(De)Regulatory overkill
03 February 2025
How should Europe get its economy back on track? According to the Commission, it's through removing red tape – ie, deregulation. Last week, European Commission president Ursula von der Leyen and her industrial-policy-officer-in-chief Stéphane Séjourné unveiled the long-awaited Competitiveness Compass, an expansive strategy to nurture the EU's sickly economy back to health.
For context: The Eurozone recorded zero growth in the last quarter of 2024, while industrial production in economic heavyweights like Germany still hasn't caught up with pre-pandemic levels. In contrast, the American and Chinese economies expanded by around 2.5% and 5%, respectively.
Under the guise of "simplification", the Commission aims for the "regulatory burden" they believe prevents European companies from rising to the top, especially in the form of Green Deal-related reporting requirements. They propose slashing red tape by at least 25%, hoping to save EU businesses over €37 billion annually by the end of the decade. Other measures are meant to bring down energy prices, spur innovation in ‘breakthrough' technologies like AI and biotech, and make investing easier across the EU.
 | Anton Koninckx While Europe's ailing economy certainly needs swift and forceful treatment, unchecked deregulation is not the answer, sustainability advocates say. In a joint letter, over 270 environmental NGOs and trade unions warn that deregulation creates uncertainty, undermines the EU's credibility, and unfairly penalises first movers who did invest in sustainable alternatives. By reopening the debate on key Green Deal files, they fear a rollback of those laws' hard-won environmental and social provisions – many of which have only recently come into force. The package's sustainability reporting requirements in particular come into focus, but also the EU's carbon tax on certain imports or its support for electric vehicles. As one commentator put it, the EU's attack on the ‘means' (regulation) risks turning into an offensive against the ‘ends' (CO2 reduction, clean air, drinkable water and the like). Instead of reneging on what has already been agreed on – notably by von der Leyen herself during her first tenure as Commission president – the Compass's critics argue the EU should rather double down on its regulatory commitments. By providing national and European regulators with the necessary staff and resources to implement and enforce the EU's environmental and social standards, they insist that the Union can level the playing field and maximise social welfare. |
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