Following the European elections, the pressure to take effective measures for more competitiveness and growth in European economic policy is also noticeable on the financial markets. “The fact that almost nine out of ten DVFA investment professionals see an acute need for action here is hardly surprising,” comments Roger Peeters, Deputy Chairman of the association, on the results of the latest monthly survey. “What is more interesting is the order and weighting of the specific demands on Brussels from the investment professionals’ perspective, and how closely these resemble the German economy’s most recent appeals to the German government.”
Reducing bureaucracy as a top priority
When it comes to the economic policy measures called for, reducing bureaucracy is clearly at the top of the list. With 40% of possible multiple answers, it is well ahead of the other responses on offer – tax cuts for companies (24%), reduction of social benefits (18%), debt-financed investments, for example in green technologies (10%) and other measures (8%).
Concerns about Europe's competitiveness
Nevertheless, well over two thirds of participants (70%) expect Europe to become less competitive than China and the USA over the next five years. Only 7% expect Europe to be more competitive than it is today, and 18% see no change here by 2029.
Framework conditions are essential for economic stability and growth
Another question dealt with the framework conditions that European policy could use to at least secure the continent’s economic stability and growth in the long term. Surprisingly, with multiple answers possible, a total of 68% of DVFA Investment Professionals responded that improvements to the digital infrastructure (37%) and a return to a more market economy and competition (31%) were the most important. In contrast, the creation of a capital markets union came in third place among the most important framework conditions with only 18%. Climate protection and sustainable development accounted for only one in ten responses.
Concerns about overregulation in the financial sector
Of course, the regulation of the financial sector also played a role in this month’s question. The question was how financial regulation should change over the next five years in order to meet economic challenges. Here, the same pattern emerged that the vast majority of participants also advocate for the economy as a whole: regulations should not hinder growth and innovation, but rather promote them, especially digital and technological development.
More than half of the possible multiple responses (52%) were therefore in favor of relaxing regulation in the financial sector. This is not contradicted by the fact that almost one in three responses (31%) called for the introduction of new regulations, for example to promote digital assets. In contrast, only 10% of participants were satisfied with the existing regulatory framework. 7% were in favor of a further tightening of regulation in order to provide additional protection for the financial markets.
“Our investment professionals are clearly very concerned about Europe’s competitiveness in the world. With their comments and clear response rates, they complain about too much small-scale overregulation and unproductive bureaucracy,” Roger Peeters summarizes the responses. “Above all, the question of growth-promoting framework conditions shows that Europe is no longer just concerned with individual issues such as the completion of the single market through a genuine capital market union, but also and above all with a genuine systemic issue. Politicians, not only in Brussels, must therefore be reminded time and again that a ‘highly competitive social market economy’ is an explicit EU objective according to the EU treaties.”
Source: DVFA e. V., July 09, 2024
