Lisbon Investment Climate at Risk? Experts Warn Excessive EU Regulation Stifles Growth

Experts Warn Excessive EU Regulation Threatens to Turn Europe into an “Economic Museum”

A panel of influential business and legal experts gathered in Lisbon has issued a stark warning regarding the European Union’s regulatory framework, arguing that excessive and often irrational rules are stifling innovation and transforming the continent into an “economic museum.” The discussion, part of the ‘9 Chaves para o Futuro da Europa’ conference, highlighted the tension between creating a trusted, regulated market and the risk of strangling economic dynamism, with Portugal’s complex bureaucracy, particularly in real estate, serving as a key case study.

Leonor Sottomayor, Director of Institutional Affairs at Tabaqueira, opened the debate by asserting that the EU’s role as a global standard-setter for regulation is creating unintended negative consequences. “The risk of being an extremely regulated Europe transforms industry into a museum and not an economic powerhouse,” Sottomayor stated. She criticized the top-down nature of many EU directives, which she argued often “appear with a lot of desire and wishes, but then they don’t look at the member states,” failing to account for local economic realities and capabilities. This creates a challenging environment for businesses that must navigate both broad European mandates and specific national implementations.

This sentiment was strongly supported by Pedro Reis, the former Portuguese Minister of Economy and current Vice-President of the Strategic Advisory Council at CIMPOR. Reis made a passionate call for a more assertive industrial policy, arguing that Europe must be less “angelic” in its approach to global competition. “We have to be less naive, we have to protect the interests of our industry. Do we want to have economies and industries with scale in Europe or not?” he questioned. Reis contended that the pace of technological and business innovation is far outstripping that of political and regulatory bodies, creating a disconnect that ultimately hinders wealth creation. “It is necessary to leave space to create wealth,” he urged, suggesting that the current regulatory environment is excessively restrictive.

The practical impact of this regulatory overreach was brought into sharp focus by Carlos Botelho Moniz, a founding partner at the law firm Morais Leitão. He pointed directly to the Portuguese real estate sector as an example of bureaucratic absurdity. Moniz described the requirement for a seller, buyer, and real estate agent to independently communicate the details of a single transaction to the same public authority as fundamentally irrational. “There is something irrational in this way of functioning,” he explained. “Surely a country like Portugal has a tradition of systematic intervention that provokes absurd phenomena like this.” This specific example illustrates the broader problem of redundant and inefficient administrative burdens that increase transaction costs and create friction in the market.

Botelho Moniz clarified that the issue is not regulation itself, but its poor implementation and the failure to simplify processes. He noted that the successful execution of high-level strategic plans, such as the one proposed in the Draghi report, will hinge on the ability of national authorities to “desburocratizar e criar condições de fluidez” – to debureaucratize and create fluid conditions for economic agents. He stressed that democratic institutions produce these rules, but they often lose sight of their primary purpose, leading to a need for simplification at both the European and national levels.

The panel concluded that a significant “vontade política” (political will) is essential to reform obsolete regulatory frameworks. The challenge, as outlined by the speakers, is to balance the EU’s societal values with the need for a dynamic and competitive economic environment. The consensus was that a move away from the “demonization of regulation” toward a more critical and constructive approach to creating smarter, more efficient rules is urgently needed. For sectors like real estate, which are fundamental to the national economy, such reforms could unlock significant potential and improve the country’s attractiveness for both domestic and international investment. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.