EU regulations could cost the European economy €159 billion annually, report warns

A study by the European Policy Innovation Council (EPIC) estimates that, between 2026 and 2030, five European regulatory dossiers could reduce EU GDP by approximately 159 billion euros annually if implemented restrictively. The authors argue that more gradual and differentiated policy design would reduce losses by approximately 125 billion euros per year.

European regulation has legitimate objectives — competitiveness, industrial transition, environmental and public health protection — but its costs depend essentially on how the rules are calibrated, scheduled and applied, concludes the report “The Hidden Cost of EU Regulation,” produced by EPIC. The analysis is based on economic scenarios, not on losses already recorded.

For the 2026–2030 period, the report analyzes five areas: tobacco products (TPD3), artificial intelligence, packaging and packaging waste (PPWR), the carbon border adjustment mechanism (CBAM) and biotechnology. Under a restrictive scenario, the cumulative impact is estimated at 158.7 billion euros in annual GDP, approximately 35.7 billion euros in unrealized investment and around 419,000 jobs at risk.

The largest modeled effects appear under TPD3, with an annual loss of 47.6 billion euros, followed by CBAM, with 43.9 billion euros, and PPWR, with 41.7 billion euros. AI regulation could cost 24 billion euros annually, according to the scenario analyzed.

The report compares these estimates with a “better regulation” scenario based on gradual implementation, risk-differentiated obligations and a timetable synchronized with economies’ capacity to adapt. Under this version, the annual GDP loss falls to 33.4 billion euros, while the difference from the restrictive scenario reaches approximately 125.3 billion euros, 27.9 billion euros in investment and nearly 241,000 jobs.

EPIC also estimates that three existing dossiers — the EU-MERCOSUR agreement, the automotive transition and the Common Agricultural Policy — are associated with annual costs of approximately 63 billion euros, equivalent to 0.35% of EU GDP. The authors propose the concept of “Stability-by-Design”: assessing economic effects early, consulting affected companies and adapting obligations to firms’ size and risk.