The European Commission wants to direct a larger share of household savings towards businesses, innovation, industry, and the continent's defense. Approximately €10 trillion is currently held in bank accounts, savings accounts, and other highly liquid investments, which contribute little to the direct financing of the European economy.
European households save more than Americans, but invest far less in financial markets. According to the European Central Bank, nearly a third of their financial assets are held in cash or deposits, compared to about a tenth in the United States. Furthermore, a significant portion of their equity investments benefits non-European companies.
Up to an additional 800 billion euros needed each year
The European Union would need an additional €750 to €800 billion in investment per year by 2030. This funding must support, in particular, the energy transition, digitalization, new technologies, industry, and European defense capabilities. Since public budgets cannot bear these expenses alone, Brussels wants to attract more private capital.
The future Savings and Investment Union aims to facilitate this shift in spending through simplified accounts, tax advantages, and products accessible with small initial investments. The choice of investments would remain in the hands of individuals. However, the project's success will depend on the ability of financial institutions to offer attractive solutions while clearly explaining to savers the risks of loss associated with equity investments.
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