r/europe • u/paneuropeanism_ Europe • 13h ago

News Von der Leyen: €300 billion in European savings flown overseas every year, primarily to the US, will be invested in Europe from now on. All 27 EU states agreed to establish the S&I Union, a step toward the full Capital Market Union

https://streamable.com/4h43qk
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u/MonoMcFlury United States of America 13h ago

Imagine all 27 countries in Europe share a giant piggy bank.

Right now, adults in Europe are sending around €300 billion of their saved money across the ocean to America every year. 

They do this because America has one simple system for investing money, while Europe has 27 different countries with 27 confusing sets of rules.

European leader Ursula von der Leyen and all 27 countries just agreed to team up and create the Savings & Investments Union.

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u/No-Significance5659 ES in DE 13h ago

Thank you! Super clear.

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u/Ok-Style-9734 12h ago

It unfortunately completely misrepresented the situation, people do not send their money to America over Europe because it has a simple unified system they send it because the return on their investments is much higher.

Over the last 20+ years and invest ment in the EU stoxx600 would have got you 6-7% a year the s&p500 would have got you ~12% a year

If you put 10k in both 20 years ago (ie a pension) youd have about 35k in your European investments and nearly 90k in your American investments 

No one making that choice just because you made the financial system cheaper. No one is picking their pension based on nationalism either.

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u/anxiousvater 11h ago

You are largely right for retail investors but this unified market helps European startups, unicorns to easily raise capital & so on., Due to the current fragmented European markets, companies like Spotify, Biontech had to choose US markets.

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u/Appropriate-Bird-354 3h ago

None of this creates the depth and quality of capital markets required to be anywhere near competitive with the US on this front.

It's a bandaid being sold to you as a panacea.

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u/StockLifter 11h ago

Is this not circular reasoning? ROI measured like this is purely a price supply and demand question, i.e., SP500 has higher ROI because more money flows there, leading to higher ROI, leading to more money flow etc.

I am not saying you are wrong, but it seems not a counter to what the other person said. Like, assume they are right and both start at the same point. If OP is right and 300b flows there for single market reasons etc, it would lead to higher ROI, leading to more money etc. I dont think the two can easily be disentangled.

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u/Ok-Style-9734 10h ago

But it doesn't flow there for single market reasons it flows there because thats where the companies are that make money.

Apple, Microsoft, Google and meta have huge markets and still have huge potential for growth.

The EUs biggest are asml with limited capacity to ram up and is dependent on US controlled tech which has already been used to limit its market. So you buy that EU company you're still at the whim of the us government.

After that we have lmvh already worth less than that 300 billion yearly investment. It's an interesting company but by its nature luxury goods aren't going to be a billion user subscription service are they? By default they're going to be paying money to Facebook, and meta for marketing microsoft for services etc.

There has to be some plan for expansion for you to get a reliable ROI there just isn't that really available in European companies and to get into the same markets they're starting 30 years behind the pack.

European markets represent more of a defensive investment than a high growth one.

Where's your money invested?

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u/nonotan 10h ago

In truth, it doesn't have much to do with any of that. The US stock market would already look a lot worse today if it wasn't for things like 401(k)s (an American employer-matched personal pension system) generally more or less forcing you to invest into the US stock market regardless of price; a humongous pile of 100% price-insensitive guaranteed regular purchases -- and, in general, the "common knowledge" that investing into something like S&P500 is "the smartest choice, totally safe, virtually guaranteed to have long-term returns 10%+" (none of that is really true, but it's what everybody has been parroting for decades)

If the US stock market was only bought by people who explicitly believe large US companies are going to continue growing at a rate that outpaces everybody else, it would be in complete shambles, because it's a tiny, tiny percentage of current investors that base their actions on that. Keep in mind being large and future potential for growth is not really related in any way, if anything it's necessarily opposed. For example, Facebook has quite literally already reached pretty much every single human being alive today who might be interested in their products. Where's the room for growth? If it exists, it will require some lateral thinking. And to the extent that expected growth can be predicted, it's already baked into the stock price today.

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u/StockLifter 3h ago

I am not saying there are not other metrics that discriminate them, but that this reasoning is circular so not the best argument. I agree to a degree with the sentiment as well, but you have to remember that the economy is more than just tech and there are quite some companies making a lot of money if you know where to look.

I am invested 65% corporate bonds (diverse) at a 7% return, and the rest is split into many stocks (mostly biotechnology) slightly more US indeed but also Bayer, Oxford Nanopore and many European ones.

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u/Appropriate-Bird-354 3h ago

Is this not circular reasoning? ROI measured like this is purely a price supply and demand question, i.e., SP500 has higher ROI because more money flows there, leading to higher ROI, leading to more money flow etc.

No. US companies (and the economy) also grow faster and are more profitable - hence more attractive to invest in.

You're not trading commodities with fixed supply and utility, you're trading cash flow generating entities.

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u/run_bike_run 7h ago

It's a chicken-and-egg scenario.

Investment in American stocks is higher than in Europe for a number of reasons, but a big one is the fact that Europe has 27 different regulatory and legal regimes when it comes to savings and investments, and so nothing scales easily compared to the US - which is a compounding issue given how freely money can now flow. Just to take two highly specific examples from the Irish retail investing market:

  • Private pensions are subject to a maximum charge schedule of 5% of contributions and 1% annually of AUM, and every provider charges that
  • Investing in index funds is currently subject to the deemed disposal rule, which taxes gains on index holdings(at 38%) every eight years as though they'd been sold and repurchased

There are of course other issues, but an awful lot of them come back to the core one: it's very hard to compete with a dominant single market like the US when your own is actually 27 different markets in a trenchcoat.

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u/Time-Bodybuilder4165 5h ago

and also less tax when you receive the dividend of a share. in some countries you paid a double tax from a dividend : from the country you live and from the country where the company is located1

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u/poopybuttholesex Luxembourg 3h ago

Ok but also account for the USD deprecating against the EUR and your 12% is down to 9-10%

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u/Ok-Style-9734 3h ago

Over time not really in 2004 the dollar was 0.84€ in 2026 its 0.86€

Heck 2022 youd have been quids in with the dollar 1.01€

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u/madd_honey 13h ago

Yeah, I don’t know, people invest in us stocks because of the growth potential that EU stocks simply don’t show or have.

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u/AG_GreenZerg 13h ago

It is circular though. Great businesses that start in the UK or Europe end up in America for better access to capital. This union will make capital easier to access in Europe so hopefully the next ARM Holdings or other tech or whatever unicorn firm stays in Europe.

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u/Aggressive_Chuck 11h ago

It's not just capital, it's easier to grow a business in America.

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u/EmergencyInternal837 9h ago

This ⬆️
Bureaucracy in europe is discouraging business

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u/Prince_of_DeaTh Lithuania 8h ago

It’s easier because they have a unified market backed by massive capital. That is literally what this union is trying to replicate.

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u/iYoona 2h ago

Europe cannot simply redirect €300 billion from U.S. assets into “European equivalents” when in many sectors the equivalent compajny doesn't even exist in the same scale. Who in the EU is competiting with Google, nvidia, microsoft, apple, amazon, or Meta

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u/AG_GreenZerg 11h ago

Why?

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u/Shihai-no-akuma_ 10h ago

Should we start with regulations? A company that starts in the EU has to deal with a shitload of regulations that get progressively worse the bigger your company is. On top of corporate taxes, since the EU has a mindset of hating and alienating every investor or businessman.

If you have an idea and money, the US makes it very simple to grow. People there love to consume and buy a product. Over Europe, it’s a much harder sell.

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u/Every_Mobile3968 10h ago

The thing is not a cluster of EU regulations but that you have to deal with regulations of EACH member state separately.

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u/AG_GreenZerg 10h ago

What are the top 3 EU regulations you think that should be removed?

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u/Shihai-no-akuma_ 10h ago

Removed? Not entirely, but substantially changed. PPWR would be a start. Goes about it the wrong way, by segregating the market into 27 individual licenses and legal representations. That's absurd for a Union.

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u/keralaindia 5h ago

Oooooh i want to play as an Indian american venture cap, i work for one of the biggest VC firms in the US

EU AI act

GDPR and DSF

Main one being completely fragmented national financial frameworks, number ONE reason companies leave

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u/alexandicity 2h ago

AML rules could chill out a bit. Yes, I might be a bit sour on this as our startup constantly has its bank account frozen for no good reason...

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u/Foreign-Engine8678 3h ago

Don't remember exact license, but to send books to Europe you have to buy a license for it. Each license is around 5k. 1 license per country. Do you think normal person can buy 27 5k licenses to send books to Europe? And that's just one example

Ps: number might be different as it is basically my hearsay. Principal still stands: you don't deal with EU when you work with EU. You deal with each country separately for one EU regulation. Regulations are made with good purposes, but taken to EU extreme they become a blocker and monopoly makers

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u/blixt141 10h ago

And this is why rivers are poisoned, wells run dry, there are cancer clusters and illegal generators power Data Centers. The US is now a shithole country because of the lack of regulations and enforcement.

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u/Shihai-no-akuma_ 7h ago

I am not talking about safety regulations. Those should be the bare minimum across the EU (although cancer rates keep going up in Europe regardless). I am talking about everything else that's just a total mess to deal with.

I mean, look at PPWR. It's a nightmare for smaller companies, dictating a minimum of 30k a year just to ship INSIDE the EU to all 27 member states. Not only it goes against the single market, it's totally insane. Then you gotta get licenses for each particular country, which is another 2-5k. The idea behind it? It's fair. But the applicatio and complexity? Totally crazy man.

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u/CuntWeasel EuroCanadian 4h ago

The US is now a shithole country

Blanket statement, infantile take, and it all depends on how you define a "shithole country".

I know it goes against the /r/europe hivemind, but the poorest state in the US (Mississippi) has a higher GDP per capita than France.

The New York state has a GDP per capita that's double that of Germany.

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u/blixt141 3h ago

Cope. The US has burned every bridge and spurned every ally because of the Orange Shit Gibbon. Police kill at will and GOP steals at will. Democracy does not exist because of this. Go read instead of watching Faux NEWZ. And I forgot $40T in debt. This is all gop.

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u/blixt141 3h ago

https://www.irishstar.com/news/politics/bitter-trump-razes-40-weeping-37615956

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u/CuntWeasel EuroCanadian 1h ago

That's the definition of a shithole in your mind?

A crazy manchild razing 40 weeping willows? What about decades of civil war and ethnic cleansing like they do in many parts of Africa? What about people shitting in the streets and having no running water like they do in many other parts of the world?

It's not apples to apples no matter how anti-American you might be.

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u/Appropriate-Bird-354 3h ago

Great businesses that start in the UK or Europe end up in America for better access to capital.

  1. This doesn't really address any of the reasons capital is easier to access in the US.

  2. It has just as much if not more to do with access to a large, extremely wealthy population with a lot more disposable income than Europeans in a single market.

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u/Willing_Cause_7461 Ireland 9h ago

Great businesses that start in the UK or Europe end up in America for better access to capital.

Or in some cases can't even start at all so go to America.

Stripe is the Irish example of this happening. There wasn't the investment environment that would allow it to thrive. They knew that so went to America instead.

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u/TheMightyOne 13h ago

Yes, but it's a circular argument. EU stocks can't get big enough, because each individual market is so small.

My understanding that a super successful international EU startup will have to list in stock markets Germany, France, Spain and more. They have to comply by regulations of each country. Who would do that? You as an investor would have to buy their stock on each market as well if you want to own it all. Who would do that?

US stock market is much easier for everyone involved. If EU has one big capital market it's much easier for startups to get money and for investors to invest and because the market is much bigger so is the growth potential.

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u/Morph_Kogan 13h ago

That's why you need a capital union, and a banking union.

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u/buythedip0000 13h ago

Why do you think US has higher growth potential, they had flow of cash and talent. Once that tide changes the returns will be impacted. Trump is doing fantastic breaking both flow of talent and capital

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u/Appropriate-Bird-354 3h ago

Why do you think US has higher growth potential

Better economic composition - growth industries, services, etc.

Much better demographics (sans permanent immigration fuck ups).

More effective environment for innovation and ease of doing business.

etc. etc.

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u/BartD_ 13h ago

Exactly. Somehow the EU thinks that people want to put money into companies the EU itself will strangle. Either by making enemies with export markets and hurting exports or by overcomplicated regulations.

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u/Every_Mobile3968 10h ago

A lot money produce more money. Tones of EU startups eventually move to the US for the sole purpose of getting chunky investment.

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u/tissotti Finland 13h ago

I don't disagree with that as a broad statement, but we also have a lot of companies that achieve certain threshold and are then bought up by US entities.

Just here in Finland we had Oura that was established by 5 Nokia engineers that has now over billion eur annual revenue and are fully owned by US entities. Their HQ also moved to US this year. They still have R&D center in Oulu, Finland, but the profits escape to US.

Even more dangerous is Iceye that produces the most advanced SAR satellites for civilian use, but especially for military use. Multiple European governments and companies (including Rheinmetall's 1,7 billion euro deal) use them. They are now being cornered by large US private equity (25% ownership now) as there's simply not enough money in EU with it's valuation reaching 10 billion euro.

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u/AbaddonR 13h ago

Hopefully, this is how you create potential growth. Imagine 300 B bleeding from US stock creating EU stocks worth purchasing. I mean, if that 300B happens fast there should potentially create great market chances. Should..? No?

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u/fatbunyip 9h ago

There's 2 aspects to the SIU.

The first is the retail accounts which target savings that aren't in stocks, but I'm accounts getting like 0% interest. The SIU accounts will essentially offer regulated low risk investment products (so more reward than a savings account but less risk than a stock account). 

The second is freeing VC and institutional capital to be used across the EU with unified rules regarding tax, legal entities, bankruptcy protections etc. Which now are a jumble of 27 different national frameworks. 

So the first aspect makes it easier for already listed companies to access capital. The second makes it easier for non-listed companies to access capital. 

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u/yellowbai 13h ago edited 12h ago

It’s more complicated than that. The banks are using our savings and investing in US bonds and securities. Also pensions. The US S&P500 has very attractive rates of return so it benefits Europeans at the cost of market liquidity in Europe.

In any case the real enabler would be a true Eurobond and the EU can issue real debt. But she doesn’t say that because Germany are absolutely opposed to it. If the EU for examples could issue 1 trillion euros in debt for capital projects it would be massive.

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u/Consistent_Sail_4812 10h ago

They do this because America has one simple system for investing money, while Europe has 27 different countries with 27 confusing sets of rules.

nah, thats not why.

real reason we invest in US markets is because their companies outperforming 99% of others.

they are generating insane profits, making investors rich.

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u/Zamyatin_Y 13h ago

Maybe a dumb question, but it's like we'll have an European S&P500?

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u/MonoMcFlury United States of America 13h ago

Not quite. The Savings and Investments Union (SIU) is a set of new financial laws, not a new stock or single index.

It fixes the underlying laws so existing European stock trackers (like the STOXX Europe 600) can finally act as big, powerful, and liquid as the S&P 500.

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u/PartiallyRibena United Kingdom 12h ago

TLDR - the European S&P500 already exists (STOXX600), this should help more money flow into it.

Answer:
That might be an outcome of this policy - but the S&P500, STOXX600, FTSE100 are all private companies (surprisingly)who run an index. They are just reflecting what is going on in the companies that they choose to include on their indexes - those companies are the underlying parts of those indexes.

This policy is aimed at making it far far easier for Europeans to invest in a company, or buy bonds etc. from another EU state, this makes it easier for money to flow around the block and makes it more appealing to invest in European assets. This ease of investment should massively help the European companies that make up the STOXX600. So rather than creating an S&P500, it should make the STOXX600 perform better and provide better returns for investors because there is more money flowing around the European system.

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u/Sunshado 12h ago

Arent the reason of US500 is doing so well because, yea partially a unified system, but the other is that it has some of the top 10-20 companies of the world (nott he worlds best but arguably some of the worlds greatest) firms.

It might stops bigger firms or startups to migrate into USA like Spotify did, for good reason, but I have my doubts partially because I have no idea what else we have in EU that is comparable to what USA top 10 firms has to offer that moves the entire 500.

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u/PartiallyRibena United Kingdom 12h ago

You’re absolutely right. But it’s also a bit chicken and egg. There are a few examples of massive innovation happening in Europe and then listing in or being bought by America due to the fact that capital and money flows better over there.

For example, ARM (semiconductors, listed on Nasdaq - UK), Spotify (as you pointed out - Sweden), Deep mind (AI labs, now owned by Google - UK). Those are ones I can think of off the top of my head that would be considered genuinely cutting edge that had to fully of partially depart Europe.

It’s impossible to say if those companies would still be fully European today if we’d had this S&I union for the last 25 years, but it would surely have helped somewhat.

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u/Raulr100 Transylvania 13h ago

There are already European equivalents to it. I have a little bit of money in STOXX indexes.

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u/Jakisuaki 🇪🇺 🇩🇰 European Union 13h ago

Essentially yes

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u/PavelKringa55 Germany 10h ago

No but we can have European S&P 5. We're a bit short on good stocks.

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u/Imatakethatlazer 12h ago

Is it similar to the Norwegian sovereign wealth fund ?

Or its just common legal scope ?

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u/MakeTheHabit 10h ago

Lol I send my money there because usa has the biggest market share and biggest returns.

I will do hell investing in vw which is partly controlled by German government and used as political playground.

EU is just a giant mess at this point and having a non directly elected head is no doing this any good.

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u/honkballs 10h ago

They do this because America has one simple system for investing money,

No they don't, they do it because they want to invest in companies like Apple and Nvidia.

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u/icemixxy 8h ago

i have to add that rule-wise, it would be best if we adopted a sort of US of Europe ideology somewhat. I know they have state rules and such, but imagine if they took the best parts from every country in the union and make it a europe wide ruleset. Even driving rules are different

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u/typhlonusMama 3h ago

Thank you! I was afraid to ask. 🫣

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u/Individual-Toe-1959 13h ago

Amazing brother, thank you

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u/Aggressive_Chuck 11h ago

They do this because America has one simple system for investing money, while Europe has 27 different countries with 27 confusing sets of rules.

No it's because America is where all the growth is, and all the exciting, fast-scaling tech companies. Economically, America left Europe behind in 2008. Europe chose comfort over growth.