EU must tap trillions of euros in private savings to keep up with US and China, investors say
Europe’s Challenge: Mobilizing Private Savings for Economic Transformation
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By Charlie Devereux and Yoruk Bahceli
Calls to Unlock Private Savings
LONDON, June 16 (Reuters) - Europe must tap into trillions of euros of private savings to fund the economic transformation it needs to compete with the U.S. and China, investors and policy makers said on Tuesday at a Reuters Next event.
Expert Opinions on Investment Needs
"We sit on €35 trillion ($40.7 trillion) of private savings, which is enough to make all of those transitions," said Benoit Peloille, chief investment officer at Natixis Wealth Management.
"We have to build enough confidence and stability to make sure that private savings don't stay on very low risk assets and go and finance all of those transitions," he added.
Policy Coordination and Momentum
Warnings from Former ECB Chief
Former European Central Bank chief Mario Draghi warned in 2024 that the EU needed to better coordinate industrial policy, make quicker decisions and attract massive investment or face a "slow agony" as the U.S. and China's more streamlined economies race ahead through innovation in AI.
Signs of Progress
There are signs of political momentum and that European policymakers have heeded Draghi's advice, said Alison Martin, chief executive officer for life, health and bank distribution at Zurich Insurance.
Recent EU Initiatives
She cited initiatives such as the Digital Omnibus Agreement and the creation of savings and investment accounts as signs of the EU's willingness to deregulate and encourage investment.
"I think the next six months are going to really show us whether Europe will be stepping up," Martin said.
Comparing Europe and the U.S.: Competitive Advantages
The EU has a long way to go to catch up with the U.S. which has several competitive advantages including much cheaper energy prices, more flexible labour laws and a far faster rate of deployment of AI, said Nizar Trigui, chief technology officer at global logistics firm GXO.
Bigger and Faster: The U.S. Lead in Unicorns
BIGGER AND FASTER
The U.S. accounts for 55% of all the world's unicorns, or startup companies worth more than $1 billion, according to the UN's World Intellectual Property Organization. That includes Space X, which on Tuesday became one of the world's five most valuable companies following its initial public offering last week.
Peloille said this was due to the U.S. being an easier environment in which to raise capital.
The scarcity of unicorns in Europe was "absolutely not acceptable" given the weight of Europe in the world, he said.
EU Efforts to Foster Unicorns
Nadia Calviño, president of the European Investment Bank, agreed that the EU was on the right track but said it needed to "go bigger and faster."
She said initiatives such as the European Tech Champions Initiative had created a dozen unicorns since it was created by the EIB in 2023.
"European unicorns do exist. Now we need them to get larger and to have more," Calviño said.
Further Information
View the live broadcast of the World Stage here and read full coverage here.
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(Reporting by Yoruk Bahceli; Writing by Charlie Devereux; Editing by Alexandra Hudson)
