Investment and Investment Finance

The European economy is in a phase of recovery, but heated debate persists on fiscal policy, monetary policy, regulatory frameworks and the long-term outlook for growth. Many questions remain on the macro-financial environment influencing investment. Can we now stop worrying about secular stagnation? What stimulus is being provided by monetary policy? Have European corporates deleveraged enough? Can they now support a possible normalisation? How can we better exploit synergies between fiscal and monetary policy? How can we make public investment less pro-cyclical in Europe? How can we strengthen the financial regulatory framework yet also foster risk-sharing and further capital markets development? Reviewing the evidence on recent investment activity in Europe, the panel will discuss what is driving investment trends, whether there is a need for further policy support, and the role that government investment should play. How should policy makers respond to the trend of slow aggregate productivity growth?

Innovation and technological progress are the most important drivers of economic growth over the longer term. While only a fraction of firms are active at the technological frontier, the spread of innovations throughout the economy is also vital, as is adjustment to changing demands for skills. Indeed, EIBIS results reveal that persistent skills mismatches are seen as major impediments to investment, innovation diffusion and growth in Europe today. The panel will debate the nature of the skills mismatch in Europe, its impacts, and how we need to respond. Does uncertainty affect investment in innovation and skills differently than other types of investment? What policies can address gaps in the availability of skills to support the process of convergence and European integration? How can investment in capacity for training along the entire work-life cycle serve to accompany technological change and reduce the skills mismatch? What role can the EIB play in implementing these policies?

The recent financial crisis was arguably longer and deeper in Europe than in the rest of the developed world, partly owing to Europe’s strong reliance on banks in its financial system. Even today, EIBIS results suggest that pockets of tight access to external finance remain in several European jurisdictions. This panel will discuss the weakness and strengths of the European banking sector and how it differs from financial systems elsewhere. It will also touch upon the capital market union, its expected design and the current gaps. Turning to policy, it will discuss how we can increase the financial resilience of corporates, diversify their sources of finance, and facilitate the development of young and small corporates that were disproportionately affected by the crisis. Is non-bank financing on the rise in Europe? Should its share in financing increase further and is there a role for policy makers to enhance this process?