Brussels Edition: Europe's investment problem

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Welcome to the Brussels Edition. I'm Suzanne Lynch, Bloomberg's Brussels bureau chief, bringing you the latest from the European Union each weekday. Make sure you're signed up. The EU's latest attempt to kick-start Europe's investment culture was unveiled today, as Brussels announced the latest stage in its Savings and Investments Union. Formerly known as the "Capital Markets Union," the rebranded policy is an attempt to create a truly single market for capital across the bloc. But despite the shiny new revamp, mobilizing private capital is something that Europe has struggled with for years. The EU is home to a whopping 33trillion euros in private savings, predominantly held in currency and deposits. Yet, historically, Europeans have tended to lack the risk appetite of savers in the US for example. In an effort to ensure the region's citizens get more bang for their buck, the European Commission announced a series of measures today. These include a new "financial literacy" campaign and a proposal for countries to encourage investment in savings and investment accounts in a bid to motivate retail investors. But the real meat of today's package is the tax measures. As Bloomberg first reported earlier this month, at the core of the proposal are tax incentives to encourage more ambitious investment strategies by European savers.  EU Financial Services Commissioner Maria Luis Albuquerque. Photographer: Kent Nishimura/Bloomberg EU officials believe that the complexity of tax compliance procedures when holding shares, bonds or investing in funds is a barrier to retail investors. The measures proposed by the commission include deductions for opening savings and investment accounts, exemptions on investment income, and a deferral system so that people are taxed only when they withdraw from the accounts.  However, the key challenge for the commission is the fact that tax matters are the proviso of individual member states - a competency they hold dearly. There is also the prospect that the new proposals will put additional burdens on providers at a time when the EU is trying to slash red-tape for businesses. Nonetheless, EU Financial Services Commissioner Maria Luís Albuquerque said it was time that Europeans make their money work better for them. "Investing is for the many, not just for the few," she said. "Of course investing involves risk, but without risk there can be no return."

The Latest

Chancellor Friedrich Merz wants Germany to drive the most important decisions in Europe again, putting him on a collision course with Ursula von der Leyen, the EU commission chief. Italian Prime Minister Giorgia Meloni's annual budget this week is set to reveal that the country's deficit will be back below the bloc's 3%-of-output ceiling by next year at the latest. Switzerland has offered to invest in the US gold-refining industry as part of its efforts to persuade the Trump administration to lower the 39% import tariff imposed last month. Sweden will oppose a push by Germany to water down the EU's 2035 deadline to effectively ban combustion engines in new vehicles, arguing it would punish carmakers that have made major investments in the green transition. The EU plans to introduce measures by the end of the year to close loopholes in one of its flagship climate policies, which was designed to stop industries from relocating abroad as the bloc shifts to a greener economy.   Russian liquefied natural gas shipments could be redirected to other parts of the world if the EU bans the imports while refraining from sanctioning one of the key facilities where it is produced, according to TotalEnergies CEO Patrick Pouyanne.

Seen and Heard on Bloomberg

Daniel Tannebaum Source: Patrick Nugent / Camera 1/Oliver Wyman Europe "will continue to need to be out in front" on Russian sanctions, as the US under President Donald Trump has essentially stepped back from the effort. That's the view of Daniel Tannebaum, Global Anti-Financial Crime Practice Leader at Oliver Wyman, who joined Stephen Carroll in Bloomberg Radio's Brussels studio this morning. He said the EU now needs to "educate the bloc in how to effectively enforce and police these sanctions."

Chart of the Day

French inflation picked up on an acceleration in the services sector and smaller declines in energy prices, though remained well below the ECB's 2% target. Consumer prices in the euro area's second largest economy rose 1.1% from a year ago in September after a 0.8% increase in August, statistics agency Insee said. Economists had predicted an advance to 1.3%. While inflation is picking up across the euro zone this month, policymakers are confident it will revert to their goal over the medium-term horizon that they focus on.

Coming up

The Atlantic Council's Transatlantic Forum on GeoEconomics continues in Brussels this afternoon. Speakers include EU Competition Chief Teresa Ribera and EU Economy Commissioner Valdis Dombrovskis French Prime Minister Sébastien Lecornu meets with heads of the National Assembly and the Senate this afternoon EU leaders meet for informal summit in Copenhagen tomorrow

Final Thought

In 2021, there were sometimes four flights a week from Baghdad to Minsk. In Daugavpils, in southeastern Latvia, authorities knew the schedule. "We know the time it takes to drive," Lt. Col. Vadims Grickovs, head of the border control and immigration service in the city, said. "So we waited for our friends on the border." Read our report by Aaron Eglitis and Peter Guest on how thousands of migrants attempted to cross into Latvia, Lithuania or Poland, in what officials in all three countries believe was a deliberate effort by Belarus — a close ally of Russia — to seed a humanitarian crisis in the east of the EU.

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