Investment and Investment Finance in Europe: Investing in Competitiveness

This report focuses on investment and investment finance in Europe and discusses both cyclical and structural factors affecting the same. It takes a closer look at the European competitiveness challenge and suggests that competitiveness gaps are increasingly seen as the main cause of divergent economic development patterns between countries. It notes that Europe faces a two-fold economic challenge. Firstly, post-crisis, Europe still suffers from weak confidence, with would-be investors sitting on ample liquidity but afraid to invest. Secondly, Europe faces the long lasting challenge of declining productivity and competitiveness, which has made it more vulnerable to economic turmoil. The report suggests that getting the conditions right for investment to take place and to accelerate the competitiveness enhancing reallocation of resources is crucial for the future of Europe. It covers the following sections in detail:

• Gross fixed investment and intangible capital with a focus on investment in tangible capital, intangible assets, and recent trends in R&D investments;
• Investment finance with a discussion on recent developments in investment finance and SME finance in Europe;
• Investing in competitiveness with a focus on assessing competitiveness, mapping European export performance, and productivity enhancing reallocations and the role of the financial system.