The EU is sitting on a mountain of assets that often gets overlooked in discussions surrounding economic growth and investment needs. The inactive assets are held by European households, who do not make enough investments in the stock market or private investment products. In this respect, the US is way ahead of the EU.
The mobilisation of private capital through retail saving and investing is the goal of the much discussed EU Capital Markets Union, nowadays also referred to as the Investment and Savings Union. Unlocking the capital would enable investment into sustainable growth, where the investment gap is currently so wide that public capital alone is not enough to fill it. The mobilisation of private capital would also give better opportunities for citizens to improve their own financial security.
The Finnish government’s measures to promote retail saving and investment have been contradictory. In its programme, Prime Minister Petteri Orpo’s government committed to reviving voluntary pension saving – only to take a U-turn in its spending limits discussion and discontinue the related tax incentives. This decision is all the more baffling in light of the fact that the EU is currently seeking ways to encourage, not discourage, personal financial preparedness for retirement.
President Ursula von der Leyen’s mission letter to Commissioner for Financial Services and the Savings and Investment Union Maria Luís Albuquerque was full of excellently aimed tasks. The letter obliges the Commission to review regulation in order to enable the mobilisation of the substantial amount of inactive private investment. The success of this hinges on EU legislators, who must take the aims of better regulation and simplification seriously.
Finnish business sectors and industries support the development of European capital markets. This development must be achieved by dismantling regulatory bottlenecks and applying a market-based approach. Private operators should be able to make their investment decisions independently, without public authorities controlling the competition through regulation.
Inconsistent and overly detailed regulation increases costs for market participants and, ultimately, for their customers. Both regulation and supervision must be harmonised. However, there is no point in dismantling perfectly good, existing solutions established in the EU – on the contrary, we should seek to spread them to other economic areas. Member states must work on building a more favourable saving and investment climate. The development of European capital markets has been gaining good momentum, and now is the time to make use of it.
Mari Pekonen-Ranta
Director, EU Affairs
Finance Finland
Santeri Suominen
Senior Legal Adviser, Capital Markets & Sustainable Finance
Confederation of Finnish Industries EK
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