Brussels makes one thing better than anywhere else: regulation. Reporting duties, due diligence checks, ESG disclosures, and endless frameworks for climate and labour compliance – if it can be mandated, Brussels has a directive for it. Now Brussels has outdone itself with a directive that makes companies legally liable for the behaviour of every entity in their global supply chain. It’s due to come into force in 2027. The law has triggered a rare backlash. This week, Emmanuel Macron has called for it to be taken ‘off the table’. Germany’s Chancellor Friedrich Merz has also demanded its repeal. But it seems even the bloc’s two most powerful governments can’t stop this from going through.
Even the bloc’s two most powerful governments can’t stop this from going through
On paper, the EU is committed to reducing regulation. In 2024, the former Italian prime minister Mario Draghi delivered a report calling for the EU to reduce obstacles for businesses and to have leaner regulation. Ursula von der Leyen stood beside him nodding when he presented the report.
But on this supply chain regulation the bureaucracy is doubling down. The new directive is part of the EU’s push to make businesses morally responsible. It forces companies to account not only for their own practices, but for the environmental and human rights records of every link in their supply chain. A business could be held liable for the actions of a subcontractor on the other side of the world, something no American or Chinese competitor is subject to. It’s a gift to compliance lawyers and a slow death sentence for exporters.
Ursula von der Leyen has staked her Commission’s legacy on this kind of regulation. The rules are part of a broader project that aims to make the EU a global standard-setter. Backing down now would mean admitting the agenda she has championed is unworkable. This is why the EU is pushing through a directive so economically damaging that even the French and the Germans are sounding the alarm.
This is the quiet crisis at the heart of the EU. Even the most powerful countries no longer control the rules. France and Germany helped create the EU’s regulatory machinery. Now they’re stuck inside it, unable to turn it off or even slow it down. The US economy has grown more than 40 per cent since 2008, while the EU limps along at half that pace, shackled by its own rules and regulations. The commissioners in Brussels talk about dynamism. What they produce is paperwork.
Meanwhile, Keir Starmer is walking right back into this trap. Labour’s plan to realign with the EU’s regulatory framework is couched in the language of diplomacy. Yet as Martin Howe KC noted in his analysis for The Spectator this week, Starmer isn’t just realigning, he’s surrendering control over entire sectors, from agriculture to energy. The UK will be required to follow EU law, interpreted by EU judges, with no vote and no voice. What the PM sees as a return to reason means dragging British companies back into the red tape that even France and Germany are trying to escape. This is why Starmer’s ‘reset’ is so naive. Labour still treats the EU as if it is the only adult in the room – technocratic, sensible, measured. When in reality, its ‘sensible’ regulations are sheer madness.
Starmer is free to pick and choose which areas of EU regulation Britain engages with, at least for now. Britain is no longer bound by EU law. But everything coming from Starmer suggests he has a general, almost devotional, belief that European regulation is better. Alignment is portrayed not just as a pragmatic choice, but a moral one.
Meanwhile in Europe the cost of regulation is piling up. Growth is stagnant. Industry is hollowing out. The French press is full of business leaders complaining about the ‘regulatory frenzy’. Le Figaro counts 13,000 new EU rules since 2019. That works out to ten new rules per day. The directive on supply chains is just the tip of the iceberg. From farming to tech to energy, Brussels is issuing orders that national governments can no longer stop.
This is no longer a union of sovereign equals. The Commission proposes, the parliament postures, and the member states fall in line. France and Germany can moan, but they can’t unpick what Brussels and the European bureaucracy conjure up. They’re legally required to implement the directive into national law. Refusing would put them in breach of EU treaties and expose them to infringement proceedings before the European Court of Justice. The lesson here is that once you’ve signed up, there’s no going back. You don’t get to revise the regulations. You just comply.
Britain got out and was unshackled from this process. Brexit meant that British governments could decide how to regulate British companies. Starmer, in his eagerness to prove his grown-up credentials, is giving that away. Deal by deal, framework by framework. The logic of his approach, of constant alignment, will lead him there. And unlike France and Germany, he won’t even have a seat at the table.
Being inside the EU doesn’t mean you have control. It means you’re subject to decisions you can’t undo. Labour should pay attention to what even Macron and Merz are complaining about. Before Starmer continues down the path of ‘resetting the relationship’, he might want to ask whether the relationship is worth resetting. Because from where I’m standing, Brussels looks less like a partner and more like a constraint.
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