State of the Union: Brussels Must Learn When Not to Regulate

Europe heard several correct diagnoses of its economic problems in Ursula von der Leyen’s 2026 State of the Union, along with another round of strong declarations. The problem is not a lack of diagnosis. It is a lack of speed, both in economic growth and in turning promises into results.

In her 2020 State of the Union, von der Leyen said:

“We must tear down the barriers of the Single Market. We must cut red tape. We must step up implementation and enforcement.”

Six years later, completing the Single Market and reducing administrative burdens remain urgent priorities. The Single Market formally began in 1993, yet more than three decades later Europe is still debating how to complete it.

Von der Leyen now wants the overhaul of the Single Market completed by the end of 2027. She said twelve omnibus proposals would reduce administrative burdens by around €17 billion annually and called for a “pact against gold-plating”, meaning unnecessary additional requirements imposed by Member States when implementing EU rules.

Gold-plating deserves attention because many obstacles blamed on Brussels originate at national level. But Europe faces a larger problem. Once layers of regulation accumulate, removing them becomes politically and technically difficult. It also means confronting vested interests that have grown around existing rules and barriers. This strengthens the case for a regulatory brake rather than relying on periodic attempts to simplify what has already been created.

Such a pause could be used to build better safeguards against unnecessary complexity: stronger impact assessments, serious measurement of cumulative regulatory costs, checks for contradictions between laws, regular evaluations and, where appropriate, sunset clauses.

The tension was visible in the same State of the Union. Alongside promises to cut burdens came a Quality Jobs Act, a Housing Act, a European Water initiative, a Climate Insurance Alliance, a Heatwave Plan, the EU Kids Act and a forthcoming Digital Fairness Act.

Some may address genuine problems. But the existence of a problem does not settle whether EU legislation is the right response. Policymakers also need to consider unintended consequences. When regulation becomes too restrictive or taxation too burdensome, economic activity does not simply disappear. Consumers may face higher prices, businesses may scale back or move elsewhere, and some transactions may shift into the shadow economy. The relevant tests are necessity, proportionality and European added value compared with action by markets, Member States or civil society. To paraphrase Bill Clinton’s famous campaign line: it’s subsidiarity, stupid.

Artificial intelligence illustrates another recurring European contradiction: ambitious goals pursued within a regulatory environment that can make them harder to achieve. Von der Leyen made an important point: Europe does not need to develop every frontier model itself to benefit from AI. The opportunity is increasingly about adoption, moving AI “from the screen to the real economy”, into factories, hospitals, transport, agriculture and defence.

But Europe has spent years making its digital rulebook increasingly complex, not only for American Big Tech but also for its own innovators. The Centre for European Policy Studies estimates that the number of EU laws governing the digital world has more than quadrupled over roughly a dozen years, from around 20 to 88. It also warns that interactions between those laws have become so complex that even experts struggle to map them fully.

This matters for the next leg of the AI race. Europe has strong industries where AI can deliver productivity gains. But adoption requires computing power, capital and access to data, as well as a predictable legal environment. It also requires lower compliance burdens and greater coherence between existing rules. Simplification will achieve little if innovators still have to navigate costly, overlapping or contradictory obligations.

The proposed restrictions on children’s social-media use reveal a similar tension. In 2025, von der Leyen said that

“parents, not algorithms, should be raising our children”.

A year later, the Commission is proposing European age restrictions, including no social media below 13 and only limited accounts for 13- and 14-year-olds.

Online harms are real and deserve serious responses. But policymakers should also be realistic about what rules can achieve and about their unintended consequences. In Australia, around three months after restrictions for under-16s took effect, more than 85% of under-16 participants in an early BMJ study still reported using covered platforms. Researchers found widespread circumvention and little evidence of an immediate substantial reduction in social-media use.

Stronger parental skills, digital literacy, and safer product design deserve at least as much attention as bans and age restrictions. Policymakers should also consider privacy costs and the risk that restrictions push some young users towards darker and less supervised parts of the internet. The broader lesson is familiar: a policy that looks decisive on paper may prove far less decisive in real life.

Finally, von der Leyen devoted considerable attention to disinformation, foreign interference and anti-European forces. Those threats are real. But dissatisfaction with the EU also has domestic economic and political causes: weak growth, high costs and a perception that European institutions increasingly regulate areas once left to national governments, markets or families.

This deserves more reflection in Brussels and was largely missing from von der Leyen’s speech. Highly ambitious or intrusive policies on climate, migration, the internet or the economy can carry political as well as economic costs. If European integration becomes associated more with restrictions and complexity than with opportunity and prosperity, it can strengthen the appeal of political forces hostile to the European project.

The strongest case for European integration has always rested on prosperity and freedom. European institutions have become increasingly good at diagnosing what is holding Europe back, while too often responding to those problems with more regulation. The harder part is delivery. The Union needs faster reform, greater consistency and the discipline to recognise that action does not always require another EU rule.