Europe Ahead: ECR’s Hoogeveen on why EU needs ‘deregulation’

***The Europe Ahead series will cover views from MEPs in charge of economic files for the main political groups in the run-up to the June EU elections.

Europe should deregulate its economy and “develop a culture of private investment” similar to the US, Vice Chair of the European Parliament’s Committee of Economic and Monetary Affairs Michiel Hoogeveen told Euractiv in an interview.

The Dutch MEP from the European Conservatives and Reformists Group (ECR) stressed that “obviously regulation is necessary”, but warned that the raft of new EU rules, including those relating to corporate sustainability and forced labour, is “overstepping” what is required.

“If you deregulate too much, things could get out of control,” he said, pointing to the role played by financial deregulation in the lead-up to the 2008 financial crisis.

“But right now we are overstepping [on] fiscal regulation, financial regulation, climate regulation, gender regulation — all kinds of regulatory burdens are put on our businesses.”

“All of this adds up to making our businesses less flexible and less adaptable to an ever-changing world. So deregulation should be put forward on the agenda, although it’s sometimes seen as a dirty word.”

Hoogeveen argued that, due to the high debt levels accumulated by member states during the COVID-19 pandemic and subsequent energy crisis, “there is no room left for public investment” to revive Europe’s faltering economy – which, according to the IMF’s latest estimates, is set to grow 0.8% this year, roughly one-third of the US’s expected growth.

The requisite funds to boost the bloc’s sluggish growth rate and help it remain globally competitive, the hard-right MEP said, should come from the private sector: through deepening the Capital Markets Union (CMU) and transforming the EU’s general investment climate.

“[In the United States,] they have a culture of private investment,” he said. “And that’s where the European Union is truly lacking: we don’t have a culture of private investment, venture capital, promoting startups, fintechs, and innovation.”

Hoogeveen was also adamant that a more deeply integrated CMU would be consistent with the ECR manifesto’s call to “safeguard member state sovereignty”.

In particular, he expressed enthusiasm for the recent proposal by former Italian prime minister Enrico Letta that European companies should be able to opt into a “28th regime” — one that doesn’t replace national rules — whereby business rules are harmonised across the single market.

“I think we should look into solutions like that: There should be a possibility to apply for a pan-European capital markets regime, but also stick to your own national legislation,” he said.

‘If we want effective climate policy, we need to get rid of net-zero 2050’

Hoogeveen was equally dismissive of the argument made by environmental and left-wing groups that the private sector will not finance key investments — especially green investments — owing to their lack of profitability.

Rather than intervening directly into the market through subsidies or tax breaks, he argued, EU policymakers should cultivate market-based systems that encourage companies to limit carbon emissions.

“If we want effective climate policy, we need to get rid of all these arbitrary rules that we set in place: net-zero 2050 or even 2040. I think we should go back to market principles,” he said.

“I think that, for example, an emission trading scheme [the EU’s current ‘cap and trade’ system] could be effective because then you promote companies to pollute less, to invest in more innovative, non-polluting technologies,” Hoogeveen said.

“But you’re not intervening as strongly as by subsidising, or by tax breaks, or by investing public money in things that might not be profitable at all.”

‘The ECB is acting like God’

Hoogeveen was also deeply critical of the role played by the European Central Bank (ECB) over the past few years, accusing it of stoking asset bubbles and general inflation by pumping trillions of euros into the economy and, until recently, keeping interest rates artificially low.

“The ECB has taken on the role of acting like God,” he said. “We’ve been warning the ECB for quite some time that inflation was going to happen, because what happens if you increase the money supply is you’ll get inflation.”

Hoogeveen also noted that the Netherlands is “at the forefront” of the crisis created by the bank’s monetary policy.

“Housing prices in the Netherlands are insane; they are through the roof,” he said. “And that is basically due to the low interest rate and free money policies that have been conducted by the ECB since 2012.”

‘Politics is about making compromises’

A self-described “centre-right politician” who subscribes to “Reaganite” views about small government and economic freedom, Hoogeveen expressed deep scepticism about the political aptitude of the left-wing and right-wing populist parties that are projected to make significant gains in the EU elections this June.

He also suggested that Geert Wilders’ far-right Party for Freedom, which is expected to become the largest Dutch party in the European Parliament, may lack the capacity to engage in politically serious work.

“I’m very sceptical, when it comes to these parties. [as to] whether they can truly deliver, where they can truly compromise,” he said. “And, in the end, politics is about making compromises,” he added.

[Edited by Anna Brunetti/ Zoran Radosavljevic]