Policy brief

Policy Brief - Has There Been an Investment Gap in France and Europe since 2007?

The slowdown in the business recovery in the Eurozone since spring 2014 triggered a debate on investment in Europe in the wake of the European elections of May 2014. Investment is an economic notion enabling the establishment of a connection between the issues of supply and potential growth in the medium and long-term, on the one hand, and shorter term demand, on the other.

Published on : 26/09/2014

Temps de lecture

2 minutes

At a time when the Eurozone is facing a shortfall of aggregate demand, related to the present economic climate, and major structural challenges in terms of competitiveness, reduction of the investment gap seems to be a well-balanced recommendation.

Between 2007 and 2013, in spite of an initial stage in which investment remained relatively healthy, the Eurozone increasingly lagged seriously behind the United States. Spain and Italy, in particular, have seen a very pronounced reduction in all investment components.

The situation is more difficult to assess with regard to France and Germany. Germany has shown chronic public underinvestment for many years, which has not been slowed by the crisis, quite the reverse. France, on the other hand, is faced with poor investment: insufficient formation of highquality productive capital (R&D in particular) and direction of resources to sectors lacking in pertinence in terms of preparation for the future (real estate in particular).

Gross fixed capital formation in the manufacturing sector (in volume)

Summary: Has There Been an Investment Gap in France and Europe since 2007?

The Fall in Investment in the Eurozone since 2007
Slower Growth of Investment in Ict and R&D
Investment in Public Infrastructure Falling in the South of the Eurozone
Authors: Fabien Dell, Pierre Douillard, Lionel Janin and Nicolas Lorach, Sustainable Development, Economy and Finance Departments.