Capital Markets Union - unlocking European business finance

We in Europe have often found ourselves asking why we don’t have the major start-ups that the US has produced over the last 10 years.  Well, part of the answer is money – and getting it into the hands of budding entrepreneurs. There is plenty of money in Europe – but it is bound up in a banking system that it is divided across national boundaries. That is why the European Commission’s Capital Markets Union Action Plan, published earlier this week, is so important. This is a plan to get money moving around Europe so that businesses can get the finance they need to start up, scale up and create jobs for people across the continent.  

I have always been clear that the European single market has enormous potential – but it needs to change if it is to deliver meaningful benefits for working people here in Britain and across the EU. That is why I have put increasing the EU’s competitiveness at the heart of our reform agenda. The action plan marks a concrete step towards a more competitive single market which can turbo charge growth.

What this means in practice are lower costs of cross border investment, allowing everyone from innovative start-ups in Bristol to infrastructure projects across the Northern Powerhouse to find the finance they need to grow. Take the case of an Estonian entrepreneur setting up a business. Rather than just heading to their local bank branch to ask for a loan they will soon also be able to go to venture capitalists in Britain, private equity firms in France or a group of Angel Investors from a number of EU countries. That’s good news for business and good news for investors – which means good news for the economy as a whole.

And yes – this is good news for the City. This is a classic case of what is good for the UK also being good for Europe. With more than a third of UK private equity funds’ investments going to companies elsewhere in Europe, there is huge potential for SMEs across the EU to better access financing from the City. Right now, a staggering 94% of people across Europe have never bought a financial product outside their own country.

President Juncker and Commissioner Hill have this week delivered us with a strategy which takes us closer to achieving the genuine free movement of capital, a fundamental part of a successful EU economy. I want to say to them that the UK stands ready to work with them in the coming months to deliver on this ambitious action plan.