On 27 March, the European Commission published its proposals concerning the “long-term financing” of the EU economy. According to Michel Barnier, Commissioner for the internal market, the EU needs to diversify its ways of financing and improve access to finances for the SMEs, which are the backbone of EU economy. To assure this, the EC would like to mobilize pension funds and insurance companies, which hold large sums of money, to invest more in the economy. Today, the EU economy relies on bank loans in terms of financing – 2/3 of investments come from banks, compared to only 1/3 in the US. The banks were hit quite severely by the financial crisis and are therefore not in proper condition today to make long-term investments in SMEs as would be needed. The EC estimates that only 1 in 3 SMEs got a credit from a bank in the Netherlands or in Greece in 2013. Pension funds money and improved access to capital markets could help the economy substantially by providing enough financing possibilities.
Also, the EU will need large investments in energy infrastructure, telecoms and transport in the coming years, some estimates reach €1 trillion and further investments will be needed to meet the Europe 2020 strategy goals, as well as the new 2030 climate goals which are being prepared. The EC will therefore come with legislative proposals that would ease the regulation of work-related pension funds, thus allowing them to place long-term investments in the SMEs, as well as with other measures that should be disclosed later.
8th April 2021