30 September 2014

IPE: Growth trumps regulation at the European Commission

The language coming out of Brussels ahead of Jean-Claude Juncker assuming the presidency has been markedly different than that employed in the recent past, stressing the importance of a nimble executive that does not unduly burden the economy with red tape. Frans Timmermans, the Dutch nominee for the College of Commissioners, will specifically be tasked with the oversight of red tape, and granted the power to veto any decision that increase the regulatory burden unnecessarily. Meanwhile, Jonathan Hill, Britain’s member of the Juncker Cabinet in charge of stability and regulation of financial markets, has used the aforementioned “quick” and “effective” to describe how he would react to proposals to streamline financial regulation.

Answering questions from the European Parliament’s Committee on Economic and Monetary Affairs ahead of his confirmation hearing with lawmakers tomorrow, Hill says the prior overhaul of financial regulation completed “while the flames of the crisis raged” is a remarkable feat, and praises the leadership of outgoing internal markets commissioner Michel Barnier. As Hill sees it, his focus will be on regulatory implementation, enforcement and, importantly, evaluation – the last potentially being code-speak for a relaxation of the current regulatory requirements. He adds that if regulation is not flawless, “quick and effective adjustments” are required, emphasising the need for jobs and growth above all else.

The development of a more diversified financial system will require the removal of barriers, again emphasising less regulation. Despite the European Insurance and Occupational Pensions Authority’s continued work on the holistic balance sheet for pension funds, the Commission is unlikely to push ahead with any changes that would cause institutions to be more averse to risk.

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