses around them. But in, say, the U.S., they first build great products and then the government creates regulations — and helps businesses to grow. If you think about the Stargate Project or any other AI infrastructure initiative in the U.S., I don’t think they’re going to be worried about getting permits to build big data centers. In Europe, you would be looking at a minimum of a year or two to get building permits. It’s the same with AI regulation — the U.S. does whatever it can to support its businesses. We need more of this mindset in Europe. Cyber City HQ of Nord Security and nexos.ai That’s why I support regulatory simplification across the board, from GDPR to the AI Act. I’m certain that we can maintain the same levels of consumer protection with far less bureaucracy. As a startup founder, you want to hire engineers, not lawyers. PS: Do you have any specific directives or initiatives in mind? TO: I’m in favor of establishing the 28th regime — a new European legal framework that would enable seamless online incorporation, harmonize commerce rules across Europe and introduce favorable taxation for stock options. Creating the Scaleup Europe Fund, as proposed by the European Commission, would also be a step in the right direction. Let’s think big — why not establish a European NASDAQ and give our scale-ups the opportunity to go public here in Europe? > The U.S. does whatever it can to support its businesses. We need more of this > mindset in Europe. Another factor is the way we think about failure in Europe. If an entrepreneur fails once or twice, it can be hard to get investment. But in the U.S., there’s a belief that even if you burn through eight companies, the 9th or 10th will be a success. We need to allow people to experiment and fail. We failed with more than 30 projects before we launched NordVPN. PS: You’ve played a major role in establishing a thriving startup scene in Lithuania. What lessons could other European cities and countries learn from your experience? TO: If companies in a local ecosystem are operating global businesses out of Europe, they need to support each other. There are great global companies here in Vilnius, such as Vinted, the secondhand clothes marketplace, and Hostinger, the web hosting platform. We have regular meetups and go on vacations together. And we’re angel investors in a number of local companies with global ambitions. New companies are being built all the time, which creates more jobs. If you love the place where you were born, you want it to grow, and it’s great if we can all grow together. The same is true for Europe. Founders like me want the continent to succeed in the global race, and we’re willing to contribute our share. What we need is more public-private collaboration and dialogue that leads to real change.

ROME — Italy’s right-wing government is turning its back on two historical referendums to place a bet on unproven nuclear technology. Some 35 years after Italy’s last nuclear power plant closed, Prime Minister Giorgia Meloni and her ministers are drawing up plans to go nuclear once again in a bid to meet a growing demand for decarbonized electricity. This time, however, it will be through next-generation nuclear technologies called Small Modular Reactors (SMRs) and Advanced Modular Reactors (AMRs). “We need to make some long-term choices. That’s why we have chosen to restart the development of nuclear power, making a bet on mini-reactors that are safe and clean sources of energy,” Meloni said in a speech earlier this year. On Wednesday, Italy’s Environment and Energy Security Ministry announced that the law outlining the national plan to restart nuclear energy production had cleared the final institutional hurdle and was now ready to be sent to parliament. Speaking at a July 16 event organized by Italy’s main business lobby, Confindustria, Environment and Energy Security Minister Gilberto Pichetto Fratin said should Rome approve it, the first plants could be operational by the end of this decade or in the early 2030s. According to government estimates, nuclear fission could meet from 11 percent to 22 percent of national demand by 2050. Italy was previously home to a number of nuclear power plants. But following the 1986 meltdown at the Chernobyl plant in Ukraine, which sent a cloud of radioactive dust over much of Europe, Italians voted against nuclear power in a referendum the following year. By 1990 Italy had shuttered its plants and nuclear power was no more. In 2011 the decision was reconfirmed with another referendum shortly after the Fukushima disaster in Japan. “This government has demonstrated up until now that they aren’t taking into account at all what has been a very clear expression of the popular will as demonstrated in two referendums,” said Enrico Cappelletti, a member of the lower house of parliament and part of the opposition Five Star Movement. Critics such as Cappelletti argue the process will be slow and expensive, and will increase power bills for Italians — already the second highest in Europe. However, the government insists that adding nuclear to the power mix is crucial to meeting growing energy demand, which is forecast to double by 2050. SPLITTING THE ATOM The mid-July Confindustria gathering saw business and political community elites pack into a parliamentary committee room. With billions of euros in investment on the line — an EY study estimates Italy’s nuclear market could reach €50 billion by 2050 — it’s no surprise the event was an irresistible draw for the companies in pole position to benefit. Although no nuclear power plants operate in the country, several Italian engineering companies are active in the sector abroad. Ultimately, however, any nuclear renaissance would almost certainly require the participation of firms in countries that already have active nuclear power plants, such as France or the U.S. Utility company Enel, infrastructure giant Leonardo, and energy engineering firm Ansaldo Energia — all under varying levels of state ownership — have formed a consortium called Nuclitalia to study viable options for a return to nuclear power. In June, Italy joined the French-led European Nuclear Alliance, an initiative aimed at promoting nuclear energy throughout the EU. Speaking at the Confindustria event, Fratin said there was a need for a continuous source of power to integrate with the variable energy produced by renewables. Nuclear was the obvious choice, he said, though officially, a final decision will follow a careful study of the costs and benefits. “We are a country that at the moment … is not able to meet its national demand for electricity,” Fratin said. “There is only one path for us to take if we want to remain among the rich countries of the world.” The lively discussion demonstrated that the debate has moved beyond the shadow of Chernobyl to focus on financial arguments. “When we talk about sustainability, we need to look at it from all angles,” Katiuscia Eroe, a representative of the climate NGO Legambiente, told the gathering. “Including the logic of costs, and therefore, economic sustainability.” Nuclear, she added, wasn’t competitive with renewables given the huge investments needed to get it up and running. TINY TECH Stefano Monti, president of the European Nuclear Society, told POLITICO that nuclear power is key to providing a steady supply to the grid of decarbonized energy, known as the baseload, supplementing renewables in moments when there isn’t enough sun or wind. The use of new technology is also politically important as it allows the government to argue that the prior referendums don’t apply. SMRs use miniaturized technology in effect to factory-produce key reactor components, thereby achieving economies of scale and reducing costs. AMRs use non-traditional fission technology and are powered by spent fuel from other reactors, such as SMRs, potentially reducing the amount of nuclear waste that needs to be stored. Neither has ever been built in Western Europe — while in the U.S., one attempted SMR had to be abandoned after costs spiraled. Monti said the government may ultimately revert to traditional power plant designs, even though these have incurred huge cost overruns in Europe in recent years. It may also be the case, he added, that the energy source will need to be subsidized for a while. Still, Monti said, nuclear energy was financially competitive with solar and wind energy when considering the additional infrastructure, such as batteries, needed to make renewables sufficiently reliable to power the grid. Michele Governatori, an academic and a member of climate think tank Ecco, said he didn’t think there would ultimately be any return to nuclear, “but that doesn’t mean that it won’t cause damage.” The buzz around nuclear, he said, was allowing the government to sidestep politically unpopular decisions on how to accelerate the build-out of renewables. He said the economics argue against fission — nuclear power is expensive and plants have to be running 24/7 for the finances to work. But given the fluctuating production levels of renewable energy, on sunny or windy days, nuclear energy might end up going unused. The government estimates there’s a backlog of 150 gigawatts of renewable energy projects currently held up by paperwork. According to Governatori, Rome’s embrace of nuclear energy was a way of avoiding a showdown with regional governments over permitting problems, given that local authorities often hold up developments due to so-called NIMBY concerns. There are also lobbying interests in play. “The big national champions have a bigger stake in nuclear than renewables,” said Governatori. Developers of renewable energy tend to be smaller “and are more distant from the businesses that are close to the state,” he said. CONVENIENT CUDGEL The government’s 2024 energy and climate plan estimates that nuclear power could save approximately €17 billion in costs compared to an all-renewables strategy. However, a report by Italy’s central bank found that while adding nuclear to the grid may help flatten swings in electricity prices, it was unlikely to deliver any savings. A paucity of know-how risks delaying construction and adding costs, while “the processing, enrichment and preparation of fuel is concentrated in a few plants, largely in countries with elevated political risk (Russia first and foremost),” the central bank noted. Meanwhile, while the previous referendums may provide ammunition for the opposition to criticize the government, they are unlikely to pose a significant obstacle. “The previous two referendums don’t create any obstacle whatsoever for the current governing majority,” said Carlo Fusaro, a law professor at the University of Florence. Referendums in Italy can revoke laws that are already on the books, but they don’t tie the government’s hands in perpetuity, especially as the last one was more than a decade ago. In theory, the opposition could call another referendum if it’s able to gather the required signatures, though polls show that public opinion has grown steadily more pro-nuclear. Five Star’s Cappelletti said it’s premature to discuss the options, given that the law has not yet been presented. “We’ll see how things evolve. We can’t exclude anything, even eventually proposing a referendum.”

Supermarkets in Belgium will be allowed to stay open one hour later, until 9 p.m., and operate seven days a week, according to multiple local news reports. Currently, supermarkets, clothing and electronics stores must close at least one day per week and cannot operate after 8 p.m. (or 9 p.m. on Fridays). The Belgian government is expected to officially amend these rules on Friday, De Morgen reported. A relaxation of store regulations was agreed when the current governing coalition was formed in January. Shopkeepers will now have more flexibility to choose their work hours, but will not be required to stay open until 9 p.m. or on Sundays.  Prime Minister Bart De Wever’s government reportedly considered extending opening hours until 10 p.m., but some coalition partners were concerned that small businesses would struggle to stay open that late to compete with larger chains. Pro-business opposition MPs said the government should have stuck with the 10 p.m. extension, while the Flemish Association of Cities and Municipalities told De Morgen that the change adds no value, as “the current opening hours are barely used to their full potential.” The Supreme Council for the Self-Employed and Small and Medium Enterprises also expressed concerns about the additional burden new regulations would put on small businesses.

BRUSSELS ―The European Commission’s plan to slap a tax on moderately large businesses in the EU seems unlikely ever to see the light of day. Governments across the continent and the European Parliament ― all of which need to approve the plan ― are already lining up to dismiss it. The tax — that Commission President Ursula von der Leyen announced Wednesday as part of the EU’s next long-term budget — would raise €6.8 billion a year. The idea is that it would be a fresh source of revenue to fund EU programs and repay Covid-era debts. But with the ink on the policy barely dry, Germany and the Netherlands appeared to deliver a fatal blow.  “There is no question of the European Union taxing companies, as the European Union has no legal basis for this,” Merz said during a joint press conference with British Prime Minister Keir Starmer in London. “We are not doing that.” The added twist is that Merz and von der Leyen hail from the same German Christian Democrat party. And a spokesperson for the Dutch government told POLITICO that “for the Netherlands, this is not up for discussion,” insisting on the need for the EU to shrink its budget rather than add to it. It’s not just northern EU countries ― those that are traditionally averse to greater EU spending ― that object. One diplomat from a less fiscally frugal southern country told POLITICO it would be “difficult” for the plan to survive. Members of the European Parliament, who would need to approve the plan along with member countries, were also unimpressed. European People’s Party lawmaker and vice chair of the budget committee Monika Hohlmeier said the tax “stands in stark contrast to our efforts to strengthen the competitiveness of European companies — particularly mid-cap firms.” “These are precisely the businesses we are actively supporting through a substantial Competitiveness Fund aimed at driving innovation, boosting productivity, and reinforcing the EU as an attractive global investment hub,” she said. European People’s Party lawmaker and vice chair of the budget committee Monika Hohlmeier | Daniel González/EPA Her view is particularly important as the center-right EPP is the biggest party in the Parliament and the most powerful political group in Brussels. The EPP dominates the College of Commissioners, and von der Leyen herself is a member. HOW IT WORKS The proposed tax would apply to companies with more than €100 million in revenue — and would be paid, controversially, whether the firm is turning a profit or not. The €100 million turnover figure isn’t as large as it might look — big banks can rake in more than 500 times that in a year. The tax is proposed as a flat fee rather than a percentage of earnings. Firms with a net turnover of between €100 million and €250 million will pay a flat €100,000, rising to a maximum of €750,000 for companies with revenues above €750 million, according to the legislative text published by the Commission. That means a business taking in €750 million a year in revenue would pay the same as one taking in €75 billion. The tax is expected to raise €6.8 billion a year, making it an important contributor to the nearly €60 billion in direct annual tax revenues the EU hopes to receive from 2028. Alessandro Ciriani, a former minister in Giorgia Meloni’s Italian government and now an EU lawmaker for her Fratelli d’Italia party, said the proposal was “at odds with the will of a majority part of the Parliament.” “That’s an obvious paradox to talk about supporting our productive sector and then mowing it down with the fiscal blade,” he said. Companies also hate it. Ursula von der Leyen has made “competitiveness” the flagship brand of her second term, and the tax on corporations is a political hard sell. | Olivier Matthys/EPA Markus J. Beyrer, director general at EU business lobby BusinessEurope, called the proposal “totally counterproductive,” while Stefan Pan, vice president at Italian Confindustria, said the €100 million turnover figure “risks hampering the growth of innovative companies.” Tanja Gönner, director general of the Federation of German Industries, called on Berlin to take a firm stance against the proposal, arguing that it’s “at odds with the EU strategic objectives.” ‘VERY BAD’ IDEA The idea of taxing turnover instead of profits is “very bad,” said Zsolt Darvas, a senior fellow at think tank Bruegel. One problem is that it hits sectors with very different profit margins. Another issue is that the tax is regressive, putting firms with different financial conditions in the same basket. “It is not correct, it’s just not fair,” Darvas said. “It is probably the worst option.” Many also objected to the fact that it seems diametrically opposed to the goal of industrial competitiveness. Von der Leyen has made “competitiveness” the flagship brand of her second term, and the tax on corporations is a political hard sell. Especially in Berlin. Germany is going through a period of economic stagnation following a two-year recession. Its economic doldrums are forcing the government to rethink its fiscal stance completely in the middle of a trade war with the U.S., putting its export-driven economic model even more at risk. Officials from the Economic Affairs Ministry had already warned that their assessment of the EU budget revenues would depend on how the competitiveness of the European economy is treated. That’s not to say there’s no rationale for the tax. Companies from both Europe and third countries benefit from trading inside the bloc, and as French lawmaker Fabien Keller from the liberal Renew group put it, “that is directly linked to an EU public good: the single market. Without the EU, no seamless trade on the biggest single market in the world.” But with such vociferous opposition from member countries and lawmakers, von der Leyen’s proposed tax has little hope of surviving in its current form.