Spend it at home: current account surpluses in the EU

April 2, 2024--EU leadership needs to identify the factors that hold investment back and the incentives that could persuade investors to stay in Europe
The European Union faces huge investment gaps. For the climate and digital transitions alone, EU countries need to find or encourage annual investment of at least €481 billion each year, over and above what is already planned. This amount is much larger if one includes defence spending needs, the reconstruction of Ukraine, and spending to prepare for potential health crises in the future.

And yet, despite these huge investment gaps, the EU continues to send a large part of its savings outside its borders. It has huge savings but prefers to invest these abroad rather than within its own borders. The European Commission forecasts that nine EU countries will have current account imbalances in 2024. Of these, five will have current account surpluses that can be as large as 10% of GDP. The EU overall is forecast to have a surplus exceeding 2.5% of GDP by 2025.

In nominal terms, EU GDP is about €18 trillion. A surplus of 2.5% of GDP thus represents about €450 billion. If the EU could use these excess savings, it would manage to cover its climate and digital investment gaps almost in full. Solving the enormous inconsistency of having big investment gaps while running with large current account surpluses is urgent and complex.

ESAs warn of risks from economic and geopolitical events

September 10, 2024--The three European Supervisory Authorities (EBA, EIOPA and ESMA-ESAs) today issued their Autumn 2024 Joint Committee Report on risks and vulnerabilities in the EU financial system. The Report underlines ongoing high economic and geopolitical uncertainties.