Working Group Meeting: Competitiveness, Finance, and Taxes (CFT)

On 9 September 2025, the SME Connect Working Group on Competitiveness, Finance, and Taxes (CFT) convened to welcome Mr. Markus Ferber, Member of the European Parliament, as the new Chair of the CFT Working Group. He has been serving as a Member of the European Parliament since 1994 and currently acts as Coordinator of the EPP Group in the Committee on Economic and Monetary Affairs (ECON). He is also a Vice-Chair of the Subcommittee on Tax Matters and holds the position of President of the Hanns Seidel Foundation. A dedicated advocate for SMEs, fair taxation, and strong financial regulation, Mr. Ferber combines technical expertise with decades of political experience. His commitment to strengthening Europe’s competitiveness will shape our working group’s direction moving forward.

The meeting gathered stakeholders from politics, business, academia, and civil society to debate Europe’s economic outlook, regulatory burdens, and fiscal framework. This discussion emphasized Europe’s lagging competitiveness compared to the US and China, the urgent need to reduce bureaucracy, and strategies to foster innovation and private investment. It was agreed that Europe must transition from identifying challenges to implementing actionable solutions.

Addressing Europe’s Competitiveness Gap
Markus Ferber MEP highlighted Europe’s challenges, including weak economic growth, lack of innovation, and increasing geopolitical pressures. Mr. Ferber insisted that the time had come to move from describing problems to delivering concrete solutions.

Investment Gap with Global Competitors
In comparing Europe to the United States and China, Ferber underscored the investment gap. He noted that the U.S. benefits from a strong venture capital culture and bold pension fund investments, while China is aggressively expanding its industrial base. Europe, in contrast, remains weighed down by regulation, high costs, and demographic decline.

Fragmentation of the Single Market
Ferber also criticized the fragmentation of the single market. Businesses trying to expand across Europe face different national rules, making scaling far more difficult than in the U.S. He drew on observations from visits to San Francisco, stressing that Europe must learn from ecosystems that combine investment, entrepreneurship, and regulation in a more dynamic way.

Policy Goals for Competitiveness
He outlined a series of policy goals: cutting bureaucracy, completing the single market, and reviving industrial policy. Other priorities included strengthening trade, modernizing competition policy, securing raw materials, and enhancing the circular economy. Ferber emphasized the need to attract private investment and to turn Europe’s research strength into market-ready products.

Digital Taxation Challenges
The discussion then turned to digital taxation. Participants recalled earlier debates about a common European framework, noting that individual member states had introduced inconsistent national taxes. This missed opportunity left space for large tech firms to exploit differences, reinforcing the need for a standardized EU approach.

Considerations for Smaller Businesses
Some participants cautioned against turnover-based taxation, warning it could hurt smaller businesses. Earlier proposals linking taxation to advertising clicks rather than raw turnover were highlighted as potential alternatives. Openness to different models was noted, provided they closed loopholes and ensured fair treatment, especially for Europe’s mid-sized companies.

Overregulation
Concerns from the pharmaceutical sector illustrated the broader problem of overregulation. Companies reportedly dedicate significant staff to compliance at the expense of research and innovation. It was stressed that this trend undermines competitiveness and that measures should focus on not only reducing current burdens but also preventing new ones from being introduced.

Trade Relations and Tariff Disputes
Trade relations and tariff disputes were also debated. Several argued that the EU had responded too weakly to U.S. measures, undermining its credibility. A firmer and more united stance was deemed necessary, applying reciprocity rather than allowing the EU to be divided by external actors.

Harmonized Tax Policies for Investment
The issue of taxation more broadly was revisited. Concerns were raised about the EU’s adoption of a global minimum tax, which could make Europe less attractive for investment. The discussion emphasized the urgent need for pragmatic, harmonized tax policies to remain competitive and appealing for private capital.