AIX-EN-PROVENCE, France, July 7, 2014 /PRNewswire/ --
Despite historically low interest rates, investment is slowing down, particularly in Europe. At the same time, growth remains limited. If global recovery has been rather hesitant, it is because growth is not significantly based on investment. In France, the debate on economic policy has focused on the choice between the supply or demand policy, and the issue of cost competitiveness, although the reason for French disengagement is most likely linked to low investment.
Today, ten priority measures, centred on Europe, are necessary in order to reinstate a culture of risk-taking by the government, companies, and private individuals:
1. Reassure investors, by clarifying the regulatory and fiscal framework
For example: improve visibility of future energy costs.
2. Share risks between private and public partners so as to mitigate risk aversion
Increasing State guarantees for private investments in high-risk and long-term projects, while continuing good incentives and regularly assessing projects.
3. Direct savings towards business financing
Create a 30 to 35% tax rate on the revenues of savings dedicated to productive investments. Another idea: replace the ISF (the French Wealth Tax) with a specific property assets tax.
4. Develop securitisation for SMEs to address their funding difficulties
Make minor adjustments to Basel III and Solvency II to lower the cost of these securitisation products for banks.
5. Restore the confidence of youth
Changing attitudes to failure. Encourage students to undertake apprenticeships and to become entrepreneurs.
6. Invest in the human capital of senior citizens
The intergenerational shock requires a more gradual transition between work and retirement, for instance by combining employment with retirement. To do this, create improved conditions for the employment of senior citizens.
7. Adopt a policy of investment in infrastructure and growth sectors on the European level
Target public investments by sector, not specific firms. Simultaneously, develop competitive clusters.
8. Increase the term of public debt maturity
Delay the repayment date of debt for as long as possible. This would allow States to benefit from the current low interest rates. This could also be achieved by issuing pooled bonds in the Eurozone.
9. Introduce "contractual arrangements" in the EU
Define, for each country, the fundamental structural reforms to be implemented in return for loans, guarantees, or an increase in the period of reduction of the public deficit. Simultaneously, create a flexi-security agreement throughout Europe, which could include unemployment insurance in the Eurozone.
10. Increase the flexibility of immigration rules for skilled labour
Migratory flows make for more vibrant economies, stimulate job creation and encourage long-term growth.
Read the full Declaration at http://www.lesrencontreseconomiques.fr
SOURCE Le Cercle des Economistes