European deregulation push creates 'moment of opportunity' to boost growth

CNBC

27-04-2025

Spurring European deregulation and economic growth was a powerful theme that emerged as an answer to challenges raised by the U.S. tariff campaign and questions about American "exceptionalism" at the International Monetary Fund's annual spring meeting in Washington last week. European officials pointed to the idea of regulatory "simplification" as a way to boost business after years of sclerotic growth. "We have gone too far in regulating the risk, and we've forgotten about regulating the growth," Rachel Reeves, the U.K. Chancellor of the Exchequer, said during a panel discussion moderated by CNBC's Sara Eisen on Thursday. At the same forum, German Finance Minister Jorg Kukies highlighted the need to lower "duplicative and multiplicative" regulations on companies. "We do have to also encourage and grow and make more prosperous the venture capital investing scheme in Germany, in the European Union," Kukies said. Britain and Germany are Europe's two largest economies. Sentiment shift The views from London and Berlin are part of a notable sentiment shift throughout Europe, long plagued by slower growing economies and stock markets that until recently have lagged the U.S. ever since the Global Financial Crisis. Over the past few months, European Commission President Ursula Von der Leyen and former European Central Bank President Mario Draghi each raised concern about the region's lack of competitiveness and fading productivity. In response, the European Commission, the executive arm of the European Union, adopted a package of proposals in February that it said "will cut red tape and simplify EU rules for citizens and business," aiming to "reduce administrative burdens by 25%, and by 35% for small- and medium-sized businesses" sometime in 2029. Reeves in the U.K. has also taken aim at excessive regulation, especially environmental rules governing major infrastructure projects. Kukies, the German finance minister, has a history in the private sector that's informed his push for deregulation, according to Isabelle Mateos y Lago, chief economist at BNP Paribas, the largest bank in France. "He's been one of the strongest proponents of deregulation, and I think he actually means deregulation, not just simplification," Mateos y Lago told CNBC. "And then in the U.K., they've already made a number of high profile decisions around permitting that really show that there is now a desire to make growth really a priority — and not the number five priority, after a lot of other things." The economist, who calls herself "a permanent, perennial, indefatigable optimist about Europe," pointed to increasingly positive sentiment toward European growth. "Most of the time, you feel lonely being in that mindset, especially in the U.S.," said Mateos y Lago. 'Moment of opportunity' "But I cannot tell you the number of panels or meetings or conversations I've had this week, where you hear people say, 'this is a moment of opportunity for Europe,'" she added. "There is really reason to be optimistic, because there's this consensus at the policy level. There is a blueprint now [and] the intention to get all this — administrative simplification — done." The culture shift on the continent and U.K. — plus easier credit from the Bank of England and European Central Bank — has excited investors about economic growth prospects, especially against a backdrop of tariff-induced instability and weakening confidence in U.S. exceptionalism and dollar dominance. Both the continent's Stoxx Europe 600 Index and the U.K.'s FTSE 100 Index are up about 3% in 2025 while the S & P 500 has fallen 6%. Including reinvested dividends, the recent outperformance is even greater. But Europe has a long way to go to turn things around and convince the skeptics. Since the financial crisis in 2008, the Stoxx 600 index has returned 223% and the FTSE 100 even less, at 191%, according to FactSet data. The S & P 500 has soared 510%. —CNBC's Michael Bloom contributed to this report. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!