A key priority for the European Commission should be on increasing investment in Europe. Investment as a share of the gross domestic product (GDP) started to pick up gradually as of 2014, after it experienced large falls during the financial crisis.
In the latest BusinessEurope Spring Economic Outlook, we explain why we expect investment in the EU to grow, in particular as companies increasingly reach the limits of their current production capacity.
Despite this, investment has yet to show a more robust pick-up. We still see a sizable investment gap compared to pre-crisis levels. Currently, the share of investment in GDP is 17% and thus 1.5 percentage points below the pre-crisis level. At the current rate of investment growth, it would take up to 2024 to bridge the investment gap compared to pre-crisis levels.
BusinessEurope Director General Markus J. Beyrer commented: “Higher investment is key to laying the foundations for Europe’s future competitiveness and prosperity. We welcome the fact that stronger recent economic growth is accompanied by a strengthening of investment. However, we can also see that policy uncertainty and geopolitical tensions are still limiting a more substantial rebound in investment”. He added that for a stronger increase of investment, there needs to be improvements in the business environment, tackling of still high debt burdens in several EU countries, and work done to increase our growth potential by implementing the right product and labour market reforms.