The European Parliament Committee on Economic and Monetary Affairs has published a draft report (dated 12 March) on facilitating investments and reforms to boost European competitiveness and creating a Capital Markets Union. The report identifies challenges facing the EU, including the risk of economic decline and its perceived inability to protect itself from territorial threats highlighted by the Russia-Ukraine war as well as the strategic realignment of the U.S. The EU is therefore exploring ways to improve its budgetary headroom and mobilise private capital for investment to provide financing for defence capacities, while continuing to support the green reindustrialisation and to invest in education and research. It is noted that businesses are turning outside the EU to gain access to finance and resources and often scale up in foreign markets.
The draft report proposes measures designed to address the challenges facing the EU and to promote the integration and efficiency of capital markets in the EU. This includes mobilising private investment and easing access to finance, including through: the creation of an EU-wide capital market; repatriation of clearing services to the EU; aligning Member States' legislative frameworks as part of the simplification agenda; and the development of proposals aimed at creating instruments to help channel household investments towards productive investments. It also recognises the need for substantial public sector investment, recommending the establishment of a dedicated instrument within the European Stability Mechanism and recommending the European Commission publishes a report on the future design of an EU safe asset. It welcomes the European Commission's upcoming proposal for a new EUR150bn financial instrument to boost EU defence capabilities and proposes the establishment of an economic intelligence unit to identify European industrial needs and market opportunities.
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