The European Parliament elections held from 6 to 9 June 2024 produced the result forecast by the polls: a shift in the balance of power towards the centre-right and the conservative right, with gains for the European People's Party (EPP), the European Conservatives and Reformists (ECR, Giorgia Meloni's group) and Identity and Democracy (ID). The left and the Greens lost seats, although the pro-EU coalition (EPP + S&D + Renew) retains the majority needed to re-elect Ursula von der Leyen for a second term at the head of the Commission.
The new political balance and its regulatory implications
The electoral result opens a new phase in European regulatory policy characterised by tension between existing commitments — the Green Deal, digital regulation, the social agenda — and pressure from a parliamentary majority more sceptical about the pace and intensity of regulation. The implications for businesses crystallise across several areas.
Green agenda: deceleration, not reversal
The new Von der Leyen II Commission has maintained the Green Deal’s climate targets (55% emissions reduction by 2030, climate neutrality by 2050) but has incorporated “competitiveness” as a fifth cross-cutting objective alongside decarbonisation, biodiversity, the circular economy and sustainable food.
The clearest illustration of this shift was the Omnibus Simplification Package presented in February 2025, which proposes delaying by two years the application of the CSRD for the second and third groups of companies (from 2025 to 2027 and from 2026 to 2028, respectively) and raising the CSRD application thresholds to exclude listed SMEs. It also proposes significantly reducing the scope of the CS3D (Corporate Sustainability Due Diligence Directive), limiting the sustainability due diligence obligation in the value chain to direct first-tier suppliers.
Digital regulation: the AI Act and the Data Act unchanged
The digital agenda — the AI Act (Regulation 2024/1689), the Data Act (Regulation 2023/2854), the Digital Markets Act (DMA) and the Digital Services Act (DSA) — maintains its deadlines without modification. The new Parliament has not challenged these instruments, which enjoy broad cross-party political consensus. For businesses, this means the AI Act’s timelines remain operative and investment in digital compliance is irreversible.
Trade policy: selective protectionism
The new Parliament composition favours a more defensive trade policy towards China and, to a lesser extent, towards the United States. The Carbon Border Adjustment Mechanism (CBAM), which entered its transitional phase in October 2023, maintains its schedule for full application from 2026, imposing a carbon price on imports of steel, cement, aluminium, fertilisers, electricity and hydrogen from countries without an equivalent carbon price. For companies importing these products, the economic impact of CBAM is significant from 2026 onwards.
The Draghi Report and the Commission’s response
In September 2024, Mario Draghi presented the Commission with the report “The Future of European Competitiveness”, commissioned by Von der Leyen. The report diagnoses a growing productivity gap between Europe and the United States and China, identifying as causes the fragmentation of the single market, the scarcity of private financing for innovation and the accumulated regulatory burden.
Among its highest-impact recommendations for businesses are: the need for a genuine Capital Markets Union to mobilise private European savings into innovation investment, a reduction in industrial energy costs (estimated at double or triple the US level), and simplification of the regulatory framework (the report estimates that the regulatory burden costs the European economy 2-3% of GDP annually).
The Commission responded with the Competitiveness Compass, published in February 2025, which articulates the new Commission’s priorities around reducing energy dependence, strengthening the European industrial base in strategic sectors (semiconductors, defence, energy-intensive industry) and simplifying business regulation.
Implications for M&A and investment strategy
The post-election political and regulatory environment in 2025 has direct implications for the investment and M&A decisions of Spanish companies:
Capital markets: the Capital Markets Union agenda is regaining momentum with the backing of the Von der Leyen II Commission, which may facilitate European mid-cap companies’ access to capital markets in the coming years and reduce dependence on bank financing.
State aid and EU funds: the approval of more flexible State aid frameworks (NZIA, Net-Zero Industry Act) and the continued deployment of NextGenerationEU funds until 2026 keep open significant public financing channels for industrial, digital and energy projects in Spain.
Competition policy: the new Commission has signalled that it will review merger guidelines to allow the creation of European champions in strategic sectors. This could soften antitrust scrutiny of some cross-border M&A transactions that the previous Commission had blocked.
What businesses must monitor in 2025-2026
The regulatory files that companies should track closely during 2025-2026 are:
- Omnibus Package: the proposed simplification of the CSRD and CS3D is in legislative approval proceedings. The final position of the Council and Parliament will determine the definitive deadlines for both directives.
- ETS review (Emissions Trading System): the new phase of the European Emissions Trading System, with the progressive elimination of free allowances for industry, has a direct impact on costs for companies with emitting installations.
- Packaging and Waste Regulation (PPWR): affects all companies placing packaged products on the market, with obligations on recyclability, recycled content and reuse.
- Corporate Sustainability Due Diligence Directive (CS3D): pending final adoption, this will establish human rights and environmental due diligence obligations for companies with more than 1,000 employees and €450 million in turnover.
At BMC we analyse the impact of European regulatory change on business strategy. See our corporate advisory services.
