Increasing EU industries, challenges and opportunities- focus on access to finance
James Watson, Director Economics
Brussels, 12 November2014
Outline
• Importance of manufacturing
• Access to finance situation
• BUSINESSEUROPE access to finance priorities
Industry as backbone of the economyDirect and indirect employment in the manufacturing sector (2012) in 1000
Source: Eurostat (2013), WIOD (2013), calculations by IW
EU is losing global manufacturing share
Share of global manufacturing value-added
Source: UN (2013), OECD (2013), Eurostat (2013), calculations by IW
Manufacturing and Employment well below pre-crisis levels
Recommendations for an industrial compact
ECONOMY ENERGY AND CLIMATE
SINGLE MARKET
EMPLOYMENT
ENTREPREN-EUSHIP
TRADE
Industrial competitiveness throughout all policy areas
Bank loans to corporations have fallen
Result of both demand and supply factors
Corporate bond issuance has risen
Financial fragmentation has eased slightly
Eg 3% Germany, Austria, 4% Portugal, > 5% Greece
5 Priorities for access to finance
• Complete banking union• Right balance on prudential regulation• Attractive tax environment – no FTT• Use public funds to leverage private – EIB• Alternative financing routes
The EU continues to lag on Venture Capital funding
Venture capital funding (%GDP), 2011 (most cases)
But VC investors may be acting rationally...
Average US and UK fund performance
Source: Nesta, Unchaining Investment
Conclusion
• Access to finance problems damaging growth and jobs
• Likely to become increasing constraints• But investment and growth needs an
attractive business environment• High policy uncertainty an issue• High costs of doing business in EU –
regulation, energy, tax labour costs
