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Opening Up European Companies to a Global Vision
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Opening Up European Companies to a Global Vision

Enrico Colombatto
GIS, 2014
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8

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Recommendation

Promising businesses in many euro-zone countries can’t access the funding they require to grow and create wealth. Economics professor Enrico Colombatto asserts that big banks, regulators and governments have corralled the vast resources unleashed by the European Central Bank and used them to prop up banks and fund government spending rather than to support the real economy. While banks willingly deal with large cash-rich corporations, small companies with regional and even global potential are left out in the financial cold. getAbstract recommends this sobering assessment of the future of Europe’s small enterprises to bankers, policy makers, and, especially, small-business owners and entrepreneurs.

Take-Aways

  • Despite years of European Central Bank (ECB) monetary support, the European Union’s commercial banks have failed to do what they should: lend to households and businesses that spur economic growth.
  • Much of the ECB cash intended to prevent recession and boost liquidity stopped at the doors of banks and governments, falling short of the EU’s consumers and producers.
  • Banks have used the funds to buy sovereign debt, secure in the knowledge that the EU will guarantee the investment, which gives politicians license to spend.

About the Author

Enrico Colombatto is an economics professor at the University of Turin and director of the International Centre for Economic Research (ICER) in Turin and Prague.

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