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EIB Investment Survey 2023: European Union overview
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[EIB Investment Survey 2023: European Union overview ]
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EIB Investment Survey 2023: European Union overview
Download the report
[EIB Investment Survey 2023: European Union overview ]
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EIB Investment Survey 2023: European Union overview
[EIB Investment Survey 2023: European Union overview ]
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Corporate investment in the European Union is holding up better than expected, despite slowing economic growth, tightening credit and rising uncertainty. While conditions are difficult, firms realise they need to make up for a lack of investment over the past three years in critical areas like digitalisation, climate change and the green transition, according to the results of the most recent EIB Investment Survey.
Two factors have buoyed investment: Strong demand after the pandemic helped firms build up financial reserves, and government policies had protected many of them from the worst effects of lockdowns and other brakes on economic activity. As those financial buffers shrink, higher interest rates and more onerous credit conditions could threaten investment.
European businesses need to invest strongly to remain competitive at home and internationally. Firms are increasingly under pressure to transform their businesses in several key areas, such as digitalisation, energy efficiency and their ability to withstand trade shocks.
At the same time, climate change is a pressing problem. EU firms are taking steps to reduce greenhouse gas emissions and invest in climate change initiatives, but they still need support with innovation and finance. European companies were strongly buffeted by the energy shock caused by Russia’s invasion of Ukraine, and they have reacted by focusing on energy savings and energy efficiency improvements, while also seeking to pass higher costs onto customers.
The European Investment Bank (EIB) has conducted the EIB Investment Survey annually since 2016, collecting data from around 13 000 firms in the European Union and the United States. The EIB Investment Survey: European Union overview looks at data collected for firms in the EU members and the United States, focusing on firm characteristics, performance, investment activities, sources of finance, and challenges firms face, such as climate change and digital transformation.
The report’s analysis of the macroeconomic context, which includes a high level of uncertainty and tight monetary policy, suggests that corporate investment remains higher than expected considering the headwinds.
So far, investment has been buoyed by the strong finances of firms and policy support rolled out during the pandemic.
As companies spend down their financial reserves, they will be forced to look externally for funds. At that point, they will feel the bite of more expensive credit. The outlook of firms for the political and economic climate is also turning negative, with more EU companies expecting this to deteriorate in the next 12 months.
The rapid evolution of digitalisation, high energy costs, and the green transition are pushing firms to invest to remain competitive. Along with tighter, more expensive credit, 81% of firms say they are having trouble finding employees with the skills needed to push forward investments. Firms are making progress, however, particularly in digitalisation and energy efficiency.
Nearly one-third (31%) of EU firms say that the climate transition and the ongoing switch to greener energy sources present a risk to their business. However, 29% of firms see the green transition as an opportunity.