Business leaders warn EU regulation is undermining investment and competitiveness

A steel industry giant and the head of a Gulf sovereign wealth fund have warned that excessive European Union regulation is constraining business activity and undermining investment.

Lakshmi Mittal, chairman of steelmaker ArcelorMittal, which was acquired by India-based Mittal Steel in 2006, wrote in the Financial Times that emissions trading rules were harming energy-intensive industries.

Mittal argued that low-cost, low-emission energy sources remain out of reach for the steel sector and other energy-intensive industries.

“Competitive electricity prices, low-cost green hydrogen, carbon contracts for difference, ‘green premiums’ for steel and decarbonisation enablers such as carbon capture and storage have yet to materialise,” Mittal said, adding that no company has the luxury of investing without a credible pathway to competitiveness.

Yasir al-Rumayyan, governor of Saudi Arabia’s Public Investment Fund, said the regulatory environment was discouraging international investors from allocating more capital to the bloc.

Speaking at a summit in Rome on Thursday, al-Rumayyan said regulatory challenges and certain laws expected to enter into force had seriously affected investors such as the Public Investment Fund, Saudi Aramco and chemicals group SABIC, not only in terms of making additional investments but also in maintaining their existing investments in Europe.

A new EU regulation gives Brussels the authority to block companies subsidised by foreign governments from participating in public procurement contracts, mergers and acquisitions, and even from selling goods and services within the single market.

Using that instrument, the European Commission launched an in-depth investigation into the acquisition of German chemicals group Covestro by Abu Dhabi’s state oil company. The transaction was ultimately approved.

Al-Rumayyan said he remained hopeful that European governments could find solutions to the challenges that were discouraging investors.

However, EU officials quoted by the Financial Times privately dismissed the complaints as lobbying efforts and argued there was no clear evidence that investment from the Middle East was slowing.

“If investors from the region are behaving more cautiously, it is probably related to the [Iran] war rather than our regulations,” one EU official said.

According to analysis by EY, foreign direct investment into the EU fell 7% in 2025, while a growing number of companies identified excessive regulation as a risk to doing business.

Rather than dismantling regulations, Brussels appears to be adding new layers. In March, it tightened its screening of foreign direct investment.