Will DOGE come to Europe? By Investing.com

Investing.com – Deregulation supports President-elect Trump’s second term agenda in the US and has boosted US stock markets since the election.

According to Jefferies strategists, this has increased pressure on the European Commission to improve the region’s competitiveness by improving the operability of rules-based governance in Europe.

One question that emerges from this is whether DOGE – a sign of deregulation of governance and economic frameworks – might make its way to Europe.

Although “deregulation” was the cornerstone of the US policy shift, the European Union is on a different path. As the Jeffries note says: “Deregulation is not the term that EU policymakers prefer.” Instead, Brussels is seeking what it calls “simplification,” aiming to bypass legislative complexity rather than completely dismantle regulations.

“It is the EU’s efforts to simplify, not deregulate, that investors should track,” strategists led by Luke Sosams said in the note. “The Commission has already stated that it will simplify existing rules to achieve a new balance between ‘green’ measures and short-term economic growth.”

Draghi’s report on European competitiveness provides context, revealing that from 2019 to 2024, nearly 3,500 pieces of legislation and 2,000 decisions were enacted at the US federal level. By contrast, the European Union issued about 13,000 laws during the same period. This legislative burden adds urgency to efforts to simplify administration, with simplification viewed as a necessary counterweight to ensuring competitiveness.

Valdis Dombrovskis was appointed Commissioner for Implementation and Simplification, signaling the EU’s intention to tackle this regulatory overhang. His mandate includes cutting corporate reporting requirements by at least 25%, with SMEs likely to see a 35% reduction.

Jeffries points out that “the first 100 days of the new commission’s life will be the most beneficial for investors,” noting the importance of each commissioner’s initial roadmap.

In its report, Jefferies highlights key tools for investors tracking regulatory simplification.

The OECD Product Market Regulation Indicators and the World Bank’s Doing Business Database provide valuable insights into administrative burdens and ease of doing business. Furthermore, the European Investment Bank’s annual investment studies consistently highlight regulation as a major barrier, with 61% of companies citing it as an obstacle to long-term investment.

According to Jeffries, one of the main concerns is whether simplification might impact the EU’s sustainable finance framework. Regulations such as the Corporate Sustainability Reporting Directive (CSRD), the EU taxonomy, and the Sustainable Finance Disclosure Regulation (SFDR) impose significant costs on companies.

The memo cites CSRD compliance costs ranging from €150,000 for unlisted companies to more than €1 million for listed entities. Ursula von der Leyen recently acknowledged this challenge in a recent press conference, announcing that the Commission is studying ways to unify these regulatory rules into a single framework aimed at “reducing redundancy” without changing its basic principles.

Although the EU’s simplification efforts are not as powerful as deregulation in the United States, they can still impact competitiveness. Jefferies notes that investors should keep an eye on the 2025 Annual Work Programme, due to be released on February 11, for further clarity.