José Luis Escrivá, Governor of the Banco de España, has acknowledged that excessive bureaucracy within the European Union (EU) poses significant challenges for the private sector, impacting both businesses and small producers.

During discussions at the event 'Financing the Future of Europe: The Role of the Banking Sector,' organized by the Asociación Española de Banca (AEB), Escrivá noted a 'growing consensus' around the complexity of current regulatory frameworks within the EU, which he stated creates operational difficulties for financial institutions, burdens regulatory supervisors, and risks fragmenting the European market.

Escrivá emphasized the need for a holistic evaluation of the regulatory and supervisory framework to address this bureaucratic overload.

'It is crucial to reassess our regulatory environment and streamline it,' he said.

However, he resisted calls from agricultural sectors for deregulation, arguing instead for a simplification of existing rules that preserves crucial stability requirements.

'I am not advocating for deregulation; it is about making regulations more effective,' he clarified.

He highlighted the agricultural sector’s challenges, citing instances where the use of pesticides in Europe is significantly lower than in countries like Brazil.

The Banco de España maintains that improving regulatory efficiency does not mean relaxing standards.

Instead, the focus should be on creating a more straightforward, stable, and predictable regulatory framework, particularly in the banking sector.

Escrivá underscored the importance of considering EU regulations comprehensively to avoid unnecessary overlaps and complexities.

He also raised concerns about whether the so-called 'regulatory enthusiasm' at the third level of regulation had at times exceeded legislative intent and indicated that measures might be necessary to recalibrate this.

In an economic context marked by uncertainty, Escrivá reiterated the urgency of this reform, aiming to enhance the EU’s competitiveness.

Despite signs of ongoing economic growth within Europe, Escrivá described the situation as characterized by 'concerning structural weakness' and a historic deficit in private investment.

He pointed out that productive private investment in the Eurozone is currently at 12.3% of GDP, compared to 15% in the United States and 27% in China.

To address this investment shortfall, he argued for an ambitious structural agenda to drive forward European integration and strengthen the single market, which would enable European companies to achieve the necessary scale to compete globally.

According to recent studies from the Instituto Juan de Mariana, regulatory obstacles linked to the EU single market could result in a 3.5% loss to Spain’s GDP, with the fragmentation caused by regional regulations potentially imposing similar costs.

Additionally, Carlos Cuerpo, the Minister of Economy, Trade and Business, expressed his support for simplifying banking regulation without compromising system stability.

He also underscored the importance of reducing the administrative burden on banks, a need that should extend across the broader productive and business sectors.

Cuerpo stated that the current prudential regulations and supervisory framework in the EU have played a crucial role in ensuring the resilience of the banking sector over the past years, highlighting that a healthy and competitive banking industry is essential for channeling private savings into the real economy.