Investing in Europe: Need for convergence between North and South

At a very crucial time for Europe, during which attracting investments and ensuring a balanced investment base in European regions are necessary elements for growth and economic recovery, a report on the 'Attractiveness of investing in Europe' by MEP Rodi Kratsa was adopted by the European Parliament in plenary in Strasbourg.

"We urgently ask for growth to create wealth and employment, to encourage the competitiveness of the Union globally, and to increase economic and regional convergence within the EU. Growth will originate mainly from entrepreneurial initiatives and investments," Rodi Kratsa stressed.

She added: "Our goal needs to be dual: firstly, Europe needs to remain the first investment destination at a global level - a position that is at stake given the strong global competition from new investment destinations; secondly, investments need to contribute to balanced growth and cohesion within the EU."

The report explores in detail the measures that need to be taken, at both national and EU level, to restore the confidence of markets and investors in European economies, mainly as regards the countries of the South, given the risks that prevail due to the fiscal crisis.

The Rapporteur stressed that 26% of investors consider Northern Europe attractive, particularly the United Kingdom. In contrast, today only 3% of business leaders are interested in investing in Southern Europe.

"We must urgently fully exploit the benefits that the euro, the structural funds and the Single market offer, as well as the specific comparative advantages of EU regions in attracting domestic and foreign direct investment. Designing and speedily exploiting innovative financial instruments, such as project bonds and public-private partnerships, with a more active participation of the European Investment Bank in promoting investments that will contribute to the recovery of EU economies, should not wait."

The report calls for a European, comprehensive and integrated strategy for investments, within the framework of the EU 2020 Strategy, to enhance the EU's effort to achieve higher growth rates and create jobs, particularly in countries that face weak growth or recession, as is the case in Greece.

Nowadays, the largest percentage of investment comes from the United States, whereas the significance of investors from emerging economies, and particularly China, is continuously increasing. To record this data and monitor progress in investment policy, the Rapporteur proposes the creation of an 'Observatory for investment' under the European Commission, targeted at promoting the EU globally as an investment destination and enhancing investment policy through studies and proposals particularly focused on European cohesion, convergence and competitiveness.

According to the Rapporteur's recommendations there is also a need for:
 

• increasing investment in research, innovation and education
• the removal of bureaucratic barriers and other regulatory inflexibilities
• encouraging cross-border entrepreneurship and cooperation
• promoting greater coordination of fiscal, tax and economic policies across Member States
• a more active role for the European Central Bank in injecting liquidity
• promoting cooperation between economic actors among Member States and complementarities between their economic activities
• encouraging macro-regional strategies, such as the ones involving countries of the Mediterranean, and better use of the European Neighbourhood Policy in the North and South of Europe
• concluding free trade agreements with the EU's major trade partners, with balanced and mutual protection of the contracting parties' interests
• attracting institutional investors to participate in EU venture capital funds as well as promoting synergies between the EU and sovereign wealth funds from third countries
• an active role for the EU at a global level in financial supervision, macroeconomic balance and defending European attractiveness and competitiveness