Regulatory Outlook: What deregulation and simplification mean for regulators in the UK, EU, and Middle East

This outlook was written by Bloomberg’s Regulatory Affairs team.

• While there is a new focus on ‘Deregulation’ and ’Simplification’ for regulators globally, the regulatory landscape is likely to become even more complex as cross border divergence grows, timelines shift and implemented requirements are overhauled.
• The most far-reaching changes to regulation in EMEA are happening in the areas of sustainable finance, banking capital rules and digital finance.
• EMEA regulators are aiming to maintain their green finance ambitions whilst also boosting their competitiveness by taking some firms out of scope of new requirements.
• Banking capital rules are an area where there has been the clearest impact as both the UK and EU delay implementing key parts of Basel 3 market risk requirements.
• Gulf markets continue to progress their economic diversification efforts with the support of government initiatives and regulatory frameworks.

Over the past decade and a half, the financial services industry has been subject to an increasing array of regulatory requirements as policymakers sought to restore financial stability and improve investor protection in the aftermath of the 2008 financial crisis.

While much of this work continues to this day, not least as new forms of financial intermediation and technological innovation continue to drive the salience of financial stability and investor protection, the wider regulatory agenda has broadened to include more novel mandates around issues such as sustainable finance, operational resilience, and digital technology.

As such, it is common for regulated firms in the financial sector to now be subject to various climate-related risk management and disclosure requirements. Similarly, the adoption of artificial intelligence (AI) across the sector has also prompted the scrutiny of policymakers, who are looking to set standards and provide clarity accordingly. These novel regulatory mandates exist on top and alongside the traditional mandates of transparency, investor protection, and market integrity.

Yet, while firms deal with this complex array of requirements, recent geopolitical and economic cycles now mean that ‘de-regulation’ and ‘simplification’ agendas are in focus.

This piece explores what we are likely to see across EMEA over the course of 2025.

United Kingdom

The politics of regulatory change loom large in the UK as the relatively new Labour Government, that came to power in July 2024, seeks to reassure international investors and deliver on campaign promises of higher economic growth.

Chancellor Rachel Reeves in late 2024 warned that certain elements of the post-crisis regulatory agenda had “gone too far” and has since tasked each of the UK’s regulators to propose specific reforms that support growth. The sense of urgency around this agenda has only been accelerated by the regulatory agenda on the new administration in the US.

In the UK, this reformed regulatory agenda is already starting to take shape.

On the banking side, the Bank of England delayed the Basel bank capital requirements by one year until January 2027, to allow for more certainty on Basel implementation plans in the US. Work is also underway to rethink the UK’s Senior Managers and Certification Regime following concerns that the current framework has become “overly costly” for firms.

On savings and investments, the Government is looking to use a forthcoming Pension Schemes Bill to significantly consolidate the UK pension system in a bid to drive growth and scale, generating better returns and delivering investment in the UK economy. The Financial Conduct Authority is expected to soon set out proposals to rethink the framework governing the UK’s investment management sector.

Turning to the UK’s anti-trust environment, the Government has removed the Chair of the UK’s Competition and Markets Authority (CMA) and has begun the process of reviewing the CMA’s mandate in an attempt to speed up decision making and enhance the UK’s reputation as a destination for international investment.

With AI now a particularly relevant technology topic, the UK Government’s ‘AI Action Plan’ lays the groundwork for reform of the UK’s copyright regime to ensure that the country’s text and data mining regime is at least as competitive as the EU. Moreover, the UK AI Safety Institute has been re-named as the UK AI Security Institute to better align with the priorities of the new US administration.

As the US withdraws from the Paris Agreement, the UK is pushing ahead with its environmental goals while looking to achieve long-term economic growth. Policy efforts are already underway to implement the Government’s Industrial Strategy, including work to establish a credible transition finance market in the UK. While the US SEC scraps its climate disclosure agenda, the Government is planning to consult on its endorsed version of the International Sustainability Standards Board standards and outline next steps on implementing transition plan disclosure rules. It remains to be seen whether the UK will follow in the EU’s footsteps and introduce its own Taxonomy, with an update planned to be released later this year.

On regulation to address climate risks, the Prudential Regulation Authority will be issuing a revised version of its supervisory expectations on climate risk management (SS3/19) for banks and insurers, while the Financial Conduct Authority considers whether to expand its Sustainability Disclosure Requirements (SDR) regime to overseas funds.

Middle East

Against a turbulent regional backdrop, the Gulf Cooperation Council (GCC) markets continue to progress their economic diversification efforts with the support of government initiatives and regulatory frameworks. The GCC includes the economies of Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Bahrain and Oman.

While GCC monetary policy is usually guided by the US Federal Reserve and strength of the US dollar – to which GCC currencies are pegged, regulators continue to strengthen local frameworks, in particular around accelerated compliance and financial regulations related to data sovereignty. For example, recent Data Protection Laws (PDPL) in the UAE and Saudi Arabia provide comprehensive frameworks for data protection and privacy rights. Data sovereignty is expected to become a more significant issue, with regulators likely to utilize data sovereignty regulations to incentivize onshore investments.

Know Your Customer (KYC) compliance regulations continue to be reinforced across the GCC, in response to the increasing presence of global companies in the region, with regulators including the Central Bank of the UAE, the Saudi Central Bank (SAMA), and the Qatar Financial Centre Regulatory Authority, further enhancing anti-money laundering (AML) measures for financial institutions.

Additionally, there is an increase in focus on developing a robust debt capital market (DCM) framework as an alternative funding source. While bank lending remains dominant in the region, recent strategic plans announced by regulators in Saudi Arabia and Qatar, for example, aim to streamline issuance processes, increase transparency, and attract a wider pool of global investors to strengthen DCM resilience.

Lastly, cross-border regulatory cooperation among GCC countries will be another key focus this year. The upcoming fund passporting framework for the GCC, set for implementation this year, marks a significant milestone in regional financial integration. By allowing investment funds licensed in one GCC country to be marketed and sold across member states, the initiative enhances capital mobility and makes the region’s investment landscape more competitive.

European Union

EU policymakers are set to advance a pro-growth regulatory agenda this year that prioritises competitiveness to ensure that the EU remains an attractive and dynamic market. Regulators have pledged to streamline existing rules and reduce unnecessary compliance costs that could disadvantage European firms in an increasingly competitive global economy.

In the wake of the High Level Report by former European Central Bank President Mario Draghi, the EU has committed to an “unprecedented simplification agenda” designed to enhance European competitiveness, attract investment, and reduce regulatory fragmentation across member states. While “simplification” has been a priority for some time – especially given the EU’s highly-regulated environment – the direction of US regulatory agendas is expected to reinforce and accelerate this push.

Changes can be observed at the structural level too: to drive this agenda forward, the EU has appointed a new Commissioner for Implementation and Simplification, tasked with coordinating the Commission’s response and ensuring that regulatory changes reflect the needs of businesses.

Regarding sustainable finance, the European Commission recently tabled a proposal for an Omnibus simplification package, which is expected to impact sustainability reporting and corporate governance requirements, as well as wider sustainability rules through targeted legislative changes to existing legislation. In particular, the Commission has proposed to significantly roll back the number of EU and non-entities that must disclose a range of sustainable finance metrics and KPIs under the CSRD and Taxonomy Regulation and limit the extent to which companies will need to identify and address harm caused by themselves or business partners in their value chains. Negotiations on the Omnibus proposals are expected to be lengthy and complex given the political and sensitive nature of the issue which is closely tied with the EU’s broader sustainable finance agenda.

In short, the EU is aiming to strike a balance between competitiveness and climate leadership. The institution wants to reduce regulatory complexity and foster economic growth whilst also maintaining their credibility in key policy areas such as climate action, defense, and technology. How the EU reconciles these competing priorities will shape its regulatory agenda in the years ahead.

On the prudential front, the EU has undertaken significant reforms to tackle systemic risk and implement the Basel Standards. While this has delivered major benefits to financial stability in recent years, EU leaders are at the moment pondering whether increasing capital requirements are limiting banks capacity to lend and enter certain activities that support growth. As a result, there is an ongoing debate on a cost benefit analysis assessing whether the EU can rebalance this without increasing systemic risk. As the geopolitical landscape continues changing rapidly, there is a focus on prioritizing economic growth and competitiveness.

The first practical conclusion of this new political and regulatory agenda under the EU is expected to be delay of the date of application of the market risk prudential requirements under Basel III to 2027, following similar measures in the UK and US to avoid creating an international uneven playing field for EU banks in their trading activities.

Similar efforts are already materializing in the space of digital policy after five years of intensive lawmaking to implement the EU Digital Strategy with landmark legislation on digital markets, content moderation, AI, data sharing and cyber resilience. The focus has now shifted towards supporting firms in the implementation of the rules. With that purpose, the European Commission will focus on performing a fitness check streamlining existing digital rules to ensure red tape and reporting requirements are proportionate. The first step in that direction has been the announcement of the withdrawal of a proposal for a regime on AI liability, which barely advanced through the legislative pipeline in recent years.

Conclusion

While headlines may give an impression that a new focus on ‘Deregulation’ and ‘Simplification’ may result in reduced regulatory workloads, the reality is that the landscape is likely to become even more complicated for globally active firms as divergence widens

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