Policy has a role to play
Governments now need to change tack and support investment. Credit is plentiful – only 6% of SMEs and 3% of large firms say they have problems raising funds. But the pandemic has limited the ability of some firms, particularly in Southern Europe, to finance investments with their own funds.
Targeted financial incentives could promote the transformative investment in digitalisation and climate change that Europe requires. European firms that received incentives to digitalise in the last three years, for example, were almost twice as likely to invest more in digitalisation as a response to the pandemic.*
As financial and economic conditions return to normal, policy needs to focus on accelerating the momentum for green and digital investments that will ultimately make Europe more competitive. To do so, though, Europe must deal with key investment barriers:
- 79% of firms say that a scarcity of workers with the right skills is standing in the way of their growth and investment plans.
- Uncertainty about regulatory environment and taxation are hampering firms’ investments in climate change.*
To stimulate investment, the European Union needs to set a clear path for decarbonisation and increase the financial advice and technical support available for climate investments.
