04 December 2013

Commissioner Barnier: Long-term investment is key for renewed sustainable growth in Europe

Translated from the French

At the end of 2013, Europe began its transition from a recession which seemed endless to the gradual return to growth, which is expected to reach 1.4 per cent in the EU in 2014. The crises have been and remain violent and it is normal for individuals, businesses and investors to remain wary. Faced with a financial system where we have seen the ups and downs, investors, large and small, attach great, maybe sometimes too great importance to liquidity. They want to be able to recover their investments quickly, which means that they focus on the short term.

Today I want to tell investors that it is time to look beyond immediate events and to invest again in our future. It's time to rediscover a long-term vision - and this is precisely why I wanted to launch the debate in Europe on the long-term financing of our economy:

• To convince companies to invest and finance the stimulus;
• To encourage investors to be less focused on short-term liquidity;
• To strengthen the trust of our citizens, so that they put their savings in the future of our economy.

Enabling firms to access new sources of long-term capital will fill the order books of SMEs, consolidate our industrial sectors and create the jobs of tomorrow.

To achieve these goals, we need to remove obstacles to the long-term financing. In this respect Europe has many strengths, including a high level of savings, a high level of foreign investment and the measures the EU is taking to restore confidence in the financial sector. And yet, beyond the preference for liquidity, several factors still hamper investment in the long-term: fiscal deficits and the dependence of the European economy on a changing banking system.

With the Commission's Green Paper, we wanted to bring out new ideas to encourage long-term investment, in four areas:

1. The ability of financial institutions to channel savings into long-term investment projects.
2. The efficiency of financial markets and intermediation of investment
3. SMEs' access to financing option
4. Public policy.

We must continue the path of fiscal consolidation to reduce the effects of crowding out and provide more space for public funding.

What has the Commission taken from the consultation carried out in spring 2013?

The numerous responses highlight the importance of the macro-economic environment and the stability of the legislative, regulatory and fiscal framework to support long-term investment. It is clear that there is no miracle solution to promote long-term investment and that it is necessary to act simultaneously on several levels. Among these, it is essential to support the diversification of the EU funding system, keeping the banks at the centre whilst developing opportunities for institutional investors and market financing. Finally, a strong point of consensus: the encouragement of long-term investment requires joint action, involving the market, Member States, Europe and other parts of the world.

Full speech (in French)

© European Commission