In an article in “The Telegraph”, Tidjane Thiam, group chief executive of Prudential and chairman of the Association of British Insurers, and Katherine Garrett, chief executive of Alliance Trust PLC, underlined that “without a significant increase in business investment, underpinned by savings, a recovery may not lead to sustained growth”. The European Commission already recognized that “households are the main source of funds to finance investment”. What remains to be done? A lot.
The 2014 European parliamentary elections will set the tone for the reconfiguration of the European Parliament and the European Commission. EuroFinUse believes that the European Union is facing key challenges following the financial crisis that Europe has been going through for the lasts years. The “BETTER FINANCE Manifesto for the 2014 European Elections” as stipulated by EuroFinUse shows the way forward by outlining four financial policy demands to be presented to the newly elected MEPs in 2014.
The urgently needed post financial crisis recovery can only be achieved with a significant increase in long-term investment. Household savings can play a crucial role to boost the EU economy since savers and individual investors, when adequately protected, can shore up the real economy, bolstering long term investment for job creation and improving corporate governance.
Thiam and Garret believe it is time for governments to give clear incentives to save and show consumers the importance of good-value saving products. EuroFinUse couldn’t agree more. In the next five years, households must be put at the heart of long term savings. The promotion of the role and involvement of individual shareholders in the long term financing of the EU economy have to be on the European agenda. So how can this be done and how can EU institutions and governments contribute and promote this? In short: by enhancing minority shareholders rights and facilitating the exercise of voting rights, especially for cross-border voting.
A saving culture must also be endorsed and developed by governments in Europe. In their article Thaim and Garret highlight the UK's efforts in recent years and the fact that the government is taking the link between savings, investment and growth into serious consideration and attempting to to negotiate a good deal for British savers in dialogue with the EU over new capital rules for insurers known as Solvency II.
BETTER FINANCE calls for EU politicians and regulators to engage in the protection of savers and to encourage Europeans to take part in securing a long-term economic recovery. Over the next five years, the EU authorities should focus on the improvement and harmonization of savers’ protection. The authors also recalled that “savers have been the silent victims of the low level of interest rates and have seen their savings eroded in real terms”. This view is echoed by EuroFinUse and calls for an end to the ongoing destruction of the real value of EU citizens' savings have been directed at policy makers. The BETTER FINANCE Manifesto clearly calls for an end to "financial repression" through the "inclusion of all long term and pension saving products in the scope of investor protection rules and through the simplification and cost reduction of “packaged” product offerings".