It is safe to assume that Capital Markets Union was not at the forefront of too many voters’ priorities as they went to the polls in the European Parliament elections over the past few days. But the completion of EMU is crucial if the EU is to ever fulfil its economic potential.
Moreover, economic growth across the 27 member states is an important bulwark against the rise of political extremes.
CMU was first proposed in 2015 as a response to the 2008 economic crash that at one stage threatened to sunder the single market. It aims to develop a deep and liquid capital market across the EU, which would enable companies in every member state to access the funding needed to grow and expand.
Nowhere is this more important than in Ireland. In the years leading up to 2008, domestic Irish firms relied heavily on bank lending to raise capital. As part of EU Banking Union, banks are limited in how much they can lend to any one sector, including corporates.
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Irish firms have been doubly hamstrung in recent years. Some of the biggest companies that were listed on Euronext Dublin have quit the exchange and moved to much more liquid markets in the US. This has prompted fears about the future viability of the Irish stock market.
The rationale for CMU is compelling. The EU has an ambitious growth agenda, including embracing the opportunities presented by the digital economy and transitioning to the green economy. But as it stands, the EU is falling behind the US and China.
The completion of CMU has the potential to unlock billions in private capital across the EU that would stoke much-needed economic growth.
Ursula von der Leyen, seeking a second term as President of the European Commission, has said CMU is one of her main priorities. It must be hoped she follows through on that commitment and that CMU becomes a reality within the lifetime of the next parliament. There is a lot riding on the outcome for Ireland and every other member state.