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Increasing EU industries, challenges and opportunities- focus on access to finance

Increasing EU industries, challenges and opportunities- focus on access to finance James Watson, Director Economics Brussels, 12 November2014. Outline. Importance of manufacturing Access to finance situation BUSINESSEUROPE access to finance priorities. Industry as backbone of the economy.

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Increasing EU industries, challenges and opportunities- focus on access to finance

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  1. Increasing EU industries, challenges and opportunities- focus on access to finance James Watson, Director Economics Brussels, 12 November2014

  2. Outline • Importance of manufacturing • Access to finance situation • BUSINESSEUROPE access to finance priorities

  3. Industry as backbone of the economy Direct and indirect employment in the manufacturing sector (2012) in 1000 Source: Eurostat (2013), WIOD (2013), calculations by IW

  4. EU is losing global manufacturing share Share of global manufacturing value-added Source: UN (2013), OECD (2013), Eurostat (2013), calculations by IW

  5. Manufacturing and Employment well below pre-crisis levels

  6. Recommendations for an industrial compact Industrial competitiveness throughout all policy areas

  7. Bank loans to corporations have fallen Result of both demand and supply factors

  8. Corporate bond issuance has risen

  9. Financial fragmentation has eased slightly Eg 3% Germany, Austria, 4% Portugal, > 5% Greece

  10. 5 Priorities for access to finance • Complete banking union • Right balance on prudential regulation • Attractive tax environment – no FTT • Use public funds to leverage private – EIB • Alternative financing routes

  11. The EU continues to lag on Venture Capital funding Venture capital funding (%GDP), 2011 (most cases)

  12. But VC investors may be acting rationally... Average US and UK fund performance Source: Nesta, Unchaining Investment

  13. Conclusion • Access to finance problems damaging growth and jobs • Likely to become increasing constraints • But investment and growth needs an attractive business environment • High policy uncertainty an issue • High costs of doing business in EU – regulation, energy, tax labour costs

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