EU Leaders Seek Reforms to Attract Private Capital

European Union (EU) leaders reportedly aim to harmonize the member nations’ bankruptcy and corporate tax laws.
The leaders will call for this and other changes during a summit scheduled for April 17-18, Reuters reported Tuesday (April 9), citing a draft document it had seen.

The EU leaders will also seek the development of a European securitization market, better supervision of cross-border financial market players, easier ways to invest in shares of companies in the EU, and a retail investor-focused cross-border savings product, according to the report.

These planned proposals aim to attract more private capital to the EU, the report said.

They come at a time when EU nations are working to shift to renewable energy and a more digital economy and need private investments of 650 billion euros (about $706.5 billion) per year through 2030 to do so, per the report.

The planned proposals are meant to make the EU more competitive with the United States when it comes to attracting private capital, as investors currently find the U.S. market to be better organized, less complex and more liquid, according to the report.

While similar reforms have been talked about for 10 years, progress has been slowed by the different interests and legal traditions of the EU’s 27 member states, the report said.

PYMNTS Intelligence has found that 79% of European middle-market firms accessed working capital solutions in the past year.

That percentage reflected the second-highest need for working capital solutions among the five regions included in a survey, according to the “2023-2024 Growth Corporates Working Capital Index: Europe Edition,” a PYMNTS Intelligence and Visa collaboration.

Only those firms in the Latin America and the Caribbean (LAC) region had higher levels of working capital needs, the report found.

As for startups, it was reported in August that European startups were struggling to find financing and facing a steeper decline in venture capital funds’ investment than their counterparts in the United States.

The funding drought — which saw a 61% decline in the first half of 2023 — has forced European startups to cut costs, scale back their plans for growth and do more to get less.