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The writer is CEO of UniCredit
“Europe is disappearing.” So said Ken Griffin, founder of Citadel Securities, earlier in December. “It is inactive compared to the United States,” he added. “Their economy is not growing. Their per capita numbers are appalling.” When major American financiers make this kind of assessment about our continent, it is time to wake up and respond.
It has now been just over two decades since the European Union saw its largest expansion ever. In one operation, it created a single market of about 450 million people, promoting stability, democracy, and economic prosperity. A positive vision at that time is still possible, but it is undoubtedly at risk.
We are going through a period of division in the European Union, with no sense of a common direction to go. This is even more troubling when we face the threat of the United States falling further behind as a result of potential tariffs imposed by President Donald Trump. I need not mention the series of geopolitical problems that have haunted us in recent years.
As a continent, we are starting to realize that we need unity and much better economic growth to deal with all of this. This is where the power of the single market becomes very clear. We forget how much it impacts the opportunity we have today. We also fail to realize that this is still only a small part of what could be and that it could disappear completely.
Recent reports by Enrico Letta and Mario Draghi on the European Union remind us of what is at stake. Without pooling vital resources together and enhancing our structural growth, the European Union cannot continue to deliver better living standards. We risk falling far behind other blocs as centers of innovation and creativity. We may eventually lose the freedoms and ideals we hold dear.
Our dear single market is incomplete and needs work. We must focus on an EU-wide growth strategy. However, we seem unable to agree on simple things like creating capital markets or a banking union to support investment and growth. If we do this, many structural challenges can be overcome.
It is up to European politicians to push through these reforms, and they will certainly have my support. But as CEO of a bank, I focus on what companies can do today. We already have the basic foundations of a banking union, which can be completed quickly. We have heard calls to advance the integration of the European banking system so that we can have greater power to finance new infrastructure and business growth. However, we have seen precious little action.
I believe in the convergence of our banking system, and with it stronger banks for Europe. That is why UniCredit Group invested in Commerzbank and offered to buy Banco BPM. While these decisions have been taken in the interests of our stakeholders, they also put broader EU convergence and the future of the single market on the table.
They represent test cases that question whether we, as a bloc, are serious about achieving greater integration. Are we prepared to take the steps our leaders have been calling for, or will we feel hesitant? The answer to this question will either help unleash growth in Europe, or confirm that the real work of moving the single market forward remains elusive.
With stronger penetration across Europe comes economies of scale and experience at the EU level. This means greater distribution of capital to companies that need financing to grow, and more options for raising funds, including via capital markets. This means that the most ambitious and growing companies can connect to trade flows and access new markets, especially within the EU. It means increasing investment in products and services to support savers. This means stronger, more resilient and trustworthy banks.
Without rapprochement, we will witness a delay in investment, hindered wealth creation, and a widening gap between us and other blocs. Young people will leave our continent in search of opportunities elsewhere. We risk our long-term prosperity and with it the power needed to uphold the ideals of the European Union.
This is not a call for more centralized decisions. All EU countries have their own specializations and deep expertise; We must not interfere or meddle in the fine details. However, we must move towards a common goal of long-term growth and success and turn our agreed-upon vision into action without excuses.
Europe's future competitiveness is not limited to banking systems and capital markets. But this does indicate whether Europe is finally ready to work together to end this period of low growth for the benefit of all. Now we have the opportunity – and I believe the duty – to expand the scope of Europe's banking sector, and with it the ambitions of our bloc. If the genius of our single market remains incomplete, I fear that Draghi's warning about Europe's “slow suffering” will come true.
