Measuring the growth potential for EU capital markets

This data pack paints an ambitious but achievable vision for the EU’s capital markets and identifies the potential for game-changing growth to support investment, innovation, and prosperity. We estimate that an additional 7,300 companies in the EU could raise an extra €570bn every year in the capital markets - even before accounting for possible further growth through more integrated capital markets in the EU.

New Financial relies on support from the industry to fund its work. Our reports are available to New Financial member firms, government and regulators, and the media. If you would like to enquire about membership or receiving a copy of the report, please click here

New Financial members, governments and regulators, can also access our complete research archive including this report here

An ambitious and achievable vision

It is not a secret that capital markets in the EU are not as developed as they could or should be, but what is often overlooked is the vast growth potential that they have. At a time when the narrative around the European economy is pretty downbeat, this report aims to be optimistic and paints an ambitious but realistically achievable vision for EU capital markets.

We measure the growth potential in capital markets across the EU and express this growth in concrete terms: how many more companies in each country could potentially access the capital markets, and how much more money would they be able to raise?

To pick one example: we estimate that around 470 additional companies in the Netherlands could benefit from an additional €7bn in venture capital funding each year. (Another way of looking at this is that every year 470 high-potential companies in the Netherlands are not getting that investment today…)

Our methodology is simple. We measure the size of capital markets relative to GDP in each sector and EU member state, rank them, group them into quartiles, and ask: ‘What if capital markets in each member state were as developed as the average of the more developed member states in the quartile above?’

While this growth may seem improbable from where we are today, it is based on what other member states in each sector have already shown is perfectly possible. Even modest progress towards this growth would have a significant impact - but this requires EU policymakers, national authorities, and market participants to translate their public commitment into action.

An important aspect to keep in mind with this report is that the analysis is not about what growth could be delivered from a completed savings and investment union. It is based on the state of EU capital markets today. After all, we think that there is virtually no reason why capital markets in Germany should not look a bit more like capital markets in France do today, or capital markets in France a bit more like in Sweden, and so on. More integrated capital markets in the EU would add an additional layer of growth on top.