Modernizing the state means more than just less paperwork.

Bureaucracy is indispensable in a constitutional state. It protects people and the environment and gives companies legal certainty. It becomes a problem where specifications are overly complex or inconsistent and therefore not practical. Then administration not only ties up resources, but also prevents investments and delays projects. This weakens the competitiveness of the location.

The dimension is significant: The National Regulatory Control Council points to annual bureaucracy costs of around 64 billion euros for 2025. At the same time, the additional compliance costs have increased significantly since 2011. According to an analysis by the Deutsche Bundesbank, the bureaucracy costs for companies in Germany amount to around 7 percent of annual sales. The finding therefore remains clear: the level of stress for companies is still far too high and the trend reversal has not yet reached everyday operations.

Industrial companies feel these burdens particularly strongly because they are the power users of the administration. On average, they have around 200 contacts with authorities per year: from approvals to funding applications to reporting, proof and statistical requirements. Particularly in medium-sized companies, there is often a lack of staff and time to cope with increasing reporting and documentation obligations in addition to day-to-day business.

From Relief Package to Genuine Structural Reform

The political will to modernize the state is evident. The modernization agenda, the cabinet committee on reducing administrative burdens, the Act on Reducing Reporting Obligations, and the federal modernization agenda are setting the right priorities. Individual simplifications—such as those in the tax, transport, or healthcare sectors—are also important. However, the decisive factor is not the number of decisions made, but their impact on businesses: Are procedures becoming shorter? Are fewer proofs required? Are digital solutions truly practical? And are fewer new obligations being created than old ones are being eliminated?

The BDI has repeatedly made it clear: piecemeal omnibus acts are insufficient if new burdens are simultaneously being created. The previous federal government’s Fourth Bureaucracy Relief Act was a step forward, yet it fell far short of the business community’s expectations. Only a small fraction of the hundreds of proposals submitted during the consultation with associations was actually adopted. With its simplification agenda, the EU Commission has set a target of reducing bureaucracy costs by 25% (or 35% for small and medium-sized enterprises). The Commission can point to initial concrete successes: the so-called "Sustainability Omnibus"—designed to simplify requirements under the Sustainability Reporting Directive and the Supply Chain Directive—has largely cleared the legislative process, meaning these simplifications are set to be implemented. Yet there are downsides to the upsides. The Danish Council Presidency calculated that directives and regulations—both recently adopted and currently in the legislative pipeline—will result in additional annual burdens of up to €85.9 billion for businesses. Companies in Germany will not be spared from this impact. Germany therefore needs a systematic approach that reviews existing obligations, eliminates superfluous requirements, and limits future burdens from the outset.

The level of ambition must go beyond merely continuing established policy agendas. With the coalition agreement for the 21st legislative period, the Federal Government has finally adopted net reduction targets. It should now implement these consistently. The "bureaucracy brake" (one-in, one-out) has not worked so far; why, then, cling to demands for "one-in, two-out" or "one-in, three-out"? The crucial factor here is the elimination of exemptions. If the Federal Government were required to adhere to the rule—including burdens originating in Brussels—it would create political pressure to take further action at the national level, to push harder at the European level for relief measures, and to give the economy fresh momentum.

BDI President Peter Leibinger sums up the link between cutting red tape and economic growth: "Tangible relief from bureaucracy acts as a zero-cost economic stimulus program."

That is precisely where the economic policy leverage lies. Reducing unnecessary bureaucracy does not necessarily cost the state more money, yet it frees up time, personnel, and investment capacity within companies.

More trust, greater systemic fairness

A core demand of the BDI is a new, trust-based regulatory approach. The state should set clear goals and protection standards, but companies should be given greater responsibility for how they achieve those goals. This does not mean less protection, but rather better rules: risk-oriented, understandable, proportionate, and digitally enforceable.

The "Agenda EinfachStaat" (Agenda Simple State) initiated by the BDI outlines a clear vision for this: less focus on safeguarding against every conceivable individual case and more on systemic consistency; less micromanagement and more goal orientation; fewer unique national paths and more direct, 1:1 implementation of European directives.

BDI Director General Tanja Gönner states: "For industry, the introduction of more trust-based regulation is the top priority."

Legislation needs to operate more on the assumption that individuals and companies act in compliance with the law.
In concrete terms, this means making greater use of thresholds for minor matters, standardized assessments, and random sampling. Existing certifications and inspections should be recognized wherever they already reliably cover the same subject matter. New reporting, documentation, and statistical obligations should be introduced only in justified, exceptional cases—and only if their benefits justify the effort involved and digital implementation is factored in from the outset.

A shift in mindset within the legislative process is particularly important. In the future, the burden of justification should lie not with the proposal to reduce the regulatory burden, but with the continued existence of any burdensome obligation. If a reporting obligation no longer serves a clear purpose, cannot be integrated into digital systems, or requests the same data multiple times, it should be eliminated. Some federal states, such as North Rhine-Westphalia and Baden-Württemberg, are leading the way here, and a reversal of the burden of proof regarding the abolition of reporting obligations has also been announced at the federal level. This shift in mindset should extend beyond reporting obligations alone.

Permits: Speeding up without sacrificing legal certainty

Rapid and legally certain permitting processes are crucial for industrial investments. This applies to production facilities, networks, transport infrastructure, energy projects, and the modification of existing sites. Companies require planning certainty before committing large sums of capital. Consequently, merely accelerating the formal aspects of permitting is insufficient; the legislature must design procedures that enable authorities to make swift decisions and allow companies to rely on those decisions.

The "EinfachStaat" (Simple State) agenda addresses a structural issue: numerous sectoral laws employ varying procedures, terminology, and assessment criteria. This renders the application of the law more complex than necessary. Therefore, successful acceleration measures found in specialized laws should be consolidated into a more uniform procedural framework and extended to other types of facilities. Standards achieved for high-priority projects should become the norm across the board.

At the same time, the legislature must more precisely address the root causes of slow procedures. Not all delays stem from the administrative execution process itself. Often, the problem lies in regulatory complexity that has accumulated over years, involving extensive areas for review, evidentiary requirements, and balancing exercises. Anyone truly seeking to accelerate processes must therefore make the underlying legal framework more comprehensible and decision-oriented.

"Fictions of approval" (deemed approvals) can be helpful in standardized cases, but they often prove inadequate for complex industrial facilities. Reliable legal certainty is at least as important as speed. What is needed, therefore, are clear deadlines, well-resourced authorities, digital file management, and a focus on issues that are decisive for the outcome.

Digital administration: Report data only once

Digitalization is a key driver for the modernization of the state. An online form alone does not create a digital state. As long as data must be entered multiple times, supporting documents repeatedly uploaded, and back-end processes still handled on paper, the relief provided remains limited.

The goal must be a fully digital administration based on the "Once-Only" principle: businesses submit data once, and competent authorities can subsequently reuse it—subject to clear access rights and data protection safeguards. This requires modern registers, shared technical standards, and binding interfaces across federal, state, and local government levels. Register modernization must no longer remain a mere promise for the future; instead, it must make concrete administrative services easier to use.

Digitalization also offers opportunities at the European level. An EU-wide "business wallet" could help companies securely use identities, authorizations, and supporting documents in digital form. For businesses operating across borders, this would be a practical step toward reducing bureaucracy within the Single Market.

Europe: Less gold-plating, more competitiveness

Many obligations originate or are prepared at the European level; therefore, efforts to cut red tape must also begin in Brussels. Bundled simplification packages—often referred to as "omnibus" measures—make sense in this context. They can streamline existing legal acts and resolve inconsistencies simultaneously, provided they deliver genuine relief rather than merely making editorial adjustments.

At the same time, Europe needs better regulation. New rules should be assessed at an early stage for their impact on competitiveness, practical enforceability, and digital implementation. Anyone aiming to foster industrial transformation, climate action, and resilience must not deter companies from investing through unnecessary documentation and reporting burdens. Overall, the Commission is called upon to exercise regulatory restraint and should only introduce initiatives when they are absolutely necessary.

As a general rule, Germany should implement European requirements exactly as stipulated, avoiding additional national measures that go beyond the EU mandate. Such "gold-plating" frequently results in increased administrative effort without clearly demonstrable added value.

What needs to be done now

The BDI advocates for an effective law to reduce reporting burdens that reverses the burden of proof: it should not be up to companies to explain why a requirement can be dropped; instead, the responsible government departments should justify why it must remain in place. Furthermore, net reduction targets must be met, and the exemptions to the "red tape brake" (which itself requires further development) must finally be eliminated.

The Federal Government must accelerate industrial permitting processes and establish a unified Administrative Procedure Act. Likewise, a digital, low-bureaucracy administration—delivered "as a service"—must become a reality. To achieve this, lawmakers must empower public authorities to act as facilitators.

Finally, the federal, state, and local governments, along with the EU, must better coordinate their measures. Companies do not experience regulatory burdens as separate issues tied to specific levels of government; rather, they encounter them as a single process, application, deadline, or reporting obligation, regardless of the source.

Modernizing the state is therefore far more than just simplifying administration; it is simultaneously a program for growth, innovation, and relief from burdens. When Germany becomes less complex, companies gain greater operational freedom, authorities gain the power to make decisions, and citizens gain confidence in a state that works. That is precisely where the economic stimulus lies.

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