MNI: Letta Report To Propose EU Savings And Investment Union

Former Italian Prime Minister Enrico Letta will propose a European Savings and Investments Union in order to fully leverage EUR33 trillion of private sector savings for pressing strategic and industrial needs, according to a draft of his report on the future of the EU’s single market seen by MNI.

"A concerning trend is the annual diversion of around EUR300 billion of European families’ savings from EU markets abroad, primarily to the American economy, due to the fragmentation of our financial markets," said the draft, which will be presented to the bloc’s leaders at their summit in Brussels on Wednesday and Thursday this week.

By fully integrating financial services within the EU’s Single Market, the new Savings and Investments Union would help complete the bloc’s Capital Markets Union, keep Europe's private savings at home and also attract additional funds from abroad, the report will state.

STATE AID

In his report, Letta also addressed the relaxation of state aid at the national level in recent years which has favoured those countries with more fiscal space, such as Germany, and threatened the level playing field of the Single Market.

"A way to overcome this dilemma could be to balance a stricter enforcement of state aid at national level and the progressive expansion of EU level funding support,” he wrote.

He will propose a State Aid Contribution Mechanism which would require Member States to allocate some national funding to "financing pan-European initiatives and investments.” This would "unleash" European public investments and help develop a competitive European industrial strategy capable of counteracting initiatives announced by other global powers, like the Inflation Reduction Act in the U.S., the report will say. (See MNI: EU Set To Consider New Agency To Fund Defence-Officials)