Step aboard the “Omnibus” – A new era for regulation in Europe
Global financial markets have been rocked by President Trump’s “Liberation Day” tariff announcements. While the full impact of these unprecedented moves will unfold over time, one thing is clear: the loan markets are now operating in a significantly altered geopolitical and economic environment.
Against this backdrop, competitiveness has emerged as the central theme driving regulatory change in Europe in 2025—and this new competitiveness agenda is poised to shape the regulatory agenda one for years to come.
Running behind schedule – Overcoming decades of weak growth and slowing productivity
The EU’s strategic focus on competitiveness was not initially driven by announcements from the White House. Instead, as highlighted in the Draghi report (the Draghi Report), the driver for this strategic focus were the dual forces of weak growth and slowing productivity in Europe since the start of the century. In economic terms, Europe has been lagging behind global competitors for years – with real disposable income growing almost twice as much in the US as in the EU since 2000.
The “rising weight of regulation” in the EU was noted in the Draghi Report as a key factor preventing companies in the EU from realising their full potential, with both the volume and complexity of regulation said to be stifling innovation and limiting growth. Draghi’s recommendation was to appoint a new Vice President for Simplification, and for each new Commission to carry out a systematic assessment of existing regulation with a view to simplification and removing areas of overlap.
Destination: simplification – Setting out the new competitiveness agenda
On 8 November 2024, the Budapest Declaration on the New European Competitiveness Deal was launched, promising a “simplification revolution” ensuring “a clear, simple and smart regulatory framework for businesses”. In the related announcements, the Commission set out its aims to make concrete proposals on reducing reporting requirements for companies by at least 25% in the first half of 2025, and suggested it would include red-tape and competitiveness impact assessments in its proposals.
On the same day, President Von der Leyen announced that the EU would put forward an ambitious “Omnibus” simplification package (the Sustainability Omnibus) covering (at least) the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy Regulation and the Corporate Sustainability Due Diligence Directive in order to reduce the compliance burden of sustainability reporting for companies across the EU – even though many of these reporting requirements had not even been fully implemented yet.
In January 2025, this was followed by the launch of the EU’s “Competitiveness Compass” setting out the EU’s plans to reignite the European economy, and including a plan to close the innovation gap by simplifying rules and laws for businesses operating across the EU. Valdis Dombrovskis was appointed as the Commissioner for Implementation and Simplification with overall responsibility for cutting red tape in the EU.
Accelerating into a new gear – Rapid progress on Omnibus proposals
At the end of February, the Commission published two Omnibus proposals – the Sustainability Omnibus and a second Omnibus at simplifying investments in the EU (the Investment Omnibus).
The Investment Omnibus is intended to amend the InvestEU programme with an objective of mobilising an additional €50 billion in public and private investment by increasing the EU guarantee, combining existing legacy programs and simplifying reporting requirement.
However, it is the Sustainability Omnibus that has really grabbed headlines. With Europe seen as a world-leader on sustainability, the prospect of reductions in the scope and content of sustainability reporting were seen by many as a weakening of Europe’s climate ambition in the face of the new Trump Administration. The speed with which the Commission moved forward on the Sustainability Omnibus proposals was unprecedented and took many by surprise. Just a few weeks earlier, the proposals had merely been a set of square brackets but what emerged was a full legislative proposal including extensive cuts to the scope of sustainability reporting requirements for companies – which would, if enacted, take over 80% of companies out of scope of (CSRD) reporting.
A ticket to nowhere?
Where are we now? Well, at the start of April, the so-called “stop the clock measures” under the Sustainability Omnibus were passed by the European Parliament and these measures have now been approved by the European Council as well. But this is by no means the end destination – there is still a long way to go before the substantive proposals under the Sustainability Omnibus are likely to be agreed. With deep political divides in the European Parliament, significant amendments may yet be seen before the Sustainability Omnibus can be agreed and enter into force.
Furthermore, whilst the Sustainability Omnibus seeks to reduce the scope of companies caught by sustainability reporting, it does not include proposals for reducing the overall quantum of disclosures for those companies who will continue to be caught by the CSRD. At the end of March, Commissioner for Financial Services and the Savings and Investments Union, Maria Luís Albuquerque, addressed the EFRAG Sustainability Reporting Board, together with the EFRAG Sustainability Reporting Technical Expert Group to outline a new mandate to EFRAG on the simplification of the first set of European Sustainability Reporting Standards (ESRS). How far the proposed cuts to the content of reporting will go remains to be seen but many will be watching closely to understand whether this might signal a watering down of Europe’s sustainability ambitions more broadly.
The big picture question is, where this will all end for Europe? Will the new simplification agenda lead to a material reduction in regulatory burden for companies operating in the EU? And, if so, will this deliver the much-needed growth that Europe is seeking in a changed political landscape?
Finally, it remains to be seen what the long-term consequences of simplification will be for Europe’s ambitions as a climate leader on the world stage. At a time when action on climate and nature-loss is more urgent than ever, has the EU taken its foot off the pedal too soon?
The road ahead for regulation – Our 5 key takeaways for members
But what does this new competitiveness agenda mean for the loan markets? Our five key takeaways for members are set out below:
- Expect more to come: The Commission has already set out its plans for more Omnibus proposals, including on small mid-caps and the removal of paper requirements, a Digital package and a Common Agricultural Policy simplification package. However, the ambition and reach of the Commission’s broader simplification agenda means any existing regulations could potentially be subject to review.
- The road ahead will be long (especially for the Sustainability Omnibus): Deep political divides mean that there is likely to be a long way to go before the Sustainability Omnibus will be enacted into law. The bad news is that this means more uncertainty ahead for market participants, but this will provide more opportunities to make sure the loan markets’ voice is heard in order to ensure that the resulting framework is both useable and decision useful for the loan markets.
- Other jurisdictions are on their way too: In this new era for global trade and competition, it is likely that other jurisdictions will also re-examine their regulatory frameworks to ensure that they are not creating unnecessary barriers to competitiveness. In the UK, the UK Financial Conduct Authority has, since August 2023, had a secondary objective to facilitate the international competitiveness and growth of the UK economy in the medium to long term. In March 2025, it announced its new 5-year strategy which includes a strong emphasis on supporting growth. On 7 April 2025, HM Treasury launched a new consultation proposing a “streamlined framework” for regulating UK alternative asset managers and the UK financial Conduct Authority launched a related call for input signalling a strong emphasis on promoting growth.
- There will be opportunities along the way: For market participants, the new competitiveness agenda will provide opportunities to engage with regulators and policymakers along the way about how the regulatory environment can better the flow of capital into the EU whilst maintaining financial stability. We expect barriers to cross-border financing and the unlocking of European securitisation markets to be two key areas of focus for the Commission.
- There are likely to be bumps in the road: If we have learnt anything over the last few years, it is to expect the unexpected. Market participants should therefore expect bumps in the road as the European Union seeks to balance out competing interests in this new era of global competitiveness, as well as the impacts of the growing use of AI technologies on global markets.
The LMA has this year renewed its own strategic focus on regulation given the importance of a supportive regulatory environment for the smooth functioning of loan markets across EMEA. It is important that we take the opportunity as an industry to ensure that policy and regulation best supports financial markets to deliver growth across EMEA, and to ensure that unintended negative consequences of regulatory change are avoided.
We have already responded to a number of important regulatory consultations this year (which can be found here) and we have held member roundtable discussions on a range of important regulatory topics. If you would like to be involved in our regulatory work, please do get in contact with Hannah Vanstone to find out more.
