Each year, Europeans invest roughly $325 billion in companies and financial assets outside the region. Officials in Brussels say they have a plan to end that “capital flight.”
America’s once highflying stock markets are stumbling, and their counterparts in Europe are faring much better. Shares in European companies have comfortably outperformed the S&P 500 in recent months, as President Trump’s trade war has prompted investors to revisit their assumptions. Officials in Brussels say that the rally could be even bigger.
The European Commission, the executive arm of the European Union, is set to introduce a proposal on Wednesday to tap trillions of euros parked in Europeans’ savings accounts as part of a strategy to incentivize investors to back Europe Inc.
The draft plan has a second objective: encourage consolidation among European asset managers, a sector long overshadowed by Wall Street. It is part of a larger vision to shake up the region’s byzantine capital markets, a long discussed effort that has taken on new urgency since Mr. Trump won re-election.
“It’s because of Trump, but also the need for more integration in so many sectors,” said Fabrizio Pagani, a partner at the investment bank Vitale and a former top economic adviser to the Italian government. “There is so much positive catch-up to do.”
Advisers to the commission are calling on member states to slash what they call “unnecessary” red tape to ease the consolidation of the continent’s army of asset managers, which are vastly outgunned by U.S. giants such as BlackRock, Vanguard and Fidelity.
They also want to see member states introduce tax breaks for investors and pension funds, especially those who put their money into European financial assets — not just stocks, but in bonds and venture funding for private companies. Another idea being floated is to create Europe-wide investment and savings plans to bolster retail investing in Europe.