The European Commission will explore how pension funds could enable people to invest their savings into the region’s economy as part of a new five-year plan.
The Competitiveness Compass, released on Wednesday, outlines the Commission’s latest strategy, along with priority actions, to boost the European economy.
“The EU has fallen behind the US in advanced technologies, while China has caught up in many sectors, and is winning the race for leadership in certain new growth areas,” said the Commission.
“The root cause is a lack of innovation.”
One of the biggest challenges identified in the report is the lack of venture capital available to European start-ups.
The EU accounts for 5% of global venture capital funds currently raised, compared with 52% in the US and 40% in China, it noted.
Among a long list of initiatives to help overcome this challenge was a commitment to “work on the potential of private and occupational pensions to help EU citizens plan for their retirement and channel their savings into the economy”.
“In parallel, the Commission will act to remove barriers to market-driven consolidation of financial markets infrastructure,” the report added.
It wants to promote the use of equity investment over bank lending, in part by introducing measures into the Savings and Investments Union that boost venture capital.“
The report stressed that “longstanding hesitations must be overcome”, and said the Commission will present in 2025 a Strategy on a Savings and Investments Union, followed by a set of specific proposals, to enable wealth creation for EU citizens and mobilise capital for projects made in Europe.
Collaborating with private investors and the European Investment Bank, the Commission will introduce an investment programme focused on disruptive technologies such as AI, clean tech, critical raw materials, energy storage, quantum computing, semiconductors, life sciences, neurotechnology and biotechnology.
Elsewhere, the Competitiveness Compass said “pension reforms should be coupled with initiatives that promote longer working lives, support active and healthy ageing and create more inclusive labour markets”.
Climate and sustainability
The Commission promised to “stay the course” when it comes to its climate commitments and its upcoming Clean Industrial Deal, saying that decarbonisation policies can be a “powerful driver of growth”.
However, it confirmed its plans for a “far-reaching” simplification initiative, including reductions to current requirements under the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive and the Taxonomy Regulation.
The first legislative proposal will be tabled in February, and will “ensure tight alignment of the data required with the needs of investors, proportionate timelines, focus on the most harmful activities, financial metrics that do not discourage investments in smaller companies in transition, and obligations proportionate to the scale of activities of different companies”.
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