Extracts from the speech by President Michel at the EIB Annual Economics Conference via video conference
I would like to express my best wishes to all of you for this new year. I would also like to express my gratitude for our great cooperation with you and your team.
It’s always a pleasure to speak at the EIB Conference. Today we face a highly unstable and unpredictable world with many challenges. COVID-19, climate change, digital, geostrategic competition, and security threats, to name just a few. We want to remain masters of our own destiny, and we must be able to respond decisively to all these challenges.
The European Union is increasing its ability to act autonomously — to safeguard our interests, to uphold our values, and to shape a better global future. And that’s why sovereignty, or strategic autonomy, is very high on the European Council’s agenda. Our sovereignty is underpinned by two critical areas: security and defence, and our economy, and they go hand-in-hand.
First, security and defence. This was the focus of our informal European Council meeting in Slovenia last September, where we agreed with the 27 leaders to speed up work on our Strategic Compass, charting a path to our future security and defence policy. Second, the economy — which I will discuss with you today. True sovereignty comes with robust and credible security and defence, and is reinforced with solid economic foundations.
Our economic strength is anchored in our main asset — our internal market of almost half a billion citizens. If we want to shore up our economic sovereignty, if we want to ensure prosperity to all Europeans, we need to shape tomorrow’s European economies. This will require massive investments — both public and private — to make our economies greener and more digital, and to spur growth and create jobs for decades to come.
In recent months, we have taken decisive action, we have made progress, and we have achieved a lot. Our European vaccination strategy is one of those concrete achievements. But 2021 was also marked by other achievements on the economic front. Together we protected people’s livelihoods and businesses and we laid the ground for a sustained recovery. This took courage, close coordination, and bold decisions at EU level. During this uncertainty, it ensured that our internal market continued to function smoothly.
Today we must remain determined in our policy response — to ensure a sustainable and inclusive recovery. We must also remain vigilant in protecting the health of our citizens. Omicron is a stark reminder of our responsibility to our citizens, today and in the future. And we must never let another pandemic find the world unprepared. That’s why rapid progress on the treaty on pandemic preparedness, which I proposed with Dr Tedros from the World Health Organization, is so vital.
Slowly but surely, we are moving away from managing the crisis to consolidating a sustainable, innovative, and inclusive recovery. This will strengthen our economic and social resilience. We have taken bold action to support our workers, our businesses and, more globally, our societies.
Together, we all contributed to protecting our societies from what could have been the worst economic crisis since the Great Depression. And this certainly includes the EIB Pan-European Guarantee Fund, that provides support for EU businesses in need. We acted together, we acted decisively, and we acted in a spirit of solidarity. And our track record in this crisis stands in sharp contrast to Europe’s difficulties after the Great Financial Crisis of 2008-2009. Rapid, coordinated action has made the difference. But we know we must remain vigilant. We must be prepared for the challenges ahead.
Our recovery from COVID provides a unique opportunity for transformation and innovation. An opportunity for the innovative retooling needed to thrive in the digital, post-pandemic world, and to make peace with our planet by switching to a carbon-neutral growth paradigm. This is a strong, lucid policy choice that we have made together. It will set Europe firmly on the path to carbon neutrality by 2050 and shore up our global leadership in smart green technology. EU leadership in addressing the green and digital transitions is our expression of European sovereignty.
This twin transition will require massive investment — like never seen before. The European Commission estimates the additional private and public investment needs at nearly €650 billion a year, until 2030. The green transition alone will account for 80% of these needs. And most of this investment will come from the private sector, which will need access to adequate financing. That’s why EU leaders — already in December 2020 — called for rapid progress on green finance. And you — at the EIB — you are frontrunners. You have led the way with green bonds since 2007.
Europe is full of innovators. But to grow and mature — from a start-up to a publicly listed company — they need access to financing. I strongly believe Europe can do better in getting the necessary capital to our boldest innovators and our most creative companies, especially when they need to scale up.
Venture capital investment in European high-tech firms is only about one-third of that in the US. This scarcity of venture capital too often leads our entrepreneurs to relocate elsewhere. That’s why our Capital Markets Union and our Banking Union are key to our future prosperity, to support our competitiveness and to channel private investment in our green and digital priorities. We need to progress swiftly on Capital Markets Union.
Europe’s digital future can be world-class. But it only depends on us. ‘Digitally Made in Europe’ or ‘Stored in Europe’ can be highly attractive European brands in the global marketplace. The public and the private sectors must come together to make it a success.
We need a paradigm shift and this means changing how we think, how we act — moving away from the overexploitation of natural resources to a sustainable and circular economy. It means maximising the vast potential of our digital resources, while protecting the safety and privacy of our citizens. Efficient regulation will play an important role. We have this power to influence and determine global norms. Designing predictable policies and enacting laws will strengthen corporate investment and instil confidence in businesses. Clear policies will speed up our climate initiatives in the Green Deal and Fit for 55.
Next Generation EU offers an extraordinary opportunity to bolster our recovery and to prepare us for the future. But we need to make sure this money is well-spent and goes to sound projects and high-quality innovation. Sound advisory services — like those you provide at the European Investment Bank — benefit entrepreneurs and ensure the best projects and most promising innovations have access to finance. Your services help all of us make the most of every euro invested.
Making ourselves stronger also means equipping our Union to meet the challenges ahead. COVID-19 has exposed the overdependence of global value chains. If we want to be more autonomous, we cannot be totally dependent on others for critical assets. Europe should not be entirely dependent on microchips manufactured in Asia, for instance.
We need a strategy that reinforces Europe’s industrial and production capacities. Because this will boost our sovereignty, boost our competitiveness and foster greater innovation in developing the technologies of tomorrow. It will also reduce our strategic dependencies and bolster our resilience in key areas — such as energy, digital, cybersecurity, and semi-conductors, for instance. This will require a stronger single market underpinned by a set of coherent policies: industrial, energy, competition and trade.
EU leaders will soon have a strategic debate on this comprehensive approach to economic policy, to increase our prosperity and to make Europe a global economic and political leader in the 21st century. That’s why our informal European Council on investment and growth in France, in March, will be important. We will continue to coordinate our action to sustain our economic recovery and strengthen our economic base.
Three areas are crucial. First, we must empower our internal market, the foundation of Europe’s prosperity. Second, we must channel money into the real economy in line with our priorities. We need to level up our Union’s financial architecture, to develop our industrial base, to support our innovators, and to bolster our strategic autonomy. And third, economic governance. It should reinforce our macroeconomic resilience, striking the right balance between sustainability and stabilisation. We will need effective rules to guide our fiscal policies, and these rules should be based on solidarity and responsibility and must be adapted to our bold objectives. Clarifying our post-pandemic economic governance will help us better coordinate our policies, for 2023 and beyond.
We are stronger, when our partners are stronger. We are more stable, when our neighbours are more stable. Africa is a good example. We need a new alliance with Africa, as they launch the African Continental Free Trade Area. We must seize this moment to develop connectivity projects between our two continents. Our EU-African Union Summit, in February, will be a great opportunity to create an Alliance of prosperity and stability.
The European Investment Bank plays a key role in supporting investment in Africa. In 2020 alone, the EIB invested in almost 60 projects for a record €5 billion, half of it going to the private sector. And 70% of EIB financing in sub-Saharan Africa benefited least developed countries or fragile states. Your financing of vaccine manufacturing capacity in Senegal and your financing of the world’s biggest solar power plant, in Morocco, are just two of your many successes in Africa. And your recently created EIB development branch will contribute to many more. I totally support your approach in this field.
In Europe, we have two assets that should fill us with pride and confidence: our single currency, the euro, and our people, the Europeans. The euro is already our engine for climate financing and a leading currency for investments in green projects - with around half of global green bonds issued in euro today.
And let’s not forget our people. A highly educated and highly skilled workforce. European citizens are our most valuable asset. So we must invest in our people: their talent, education, skills. This will fuel our innovative economies and build inclusive and fair societies that leave no one behind.
A new world is unfolding before our eyes, full of challenges but also full of exciting new opportunities. We have a clear vision and a compass to guide us. This vision is grounded in protecting our planet, maximising the vast potential of digital, and leading on the global stage. And we have the talent, skills and passion to make this vision come true.
Together, we can harness all these energies to ensure a robust recovery and a prosperous future for our people and for our societies.
Thank you again and my gratitude for the great cooperation between the EIB and the Council.