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What to expect from the new Commission on financial services

Get ready for a seismic shift in the post-2024 EU financial landscape – where economic imperatives, global competition, and recalibrated political priorities converge to shape a dynamic agenda ahead. In terms of setting the post-2024 EU financial services agenda, turnover in the European Parliament and in some Member State governments (Council) are not the primary drivers. The agenda is already being strongly shaped by economic imperatives, particularly a focus on competitiveness driven by factors such as global competition, regulatory frameworks, the macroeconomic outlook, and pushed further by and two reports on competitive and single markets from Draghi and Letta. This is already evident in Ursula von der Leyen's strong recalibration towards the political right in her own political party, leading her to prioritise the competitiveness of European businesses and push back against EU ‘overregulation,’ in particular on certain green initiatives that she championed in her first term.

As well as picking up a record number of open files from the last mandate including the payments review, open finance, the digital euro and the Retail Investment Strategy the new term is set to focus on:

  • adjustments to the sustainable finance framework (starting with the SFDR)
  • rebooting the Capital Markets Union
  • broader issues of economic security (including strategic autonomy, and investment rules)
  • further digital regulation to address the perceived risks of new technologies being widely deployed in the sector in particular blockchain and AI

Political change in the European Parliament and Council

As in any election year, changes to the balance of political power are expected in the EU’s legislative institutions. In the European Parliament, current polling suggests gains in the magnitude of 40-50 seats (out of 700 total seats) for the right-leaning ECR and ID political groups with commensurate losses for their liberal and left-wing counterparts. Although the EP may exhibit a more right-wing inclination and potentially resist certain ambitious green initiatives, finding agreement will become significantly harder in general for a number of reasons, including that many groups do not want to work with the far-right ID members. The first test of this will be the approval of the new Commission, noting that Von der Leyen(VDL) only squeaked through with a margin of 9 votes.

Similarly, in the Council, recent and expected changes among Member State governments are not expected to be major. While there have been notable shifts in certain countries, such as Poland electing a pro-European government under the leadership of Donald Tusk, or Geert Wilders winning the most votes in the Netherlands, the overall ideological balance in the Council and their newly appointed Commissioner is expected to remain relatively stable.

VDL recalibration is the driving force in setting the agenda for the next Commission

Geopolitical and macroeconomic developments that have hit the EU as a whole but the German economy in particular very hard, have supercharged competitiveness issues in the runup to the June Parliamentary elections. A surge in living expenses and energy costs, the ongoing Russian war in Ukraine, heightened tensions with both the US and China, coupled with increased regulatory burdens, have impeded the growth of the EU economy and fuelled social unrest. The pro-business EPP has faced growing discontent in many Member States due to its perceived inadequacies in addressing these challenges. Von der Leyen had been under particular pressure from German Politicians and industry to reduce the regulatory and reporting burden on EU companies.

In her bid for renomination, von der Leyen has found herself compelled to make concessions to her own political faction, prioritising competitiveness over certain aspects of the green agenda. This orientation will be baked into the priorities of the new Commission via the mission letters to the incoming Commissioners, including for financial services. This re-prioritisation on the EU’s competitiveness will be embedded under the overarching strategy of economic security. The new Commission will continue its efforts to reduce overdependency on critical inputs and technologies and foster domestic industry in strategic sectors, such as green tech and defence. In the interest of (economic) security, investment screening mechanisms could be reinforced to protect critical assets. The financial services agenda will be further informed by three upcoming reports (two of which were commissioned by Ms von der Leyen): a Eurogroup political statement on the Capital Markets Union (CMU) by Pascal Donohoe in March, followed by a report on the Single Market by Enrico Letta in April and the report on EU competitiveness by Mario Draghi, currently foreseen for June.  

A trio of reports

Yesterday’s Eurogroup statement on the CMU is an important step to potentially unblock Member States’ position on key proposals. Renewed commitments are expected in the usual areas of improving access to finance, centralising supervision, harmonising insolvency and accounting frameworks, but scepticism remains high about the likelihood of being able to deliver any real progress.

The Letta report, scheduled for release in April, will focus on revitalising the Single Market undermined by the pressures of both the COVID pandemic and Russia’s invasion of Ukraine. It highlights the urgent need to finance green and digital transitions, stressing the necessity of a cohesive EU response to geopolitical tensions. The report is expected to advocate for streamlined regulations, innovative financing solutions, and a shift away from nationalistic orientations.

Mario Draghi’s upcoming report on European competitiveness is expected to signal the need for a fundamental change in the economic model, challenging established norms and priorities. Draghi will highlight the vulnerability of EU competitiveness to external crises and pressures and the need for greater political unity to deliver growth and competitiveness. Emphasising the imperative to finance green and digital transitions, the report is expected to underscore the need for a CMU reboot to deliver increased investment for the green and digital transitions.

What to expect on financial services?

Adjustments to the EU’s sustainable finance framework are widely expected to be at the top of the new Commission’s agenda, starting with the review of the cornerstone Sustainable Finance Disclosure Regulation (SFDR) early in the new term.

A new Single Market in Financial Services strategy is also expected to set some new priorities for the further development of the EU capital markets. This will emphasise the necessity of mobilising private capital to finance green and digital transitions in light of fiscal constraints, there will be continued pressure to ensure sufficient private sources of investment. Not for the first time, initiatives to better deploy the substantial savings of EU citizens could become a central feature of financial services agenda. Additionally, efforts to drive retail investment through tax incentives and bolster private pension provisions are also gaining traction.

On economic security, there will be further proposals on reducing dependencies in ‘strategic’ sectors to unreliable external trading partners. Investment flows will be further scrutinised. In January 2024, the Commission proposed to close the gaps of the inbound investment screening mechanism to make it more effective and launched a consultation that will inform a potential proposal on a new screening framework for outbound investments. Details of how this will be applied across the financial sector remain uncertain, especially given the potential of overly restrictive measures to drive up costs for consumers, reduce competition and stifle innovation.

Finally, digital finance will continue to be a top priority as regulators grapple with the accelerating use of innovative technologies. While artificial intelligence (AI) is currently the main focus, it also poses widely recognised risks that may require a sector-specific approach from regulators. Measures may be contemplated to enhance consumer understanding and protection in digital finance, as well as to promote the responsible use of emerging technologies in the financial sector.


This blog post was written by Fiona Wright, partner, and Mateusz Marciniak, consultant both working on EU financial services. Flint has offices in London, Asia Pacific, Dublin, France and Berlin working jointly on EU, UK, and international financial services regulation.  To find out more about how Flint can help you navigate the risks and opportunities of these developments, get in touch.  

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