European firms are expecting a tough year in financing, EIB says
The prospects for corporate investment within the European Union are bleak, the annual investment report of the European Investment Bank said on Wednesday.
The investment bank's annual report, which provides an overview of the EU's investments and major drivers behind them, points to tighter monetary policy and waning public support linked to the pandemic and the energy crisis as being behind the negative prospects.
The report credits the EU's capacity to absorb pandemic and energy crisis-related economic shocks to well-coordinated accommodative fiscal policies. The flexible fiscal policies allowed support for firms and households in distressed times.
"This resilience and past accomplishment have come about largely thanks to a well-coordinated EU policy response," the newly appointed bank's president Nadia Calviño said, while opening the second edition of the European Investment Bank's Group Forum in Luxembourg.
The recent reinstatement of EU's fiscal rules, which were suspended since March 2020 in response to economic hardships caused by Covid-19, is expected to curb public spending across the EU, according to the report. This will directly impact private investment and consequentially, the EU's growth and competitiveness.
The report highlights multiple challenges to the EU's competitiveness - climate climate change, the accelerating pace of digitalization, de-globalization and ageing.
To remain competitive, the report recommends improving productivity, encouraging innovation, addressing skill gaps, scaling up new technologies and supporting young, dynamic firms.
