Regulatory Simplification: A Key to Europe’s Competitiveness
The Centre for European Policy Studies (CEPS) has published an article by Judith Arnal analyzing the regulatory simplification process undertaken by the European Union (EU) and providing recommendations to ensure that this effort translates into real progress in business competitiveness and the EU’s global influence. According to the author, it will be crucial to clearly define what is meant by regulatory simplification (distinguishing it from deregulation), establish effective coordination mechanisms among the various initiatives underway, and thoroughly rethink the EU’s governance structure, which currently fosters complexity, encourages regulatory fragmentation, and discourages pan-European business operations.
- EU regulation is no longer a competitive advantage for European companies.
- The so-called Brussels Effect, which granted European firms a competitive edge by being the first to adapt to a regulatory framework later adopted as a standard in other regions (e.g., the GDPR), has not been replicated in more recent regulations (i.e., in sustainability or digital matters). These have failed to reach international benchmark status, particularly in a context of deregulation in the United States.
- The growing regulatory complexity has created a more costly and difficult-to-implement framework, reducing competitiveness. In response, the new Commission has set the goal of reducing the administrative burden on companies by 25% (35% for SMEs), appointing a commissioner specifically for “Implementation and Simplification” and promoting regulatory simplification initiatives through the Omnibus format.
- EU regulatory governance fosters a model of “detailed regulation + fragmented implementation” that increases complexity, hinders pan-European business activity, and weakens the integration of the single market.
- This complexity is reflected in an excess of Level 1 legislative mandates, triggering cascades of highly granular technical rules at Levels 2 and 3, to limit divergences in national implementation. Yet Member States still embed their own specificities through goldplating practices.
- There are no systematic ex-ante or ex-post reviews of necessity or quality, and too few secondary objectives like competitiveness or proportionality to balance primary goals such as financial stability or tax collection.
- Key reforms for effective regulatory simplification:
- Political consensus on the concept of “regulatory simplification”, clearly differentiating it from deregulation. Simplification means reducing complexity without eliminating regulatory objectives, with the fundamental aim of strengthening competitiveness. It should be a continuous process, including ex-ante and ex-post evaluations, and explicit limits on the growth of Level 2 and 3 rules and on goldplating practices.
- Coordination mechanisms across the various initiatives underway, with specific coordinators by technical area (e.g., capital, reporting, sustainability), to ensure coherence between agencies and Member States. A clear example is bank capital requirements, where multiple authorities are involved; a joint approach would allow for more effective simplification. Coordination is even more critical in cross-cutting regulations, such as the AI Act, which affect multiple sectors and authorities.
- Rethinking overall EU governance. To advance European integration, it will be necessary to transfer more national competences to European bodies, overcoming the current hybrid framework that fuels regulatory complexity.
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