Access to finance / financial affairs

Although the supply of finance is improving due to improved capital and liquidity positions of European banks, we remain concerned that overly burdensome financial regulation is likely to be an obstacle to the supply of finance. On the demand side, we are seeing an increase in business intentions to invest both in industry and in services. But as the recovery gradually starts to take hold we will need to ensure we have begun to address the issues of access to finance as companies start to want to take their investment projects forward. We therefore believe the European Commission’s initiatives to build a Capital Markets Union extremely important.

Overall, we believe there are five key areas under which EU policy-makers need to take action to create a Capital Markets Union:

• Improve information flows regarding growth prospects for small and medium-sized companies;
• Ensure that financial regulation finds the right balance between improving financial stability and supporting investment;
• Develop alternatives to bank finance;
• Restore confidence in securitisation;
• Promote tax systems which support equity-financed investment.

Overall, as part of its broader investment plan, the EU needs to unlock alternatives to bank finance and improve the business environment.