Analysis and Publications

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To many, the European Union (EU) is a complex entity overburdened by rules. In The European Union Could Be Simple, Inclusive, or Effective. Pick Two., author Dimiter Toshkov, an associate professor at the Institute of Public Administration at Leiden University, presents the structural dilemma facing the EU: accommodating the diverse interests of twenty-eight member states while delivering effective policies for over 510 million citizens in a simple way.

The recent financial policy shifts agreed upon by European Union (EU) member states mark a move toward European economic growth and suggest a post-Brexit European capital market is starting to take shape.

On May 30, EU member states at the European Council set forth a series of regulatory policies designed to diversify the funding sources available to small- and medium-sized enterprises (SMEs) and early-stage companies. They also agreed to a regulatory policy regarding securitization.

These policy shifts are crucial to the creation of a common capital market in Europe that includes a larger role for market-based finance alongside banks in financing growth and innovation. They are also crucial to developing a foundation for an innovative economy that can contribute to dynamic growth prospects with particularly European characteristics, as discussed in the Atlantic Council’s recently published EuroGrowth Initiative Report
 European venture capital (VC) suffers from fragmentation, undersized funds, lack of private capital, excessive and unfavorable regulations, dependence on public investment, and an often risk-averse culture. These factors that stymie VC in Europe are interconnected and mutually reinforcing.

The European Union (EU) is still not one large VC market; instead, the EU is made up of twenty-eight markets with different regulatory regimes. To market their funds across different EU member states, many VC fund managers must pay a fee and register their funds in each EU country. National corporate tax systems throughout the EU actively discourage equity financing and incentive debt financing. For funds operating across EU borders, double taxation remains a serious obstacle.  EU-wide regulations, such as Basel III and Solvency II, impede equity investments by banks and large insurance companies. As a result of this fragmented VC market, today’s typical European VC fund only operates in one EU member state and is much smaller than its US competitors. 
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The European Union (EU), a vital partner for the United States, is facing numerous challenges, including massive migration flows, the UK’s vote to leave the EU (Brexit), and rising support for anti-EU and populist parties in upcoming elections in several European countries. In Charting the Future Now: European Economic Growth and its Importance to American Prosperity, the Atlantic Council’s EuroGrowth Initiative proposes pragmatic steps to restore European economic growth, safeguard the European project, and reinvigorate the transatlantic alliance.

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The European Union (EU) is facing numerous crises, including massive migration flows, the UK’s vote to leave the EU (Brexit), and rising support for anti-EU and populist parties. In “The EU’s Capital Markets Union—Unlocking Investment Through Gradual Integration,” author Zdenek Kudrna, a post-doctoral researcher at the University of Salzburg, argues that these crises all share one characteristic: They would be easier to resolve if EU economies grew faster.

To reinvigorate economic growth across Europe, the President of the European Commission, Jean-Claude Juncker, launched the “Juncker Plan” in November 2014. Kudrna introduces the Capital Markets Union (CMU) as the core regulatory initiative of this plan. 

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Europe suffers from two major handicaps: poor economic growth and high unemployment. In Europe Needs To Trim Its Excessive Fiscal Burden, Anders Åslund argues that Europe needs more structural reforms to solve these problems. Åslund addresses some fundamental questions on excessive fiscal burden: Why have public expenditures become higher in the EU than in other countries at a similar level of economic development? How have varying levels of public expenditures impacted economic growth? What level of public expenditures is desirable and how can the desired level be achieved? 

The United Kingdom’s vote to leave the European Union will have a negative impact on the European economy because it creates uncertainty and decreases business confidence for the foreseeable future, according to the International Monetary Fund’s recently updated World Economic Outlook. Beyond uncertainty, experts contend that the outcome of the June 23 vote on a so-called Brexit highlights structural issues within the Eurozone that have prevented significant growth following the 2008 financial crisis.

“There’s no doubt about the fact that this is a negative shock to growth,” Paul Sheard, executive vice president and chief economist at S&P Global, said of the British referendum. “In many ways, it’s worse for the Eurozone than it is for the United Kingdom,” he added.
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With the impending Brexit referendum on June 23, economists must anticipate the ramifications of the United Kingdom (UK) leaving the European Union (EU). This is the first time the voluntary integration of the EU has been threatened, and creates a distressing existential question: is EU membership valuable enough?

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After more than three years of negotiations to forge a Transatlantic Trade and Investment Partnership (TTIP), many elements of the agreement are still far from settled. However, it is possible to reach agreement in 2016. The negotiators are determined, and there is mounting awareness that an agreement that underscores the importance of the transatlantic economic relationship and strengthens the strategic relationship between the European Union (EU) and the United States is needed.


Atlantic Council’s Andrea Montanino warns against reading too much into leaked negotiation papers

Greenpeace’s decision to leak 248 classified documents related to the Transatlantic Trade and Investment Partnership (TTIP) negotiations only creates more confusion rather than contributing to an understanding of the complex process, according to the Atlantic Council’s Andrea Montanino.

By leaking the documents, Greenpeace intended to show that EU standards on environmental and public health will be lowered as part of compromises made during TTIP negotiations. Montanino, who is Director of the Atlantic Council’s Global Business and Economics program, cautioned against reading too much into the leaked documents noting that in such negotiations there are “tons of documents and proposals which are not part of the conclusion.”