The European Commission has adopted its strategy for the savings and investments union (SIU), a key initiative to improve the way the EU financial system channels savings to productive investments. It seeks to offer EU citizens broader access to capital markets and better financing options for companies. This can foster citizens’ wealth, while boosting EU economic growth and competitiveness.
The savings and investments union is a horizontal enabler that will create a financing ecosystem to benefit investments in the EU’s strategic objectives. As highlighted in the competitiveness compass, Europe’s capacity to address current challenges – such as climate change, rapid technological shifts and new geopolitical dynamics – demands significant investments, which the Draghi report estimates at an additional €750‑800 billion per year by 2030, and which is further impacted by increased defence needs. Much of these additional investment needs relate to small and medium sized enterprises (SMEs) and innovative companies, which cannot rely solely on bank financing. By developing integrated capital markets – alongside an integrated banking system – the savings and investments union can effectively connect savings and investment needs.
Why a Savings and Investments Union?
The European Union has the means to secure its own economic future and has an enormous potential to better serve its citizens and businesses. The EU benefits from a talented workforce, many innovative and successful companies, a large pool of savings and a predictable and sound legal environment, based on common principles and the rule of law. Europe’s stock exchanges count together for trillions of market capitalisation, it is home to UCITS, the globally most successful brand of investment funds, and has become the global leader for sustainable finance issuances with more issuances than the Americas and Asia & Pacific regions together. The business case for Europe is there – the Commission’s Competitiveness Compass defines the areas that are fundamental for growth and competitiveness, through flagship measures under the three transformational imperatives: closing the innovation gap, a joint roadmap for decarbonisation and competitiveness and reducing excessive dependencies and increasing security. Financial markets contribute to a thriving economy that creates better jobs with higher salaries for today’s workers and future generations and offers adequate retirement income in light of demographic developments. The EU’s resilient and well-regulated financial system has significant untapped potential to channel more savings to productive investment. EU citizens stand to benefit from well-developed, integrated and efficient EU financial markets that can offer them access to more wealth creation opportunities.
The development of a Savings and Investments Union is a crucial priority as it aims to improve the way the EU financial system channels savings to productive investment, creating more and a wider range of financial opportunities for people and businesses, notably sustainable businesses. The EU offers attractive investment opportunities, including to investors from third countries, but it is important to render it an even more attractive investment destination by enhancing its overall growth potential. Such attractiveness should be secured by means of strong aggregate demand, support to private investment, access to cleaner and more affordable energy, raw materials and advanced technologies, as well as a simpler business environment in a single market with fewer barriers.
The rapidly evolving geopolitical landscape, the challenges of climate change and technological developments have profound implications for the future of the EU and reviving the economy must be a key focus of the EU’s response. Major policy challenges lie ahead, in the fields of security and defence, sustainable prosperity and economic competitiveness, and also democracy and social fairness, as the EU must urgently prepare to play a very different role on the global stage. The EU’s economy will be instrumental in this respect, and it is now vital to take a more ambitious approach to policy coordination among Member States, reflecting the imperative to act collectively to unlock significant untapped potential for growth, employment and wealth creation.
At the same time, persistent fragmentation limits the benefits to be gained from the EU’s single market. For financial services alone, the IMF estimates that internal barriers to the single market are equivalent to a tariff of over 100 per cent, implying a huge cost to the EU economy. Urgent action is required to address these barriers if the EU’s prosperity and economic and geopolitical strength are to be secured. Clearly, the EU financial markets and wider economy can be much more than the sum of its national parts and, as argued in the Draghi Report, a vibrant and resilient economy is a pre-condition for the EU to manage its own destiny. The EU’s international partners are already adapting to the new geo-economic realities, and so the EU must also respond decisively.
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Frequently Asked Questions
Factsheet: The savings and investments union – Connecting savings and productive investments
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