‘EU is not a think tank’ says Summit keynote Guy Verhofstadt
Guy Verhofstadt, former prime minister of Belgium and leader of the Alliance of Liberals and Democrats for Europe in the European Parliament today told delegates to the Pan European Fund Selector Summit in Lausanne that EU institutions needed to act more swiftly to grab the advantages offered by creating a single capital market.
Verhofstadt said that European Commissioner Hill is likely to put forward more concrete proposals by June for the Capital Markets Union (CMU). However, the broader process of pushing these proposals into becoming EU law as it stands could take so long that Hill might no longer be Commissioner once they come into effect.
This clearly means that the legislative process is taking too long at a time when Europe’s economy requires more investment more quickly in order to encourage growth, Verhofstadt added.
“The EU is not a think tank,” he said, adding that it should therefore not behave like one.
Comparing the speed at which the US was able to recover from the financial crisis via a combination of Tarp, asset purchases funded by the government and quantitative easing pushed by the Federal Reserve, Verhofstadt said that only now, some seven years after the US, is Europe putting itself into anywhere near a similar position to react to the crisis.
The glacial response rate from European political institutions means that it is likely banks have passed a stress test that is not stressful enough, while key sectors of the economy including telecoms, energy, capital markets and the digital economy have not been able to play their part in generating recovery because they are areas that have so far failed to be harmonised.
Creating a single capital market will be crucial to Europe’s growth in future. Verhofstadt argued that, for example, smaller businesses cannot use collateral in one country to access loans in another. Coupled with Europe’s continued heavier reliance on bank loans to access capital, as compared with the US, where businesses are more easily able to access other sources of capital, it means that a single capital market should be established “as soon as possible”.
Verhofstadt, who is recognised as belonging to the more federalist end of the spectrum of European politics, also said that for the eurozone to survive and prosper there would have to be closer political union.
“A country can survive without a currency – we see several examples of countries that have adopted the dollar or euro – but a currency cannot survive without a country.”
InvestmentEurope is reporting live from the Pan European Fund Selector Summit. To get all the latest views and news follow #FSSUMMIT @InvEurope on Twitter.
A full report of the event will be carried in the June issue of the InvestmentEurope magazine.