The Confederation of Swedish Enterprise welcomes the European Commission’s focus on capital markets and the strategy and ambitions for the Savings and Investment Union. Strong, well-functioning capital markets are critical for businesses and are key to achieving the EU’s long-term goals, such as the twin transition, a more competitive and resilient EU.
However, it is clear that the EU’s long-term challenges can only be resolved by much needed competitiveness reforms. Only by providing strong foundations for businesses in the EU can we succeed in creating the productivity growth which will enable achievement of other goals. It should also be pointed out that financial market outcomes are greatly driven by the real economy, and what is often perceived as funding shortfalls more likely reflects a lack of investment opportunities. Therefore, a more supportive business environment will also lead to larger and more active capital markets.
The goal should be to make the EU attractive to both domestic and foreign investors. Caution is warranted when it comes to attempts to harmonize financial market rules across the EU, and we therefore welcome that the Commission puts an emphasis on the need for reforms at the national level. The full potential of EU capital markets can only be realized through a coordinated effort by both the EU institutions and individual Member States.
It is important to leverage the diversity in the EU by improving each individual market through a structured process of peer exchanges, support and pressure to drive reform at national level. It is clear that many issues are more effectively resolved in the Member States. In this respect the EU has an important leadership role, not least to showcase good examples and solutions.
We welcome the idea put forward by the Commission that the Savings and Investments Union should also be better integrated into the European Semester process. We encourage the Commission to put forward a more detailed proposal for establishing an enhanced peer review process and a national reform scorecard at the EU level, e.g. via integration into the European Semester.
As recognized by the European Commission, there are significant benefits to households increasing their capital market engagement. Citizens would enjoy higher returns and businesses would receive enhanced access to finance. It is important that any savings accounts intended to increase household participation in capital markets be attractive for investors, easy to use, require an absolute minimum of administration and offer the possibility of investing in a wide range of assets.
We believe that encouraging households to co-invest in public entities, as suggested in the strategy presented, would displace investment in private companies, thereby limiting access to finance. Experience suggests this would also lead to capital being used less efficiently, which in turn would be detrimental to the EU’s long-term goal of increased productivity growth. Derisking private investments with public funds suffers from the same issues, as these funds originate from the private sector where they could have been used more efficiently. Furthermore, if derisking is pursued, it is important that the risk is shared between the public sector and private investors. This would limit incentives for private investors to take excessive risks.
Given the view of the European Commission that EU and national programs to develop growth and venture capital should be further developed, we wish to point out that Sweden has a poor experience with public venture capital. The policy pursued in Sweden during the 1970’s and 80’s ended with massive losses for taxpayers as supported companies did not survive, mainly because of international competition. Research shows that government subsidies can distort competition, lead to inefficient resource allocation, and foster political corruption. If the state fails to choose the right sectors to invest in, it can result in loss of public funds and stagnating or negative economic growth. Both the former and latter are part of the Swedish experience which is why we have a sceptical view on what active industrial policy and public venture capital can achieve. Instead, focus should be to create conditions that lead to private capital investments, such as creating a business environment that is conducive to the creation and growth of successful companies.
We welcome the Commission’s clear commitment to ensure that, in implementing the Listing Act, rules in delegated and implementing acts are simple and that burdens are minimized, making EU public markets more attractive. This is also key to support European issuers and secure that they remain competitive.
While single supervision may seem beneficial in theory, in practice it risks creating a rigid and detached supervisory framework that lacks the necessary understanding of national market conditions. A one-size-fits-all approach to supervision would fail to account for the diverse structures and dynamics of national markets. Rather than pursuing full centralization, the focus should be on enhancing cooperation and information exchange between national financial supervisory authorities, ensuring efficient oversight while maintaining adaptability.
Effective supervision requires deep local knowledge and the ability to respond swiftly to market developments—something that is difficult to achieve through a centralized model. While convergence in supervisory practices may be beneficial in some areas, it is essential to safeguard the flexibility needed to address national specificities. Moreover, there is a risk that supervisory harmonization could, over time, lead to increasing pressure for regulatory harmonization, which may not be appropriate or desirable. A ”do no harm” approach should be used, ensuring that market flexibility and innovation are not unintentionally undermined.