Europe’s CEOs appeared to watch on with envy as President Donald Trump overturned a slew of regulations on Monday, with a growing chorus of voices calling for similar moves on the continent.
Trump wasted no time on his first day in office, announcing a series of executive orders designed to shore up key industries, including curbing electric vehicle production targets and accelerating oil and gas production.
The returning president has long argued that regulation is stifling innovation and U.S. competitiveness, campaigning for a second term with pledges to roll back the red tape. And, in the face of a more assertive U.S. and increased global rivalry, European business leaders are echoing that view.
Morten Wierod, CEO of Swiss robotics firm ABB, warned that excessive regulation and the associated high costs were pushing frontier businesses to relocate to other markets, ultimately risking the “deindustrialization of Europe.”
“It needs to be a clear reset on regulation and let business get on with it,” Wierod told CNBC “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland.
Wierod added that European Union regulations, while often well-meaning, had become too bureaucratic and needed to be simplified to give firms the flexibility needed to innovate and grow.
“Each regulation is set with good intentions. But it’s when you take and you put everything together, it just becomes too much. It gets too complex,” he said.
Dutch bank ING‘s CEO Steven van Rijswijk agreed that the bloc needs to simplify and harmonize regulation to boost investment and labor productivity, a growing bugbear for the continent.
“There are a lot of investments that are needed to be made in infrastructure, a lot of investments that need to be made in the strategic autonomy of Europe when it comes to tech infrastructure, those are the things that need stimulation,” he said.
Tackling Europe’s ‘regulatory-first’ approach
The EU has one of the strictest regulatory business environments globally, often priding itself on being a first-mover in developing guidelines to manage industries and protect consumers.
However, Borje Ekholm, CEO of Swedish telecom firm Ericsson, said there was no merit in Europe’s “regulatory-first approach,” arguing that it was curbing technological progress.
“I don’t think you can be frontrunner in regulation, I don’t think that creates value,” he said. “Where you have to be frontrunner is innovation, you need a framework that supports innovation. That’s where the U.S. has been really successful — Europe needs that.”
European policymakers appear aware of the need to innovate and deregulate in the face of burgeoning economic competition and rivalry from the U.S. and China, but have thus far been slow in moving.
Zurich Insurance CEO Mario Greco said that Europe needs to “wake up” if it is to compete with other global markets, particularly now with a new U.S. administration in office.
“Europe is always lagging behind. It’s always busy with itself,” he said.
“In a world which is going very fast forward, with lots of innovation, it’s a wake-up call, again, for Europe,” he added.
Swiss pharmaceutical firm Novartis‘ CEO Vas Narasimhan agreed that now marked a “big moment” for Europe, arguing that the bloc faces a fork in the road with two quite differing outcomes.
“Europe has to decide now — in a world where the U.S. is so heavily deregulating and trying to increase competitiveness — is Europe going to continue to sit on its hands, continue to increase regulation in the Commission, increase regulation in the various individual countries. Or, are we finally going to get a more pro-competitive, pro-innovation environment in Europe,” he said.
“We’ll have to see. History suggests that while there’s a lot of talk, not a lot of action comes out of the Commission. And right now, this is the moment.”
One CEO to express more optimism that the U.K. and wider Europe could be looking to emulate the U.S. in order to boost sluggish ecoomic growth was Barclays’C. S. Venkatakrishnan.
“Obviously there’s a lot of [U.S.] control and regulation that had been placed in the last few years, and we think that’ll get relaxed. That’s generally good for business sentiment and good for business opportunity.”
“And we think those winds are blowing towards Europe and the U.K., where you can see governments understanding what’s going on in the U.S. and trying to see what aspects of their own regulation they should ease up on.”
“One can be hopeful,” he added.