HOW THE EUROPEAN PRIORITIES FOR 2026 AFFECT THE BUSINESS ENVIRONMENT

The year 2026 is shaping up to be a pivotal one for the European Union’s economic policy. Both the European Commission’s Work Programme for 2026 and the priorities of the Cypriot Presidency of the Council of the EU clearly signal a strong focus on enhancing competitiveness and being “open to the world.” In addition, they prioritize reducing the regulatory burden, strengthening economic, energy, and digital security, and ensuring the full and effective functioning of the Single Market.

The European Commission's 2026 Work Programme and its business-related priorities

The European Commission defines 2026 as “Europe’s Moment of Independence.” By “independence,” the Commission does not mean isolation, but rather the Union’s capacity to ensure its own economic resilience while remaining open to free trade.

At the core of the programme is a major simplification of legislation. Out of a total of 47 planned legislative initiatives, 25 have a clear objective of reducing administrative and regulatory burdens. The Commission has set specific targets:

• a 25% reduction in administrative burden overall;

• a 35% reduction in administrative burden for small and medium-sized enterprises (SMEs);

• more than €8.6 billion in annual savings for businesses in the EU.

Key simplification tools include the so-called “Omnibus” legislative packages, which cover: energy product legislation; taxation; the automotive sector; environmental requirements; food and feed safety; and medical devices. The aim is to streamline reporting, accelerate permitting procedures, and adapt EU legislation to changing market conditions.

The Commission also foresees 25 proposals to repeal outdated or ineffective acts, as well as 20 evaluations (stress tests) of existing legislation, with the goal of eliminating overlapping and inefficient rules.

The single market, industry and investment

The Commission states its ambition to “complete” the Single Market by 2028 by removing remaining barriers to the movement of capital, services, energy, and digital solutions. Several key initiatives are of particular importance for businesses:

• Creation of a “28th regime” – a single legal framework for companies operating cross-border within the EU, which could significantly facilitate business activity in more than one EU market.

• European Innovation Act and the introduction of a “fifth freedom”: the free movement of knowledge, data, and innovation. This is crucial for technology companies, R&D centers, and the startup ecosystem.

• Completion of the Savings and Investments Union, including easier access to finance for innovative companies, startups, and SMEs.

• Updating competition and merger rules so that they take into account not only price effects, but also contributions to innovation, sustainability, and strategic autonomy.

Energy and the Green Transition

High and volatile energy prices are acknowledged by the Commission as one of the main factors undermining the competitiveness of European industry. As a result, 2026 priorities include strengthening the Energy Union; modernizing and expanding electricity grids; reducing administrative barriers to cross-border energy projects; and accelerating electrification and investment in clean technologies.

On the industrial side, the Commission will propose:

• a Circular Economy Act, aimed at developing markets for circular products and reducing dependence on imports of critical raw materials;

• the establishment of a Critical Raw Materials Centre, which will monitor supply, coordinate joint procurement, and support strategic stockpiling.

Priorities of the Cypriot Presidency

The motto of the Cypriot Presidency of the Council of the EU for the next six months is “An Autonomous Union. Open to the World.” For businesses, this translates into three key directions.

Economic security

According to the Cypriot Presidency, this will be achieved through implementation of the 2023 Economic Security Strategy, protection of critical infrastructure and technologies, and reduction of vulnerabilities in supply chains. This implies stricter requirements in some sectors, but also greater predictability and stability.

Competitiveness and regulatory clarity

Over the next six months, full support will be given to the Omnibus simplification packages, the completion of the Single Market, and measures supporting SMEs and innovation.

Trade and external partnerships

Market diversification is a core priority, emphasized by the Cypriot Ambassador to Bulgaria during the discussion meeting on Thursday, 8 January 2026. Strengthening a functioning multilateral trading system and more effective implementation of existing trade agreements are seen as essential.

On 27 January, Cyprus stated before the European Parliament that the Presidency will prioritize the Consumer Agenda for 2030, rapid progress on all digital omnibus files, and the conclusion of negotiations on customs reform and rules on the posting of workers. Discussions also focus on simplifying the regulatory framework for SMEs, reducing dependence on non-European suppliers, and integrating SMEs into strategic supply chains.

Mihalis Damianou, Minister of Energy, Commerce and Industry, stated that EU trade relations should be based on rules-based, open, yet frank relations with other countries, while at the same time protecting EU values and legislative autonomy.

Nikodemos Damianou, Minister of Research, Innovation and Digital Policy, noted that the Presidency will work on the Digital Networks Act and on promoting research to stimulate innovation and retain talent.

The position of BusinessEurope

BusinessEurope clearly supports the EU’s strategic direction but places strong emphasis on effective implementation. In its declaration adopted at the Council of Representatives meeting in Nicosia, it sets out six key messages to the Cypriot Presidency.

Unity and trade diversification

In a context of heightened geopolitical instability, BusinessEurope stresses that the EU must act in unity to effectively protect its economic interests globally. European business supports the agreement reached with the United States on tariffs, while also calling for rapid ratification of agreements such as EU–Mercosur and EU–Mexico, and progress in negotiations with India and ASEAN countries.

Real and acelerated reduction of regulatory burdens 

The Nicosia declaration underlines that the promised 25% reduction in administrative burdens for all companies and 35% for SMEs must be achieved through swift adoption and effective implementation. It explicitly expects the Cypriot Presidency to finalize pending Omnibus packages without delay and to simplify the Pay Transparency Directive to facilitate its transposition and application by businesses.

A fully functioning  Single Market

According to BusinessEurope, remaining barriers in the Single Market have an effect comparable to tariffs of 44% on goods and 110% on services, severely undermining competitiveness. The Cypriot Presidency should accelerate implementation of the Single Market Strategy and develop an ambitious roadmap to 2028, with a strong focus on eliminating barriers stemming from national “gold-plating” of EU legislation.

Affordable energy and a feasible climate policy

The declaration reaffirms the commitment to climate neutrality by 2050 but stresses that targets must be backed by real economic conditions for investment in decarbonization. BusinessEurope calls for affordable and predictable energy, mobilization of significant public and private investment, and accelerated deployment of necessary infrastructure. A stable, technologically neutral regulatory framework and effective protection against carbon leakage are crucial. If the Carbon Border Adjustment Mechanism (CBAM) proves insufficiently effective, the phase-out of free ETS allowances should be postponed.

Skills, employment an flexibility for companies

Population ageing and labor shortages require simultaneous increases in employment and productivity. While the Union of Skills is a positive step, it is not sufficient on its own, according to BusinessEurope. It must be accompanied by new initiatives that do not restrict company flexibility. The declaration warns that future acts, such as the Quality Jobs Act, should not undermine competitiveness, industrial policy, or the deployment of innovation, including in artificial intelligence and remote work.

More investment without tax burdens 

BusinessEurope notes that although the EU invests a similar share of GDP as the United States, it lags significantly in strategic areas such as green technologies, digitalization, and research. Deepening capital markets within the Savings and Investments Union is therefore essential, including the removal of barriers to cross-border capital flows. Regarding the upcoming Multiannual Financial Framework, European business calls for maintaining increased funding for competitiveness, innovation, and key programmes such as Horizon Europe, InvestEU, and the Connecting Europe Facility, without further increasing the tax burden on companies.

What this means for Bulgarian business

The European priorities for 2026, together with the strategic framework of the Cypriot Presidency, outline an environment that will directly affect Bulgarian companies. Some measures, although well-intentioned, carry risks of additional costs, new requirements, and administrative burdens that could negatively impact the business climate. Expectations can be grouped into several time horizons.

Short-term opportunities and risks (up to 1 year)

In the short term, businesses may face increased compliance costs stemming from new regulatory regimes related to economic security, cybersecurity, and protection of critical technologies. Despite promises to reduce administrative burdens, the introduction of Omnibus packages may create temporary uncertainty, require adaptation of internal processes, and generate additional consultancy costs. SMEs, with their limited administrative capacity, may be disproportionately affected.

Opportunities:
Adoption of the legislative packages will lead to simplified procedures, faster permitting, and reduced administrative costs, particularly for SMEs. Regulatory predictability will also increase through the repeal of outdated acts and evaluations of existing legislation.

Medium-term opportunities and risks (1-5 years) 

In the medium term, new European standards on sustainability, circular economy, and digital networks may require increased capital and substantial investment in modernization, certification, and technological upgrades. For many Bulgarian companies, this could pose a financial challenge. Removal of Single Market barriers will increase competition from larger, better-capitalized European firms, putting pressure on local producers and service providers. Labor markets will face additional requirements related to job quality, training, and social standards, increasing employer costs.

Opportunities:
Full use of the Single Market—such as the introduction of the 28th regime and removal of remaining service barriers—will facilitate cross-border activity, particularly for IT, outsourcing, and high-tech companies. Development of energy infrastructure and broader use of Power Purchase Agreements (PPAs) and Contracts for Difference (CfDs) will improve energy cost predictability. Circular economy rules will create opportunities for innovation and new business models, while also requiring adaptation to higher sustainability standards. Labor market initiatives on skills and job quality will necessitate investment in training, automation, and talent attraction.

Long-term oportunities and risks (over 5 years)

In the long term, industrial transformation driven by decarbonization, electrification, and the circular economy may require significant capital investments that not all companies can afford. If mechanisms such as CBAM and ETS are not adapted to the realities of less developed economies, Bulgarian energy-intensive industries may lose competitiveness. Additional ESG reporting, transparency, and risk management requirements may increase administrative burdens and require new internal structures and systems. Delays in capital market reforms could leave Bulgarian firms at a disadvantage compared to competitors in countries with more developed financial ecosystems. Stricter economic security and supply-chain controls may limit access to certain markets, technologies, or suppliers, raising costs and reducing flexibility.

At the same time, completion of the Single Market by 2028 and deeper integration of the Savings and Investments Union will create conditions for higher competitiveness of Bulgarian companies. Easier access to capital, greater integration into European value chains, and expanded export opportunities through new trade agreements are expected. Companies that adapt early to new sustainability, corporate governance, and technological neutrality standards will be better positioned in European and global competition.