Austria and Italy launched an initiative in September aimed at reducing regulatory burdens, which according to EU Insider has already attracted 17 European Union member states. At the centre of the dispute is gold plating, meaning the expansion of EU requirements by member states when transposing them into national law. For industry, the issue has practical significance: additional obligations mean not only administrative costs, but also more time needed to adapt investments, products, and processes to changing regulations.
The European debate on competitiveness is increasingly focused on the quality of the regulatory environment. Companies operating in the EU must invest simultaneously in the energy transition, digitalisation, and new technologies, while also meeting a growing number of requirements concerning reporting, the environment, products, and business operations. In an environment of high energy prices and strong international competition, what matters is no longer only what an individual regulation says, but also how many different obligations a company must meet at the same time.
The problem of market fragmentation was highlighted both in Enrico Letta’s report and in Mario Draghi’s analysis of the competitiveness of the European economy. These analyses pointed, among other things, to barriers that make it more difficult for companies to expand within the single market, insufficient investment, high energy costs, and differences between member states. The European Commission is incorporating some of these conclusions into its competitiveness policy.
The new initiative by member states, however, concerns a more specific problem. It relates to situations in which common EU rules, once implemented in individual countries, begin to operate within different administrative frameworks. If a country adds its own requirements, forms, or procedures, a company operating in several markets may be forced to meet additional obligations even though the basic requirement stems from the same EU legislation.
Gold plating is not a new phenomenon. The European Commission has previously pointed out that member states should pay attention to unjustified extensions of requirements when transposing EU directives. In documents concerning the functioning of the single market, the Commission has also stressed that proper implementation of EU law matters for whether common rules actually create uniform conditions for doing business.
The mechanism is relatively simple. The EU adopts a particular standard, and a member state implements it within its own legal system. If it also adds an obligation that is not required by EU law, a company operating in that country faces an additional burden. For an individual company, this may involve an additional report or procedure. Across thousands of companies and many different regulations, the effect can mean greater demand for employees dealing with legal compliance, information systems, and legal services.
Polish government documents also identify specific examples of this mechanism. A document concerning gold plating described, among other cases, situations in which Polish capital market regulations introduced requirements going beyond the minimum resulting from EU law. One example involved quarterly reporting that was not required by EU regulations.
This difference between common regulation and the way it is implemented is one of the arguments made by supporters of limiting gold plating. If companies in different countries are expected to achieve the same regulatory objective but are subject to different procedures, the single market becomes less uniform in practice.
17 countries want to reduce the burden
According to EU Insider, Austria and Italy launched an alliance on 21 September aimed at reducing bureaucratic burdens. At least 17 member states were subsequently reported to have joined the initiative. One of its main topics is gold plating and the reduction of additional requirements imposed when EU law is implemented.
The significance of the initiative lies primarily in the fact that the debate about deregulation is no longer limited to individual sectors. The focus has shifted towards the way regulations are created and implemented. The participating countries want greater attention to be paid to the cumulative impact of regulations on companies when regulatory measures are assessed.
This approach is important for industry because a company does not experience each regulation separately. Environmental, energy, tax, reporting, and product safety obligations may require the same administrative and investment resources. Even if each individual requirement has a justification, their simultaneous introduction can change the economic calculation of an investment.
EPIC report estimates potential costs
The argument concerning the cumulative effect of regulation also appears in the latest report by the European Policy Innovation Council. The organisation analysed five policy areas, including regulations concerning the automotive sector, tobacco products, artificial intelligence, packaging, the carbon border mechanism, as well as biotechnology and novel foods.
According to the model presented by EPIC, a restrictive scenario covering these five areas would be associated with around €159 billion in annual GDP losses between 2026 and 2030. The report also estimates an annual investment shortfall of around €36 billion and around 419,000 jobs at risk in the analysed scenario. These are modelled values, however, rather than currently observed losses for the EU economy. EPIC itself stresses that the results depend on the scenarios adopted and represent projections for the 2026 to 2030 period.
The report also presents an alternative scenario in which better regulatory design would generate around €125 billion in additional annual GDP compared with the restrictive scenario. In the model, this would also mean around €28 billion in additional investment per year and an improvement in the employment impact equivalent to around 241,000 jobs. This is not a forecast of a guaranteed effect of deregulation, but rather the difference between two modelled approaches to regulatory policy.
The debate is also directly relevant to Poland. Examples of gold plating have previously been analysed in Poland, including in relation to the capital market. Documents concerning the implementation of EU law have pointed out that national solutions may be more restrictive than the minimum resulting from EU regulations, increasing the burden on companies operating in the Polish market.
Recent analyses of the potential effects of new regulations also indicate that the scale of the impact can be considerably greater than administrative costs alone. According to analyses by researchers from the SGH Warsaw School of Economics cited by Polish media, the cumulative impact of selected regulations could mean more than €14 billion in lost GDP for Poland and put around 200,000 jobs at risk. The calculations concern specific regulations and model assumptions rather than the entire EU legal system.
Climate regulations and proposals concerning the market for tobacco products are particularly important in this context. Poland has a large tobacco processing sector and an extensive supply chain involving agriculture, industry, and trade, so regulatory changes may have effects extending beyond the companies directly covered by the rules.
Letta and Draghi pointed to a broader problem
The dispute over regulation is not equivalent to the claim that European competitiveness depends solely on reducing legislation. Draghi’s report also pointed to the investment gap, energy costs, insufficient spending on research and development, and fragmentation of the European capital market. The European Commission stresses that Europe needs both a better business environment and major investments in energy, infrastructure, digitalisation, and innovation.
Similarly, Letta’s report on the single market focused on removing barriers between countries and increasing the ability of European companies to scale their operations. In an analysis of both reports, the European Parliament noted that a significant proportion of the barriers identified by companies have remained unresolved for many years.
The current dispute therefore concerns two levels at the same time. The first is the number and design of new regulations. The second is the way they are applied within 27 different legal systems. Even limiting gold plating will not solve the problems of high energy prices, shortages of capital, or weaker investment in technology, but it may reduce some of the costs resulting from the national implementation of common regulations.
Implementation will now be crucial
The initiative of the 17 countries puts the European Commission before a practical question about how the next reviews of EU law should be carried out. A declaration to reduce burdens will not by itself change companies’ costs. Concrete decisions are needed on which obligations can be removed, which can be simplified, and which should remain because of environmental, social, or safety objectives.
It will also be important to distinguish between two phenomena. Some burdens result directly from legislation adopted at EU level, while others emerge only at the stage of national implementation. Responsibility for reducing them is therefore divided between EU institutions and member states. Only an analysis of the entire regulatory chain will make it possible to assess where the cost actually borne by a company is created.
For European industry, this will be particularly important at a time when it simultaneously needs major investment in new technologies, energy, and productivity improvements. The debate initiated by the group of 17 countries does not yet determine how far deregulation should go. It does, however, show that the regulatory burden and the way legislation is implemented have become one element of the broader European debate about how to combine regulatory objectives with the conditions companies need to invest and compete in the single market.
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