Inspiration for the future

Inspiration for the future

Othmar Karas MEP

“It is vital that we further enhance the free flow of capital within the single market”

Commentary by Othmar Karas MEP, SME Intergroup’s Chair, European Parliament, EPP

“Europe is our future, we do not have another,” as Hans-Dietrich Genscher once said. “The Europe of tomorrow will be created by the Europe of today,” as Claus M. Finkelstein once said. Those words show us the way. We need a Europe that believes in itself and in its commitment to a strong economy for everyone.

What better way is there to foster this self-belief than reading the stories of Europeans who have achieved success? I am therefore very glad that London Stock Exchange Group has collected these 1000 success stories. We need these inspiring examples to show us the possibilities and capabilities of European entrepreneurs. There are so many talented men and women in all regions and sectors, our challenge is to give them the necessary economic framework, so they can accomplish their visions by themselves.

Besides the reduction of red tape and regulatory arbitrage, we need to focus on making Europe more attractive for investors. The European Commission estimates that we need to invest up to €1tn in transport, energy and telecom infrastructure networks before 2020. While much progress has been made in many European countries, when it comes to economic governance and the labour market, we still see a gap in investments compared to pre-crisis times.

While the European Fund for Strategic Investments (EFSI) was a first big step, we also need a Capital Markets Union (CMU) that sets the right framework for a better flow of capital within the Single Market. Through the CMU, the European Commission and the European Parliament recognise the need for more diversified funding sources and especially for a greater share of financing from capital markets. It is clear that the well-established role of banks will be crucial when it comes to SME financing, but we need more funding options, so we can add to this existing pillar and widen the economic tools of European entrepreneurs.

We also need to establish a more equities- and risk-sharing culture, which enhances additional support for high-growth companies. It is vital that we lower the barriers to SMEs accessing capital markets by improving the availability of financial information on them. The recent proposal for the revised Prospectus Directive is an important step because the EU IPO Task Force report clearly showed that a reduction of issuing costs would be the main incentive for companies to raise capital on public markets. It is vital that we further enhance the free flow of capital within the Single Market.

We need the political will to achieve this goal. Currently there are still too many national restrictions for the cross-border movement of capital, as well as a fragmentation of the capital markets. If we remove these national barriers we can attract more investments and hopefully add further chapters to the next edition of 1000 Companies to Inspire Europe.