In her State of the Union Address, Commission President Ursula von der Leyen named the completion of the Capital Markets Union as one of the priority projects, which she intended to proceed with straight away. This was followed a week later, on 24 September 2020, by a Communication which announces 16 concrete proposals for the coming months.
As one of the responses to the 2008 Financial and Economic Crisis, in 2015, former Commission President Jean-Claude Juncker presented a Green Paper as well as an Action Plan on the Capital Markets Union. The intention was to improve in particular the framework conditions for investments by increasing mobilisation of private finance, by improving corporate finance and by harmonising current national corporate and tax law regulations.
However, as this intended European single market for the capital market has not been competed yet, the Commission established a High-Level Forum in 2019 with the aim to develop concrete actions. Its final report forms the basis for the present Communication on A Capital Markets Union for people and businesses: with overall 16 actions, European companies shall get better access to financing to meet the targets of the EU’s green and digital transformation on the hand. On the other, saving and investment options shall be improved, and national capital markets better coordinated to create a genuine single market.
The concretely announced actions include among other the creation of a EU-wide platform that provides investors with access to financial and sustainability-related company information, a common and standardised system for withholding tax relief at source or an initiative on harmonising insolvency proceedings. In particular those actions, which target supervisory, tax and insolvency regulations in individual States, are to be welcomed. However, from the Chamber of Labour’s point of view, one should also emphasise that thoughts on sustainability within the meaning of prosperity orientation should be expanded. Apart from that, it cannot be the completion of the Capital Markets Union, which enables financing of important and necessary investments, especially regarding investments in public services or social infrastructure. What is needed is a reform of the Stability and Growth Pact to give Member States more independent scope to invest in future key projects on implementing the Green Deals, the digital transformation and a more social Europe. Finance Watch too, which fights as a NGO at EU-level for a fairer financial system, points out that the Capital Markets Union has to focus on financing a sustainable economy and must not harm financial market stability.
This week, on 28 September 2020, the President of the European Central Bank (ECB), Christine Lagarde, within the framework of her quarterly exchange before the European Parliament’s ECON Committee, provided a less than optimistic economic forecast: GDP is to shrink by 8 % in 2020; 5 % growth has been predicted for next year. Economic growth of 3.2 % is expected for 2022, which means that the Gross Domestic Product would only achieve the level of before the Coronavirus crisis at the end of the year. However, Lagarde stands by the ECB’s strategic review, which was initiated before the beginning of the pandemic and refers to the “The ECB Listens Portal”, where citizens will have the possibility to voice their opinion on the monetary policy strategy until the end of October.