The risk a coup of stopping investment is large

Crisis puts Europe in a difficult situation, characterized by high levels of public debt. By pulling the alarm, financial markets have meant that this situation was untenable and that adjustments were necessary. All Governments face difficult choices on the structural reform of public expenditures and tax regimes, knowing policies of fiscal tightening will weigh on growth, which will make the adjustments in question even more difficult to operate... The risk a coup of stopping investment is large. Our eyes, it would be a mistake. Support the long-term growth must be the absolute priority. In Europe, demand for infrastructure will remain very strong for the next decades. Major investments in innovation, renewable energy, telecommunications and new transport systems are necessary to ensure sustainable growth, while preserving the European competitiveness.

The long-term public infrastructure spending have a positive impact on the rate of productivity growth. These are areas that also have more immediate benefits in encouraging additional investments and, therefore, creating growth and employment. Finally, this type of investment could contribute to a reorientation of growth in Europe, a model of consumption to high carbon intensity to a model with a focus on public goods and to the reduction of CO2 emissions.

The more attractive to reduce public debt and restore financial stability is to advance the average growth rate. Also should Europe stimulate growth by directing significant flows of long-term capital-investment to regional and cross-border initiatives having a positive impact on economic and social cohesion. But where will you find the resources to finance the long-term investment programs The increase in public deficits and the requirement of an exit strategy are such that it is not possible for the time being to mobilize the desired investment volume. Nevertheless, in several European countries, the household savings rate is high. In addition, at the global level, pension funds, insurance companies and sovereign wealth funds have a growing need of financial instruments to type long term "moderate performance/low risk". These sources of capital could be used to finance European strategic investments, while partly relieving public budgets.

You can reach some of these objectives by developing funds European investment of long term, such as the Marguerite EU 2020 Fund that we launched in 2009. Other instruments need to be studied (bonds issued projects and new security devices). In any event, it will be that the European legal framework is adapted so that the long-term investments are better supported, as the former European Commissioner Mario Monti has explained in his report on a new strategy for the EU single market.

Said capitalism "of creating shareholder value" preferred the maximization of the value in the short term. In addition, the accounting valuation rules at the price of market, also applied to long term investors, do not make a distinction, in the balance between short term investment values and values of long term investment. Regulation and accounting experts are working today to introduce accounting criteria to distinguish between the different time horizons corresponding to different types of investments such as proposed by the European Commission based on the Larosière report. Accounting rules adapted to long term investors would contribute to the stabilization of international financial markets and to mitigate the volatility in the short term.

These are the reasons why our four institutions founded last year long-term investors (LTIC) Club. Thanks its second annual Conference, to be held in Rome tomorrow, the LTIC intends to promote this new vision for the growth of long term with the assistance of experts, investors and national and international leading decision-makers, which we welcome.