A Business-Centric Approach to Cutting Red Tape

From Complexity to Clarity: Reducing EU Regulatory Burdens with AI

Regulatory burdens in the EU have increased despite simplification efforts, impacting business competitiveness, particularly for SMEs. This study, commissioned by the EESC, analyses regulatory expansion, evaluates the effectiveness of the Better Regulation (BR) framework, and explores AI-driven solutions to reduce regulatory burden.

The research follows a structured four-phase approach:

• Regulatory Burden Analysis – AI-driven assessment of regulatory expansion (2019-2024) and evaluation of BR tools.
• AI-Based Monitoring – Development of AI models to extract compliance obligations from legal texts.
• Regulatory Burden Index (RBI) – Definition of heuristics and metrics to quantify regulatory burdens, tested on selected EU regulation.
• Policy Recommendations – Validation through stakeholder engagement (interviews) and proposals for integrating RBI into EU policymaking.

This study highlights that even well-researched, broadly supported policies can create unintended burdens if they fail to integrate seamlessly with business operations. Effectively reducing regulatory burden in the EU requires addressing a fundamental issue in the current approach: the overreliance on ex-ante assessments to estimate regulatory impacts. A more harmonised and flexible regulatory approach is essential to ensuring that sustainability policies achieve their goals without excessive administrative burdens or undermining global competitiveness.

The Regulatory Burden Index (RBI) provides real-time insights into compliance costs, complexity, and national implementation inconsistencies. The SME Indicator Company Approach measures sector-specific regulatory burdens. To reduce regulatory complexity, the study recommends:

• Implementing the RBI to assess and prevent excessive burdens.
• Strengthening the BR framework with clear reduction targets.
• Ensuring adaptive legislation to prevent compliance uncertainty.
• Harmonising implementation across Member States to enhance predictability.

By leveraging AI-driven insights, the EU can streamline regulations, making them more effective and business-friendly.