€35 Trillion: Europe Eyes Its Dormant Savings with New Investment Label
But also — European Semester, Flight Delays, Inflation
Hello! Today is June 12th, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and LinkedIn.
European households are sitting on a staggering €35 trillion in savings. That figure—unveiled Friday in Paris during the launch of Finance Europe, a new label for savings products backed by seven EU member states—offers both a challenge and an opportunity.
Championed by Germany, Spain, Estonia, France, Luxembourg, the Netherlands, and Portugal, the initiative aims to redirect a portion of this capital toward productive investments within the EU.
DRAGHI • With 20% of eurozone household savings invested outside the bloc, and the majority of the remainder sitting in low-yield bank accounts or guaranteed products, proponents hope the Finance Europe label will serve as a nudge toward homegrown equity and long-term capital commitments.
“The label is not a new financial product, but a marker for savers who want their money to actively support European businesses,” said the French finance ministry.
The motivation is clear. According to the much-cited Draghi report published last year, Europe must boost investment by €800 billion annually to remain competitive with China and the US — particularly in green transition, digital innovation, and defence.
SIMPLE RULES, LOFTY GOALS • The Finance Europe label alone won't fill that funding gap, but its backers argue it’s a meaningful step.
To qualify, financial products must meet three straightforward criteria:
At least 70% of their assets must be invested within the European Economic Area,
They must prioritise equity investments to support European companies’ capital needs,
They must include incentives for long-term holding — for example, a minimum investment duration of five years is included.
Market participants — banks, insurers, and asset managers — will self-declare their products under the label, based on a common framework. National regulators will be responsible for verifying compliance. Tax incentives for labelled products are expected — these will be determined at the national level.
While technical details remain in development, the seven governments have pledged to work closely with the financial industry to roll out the label in 2025.
REACTIONS • The financial sector has responded positively, with the French Banking Federation welcoming the move.
Not everyone is convinced, though. Better Finance, the European federation of retail investors, described the initiative as a “step in the right direction,” but flagged concerns that savers’ interests were being sidelined.
“Despite its stated and excellent objective to enhance European competitiveness and channel private savings into productive investment, the initiative demonstrates a worrying disregard for the very citizens it purports to serve,” the group said in a statement.
Aurore Lalucq, chair of the European Parliament’s economic and monetary affairs committee (S&D, Place Publique), offered a more upbeat view on LinkedIn.
“A European label is probably the best tool we have to advance capital markets union and bring our savings back home. Opting for a label instead of creating a new product avoids disrupting savers’ habits,” she wrote. “This initiative, born of a tight-knit group of member states, can help us move faster — and more concretely.”
A PATH TOWARDS CMU? • The intergovernmental approach taken by the seven countries — soon possibly joined by Italy, Ireland, and Hungary — may allow them to bypass the institutional gridlock that has hampered progress on the EU’s Capital Markets Union (CMU) since its launch in 2014.
Twelve years on, CMU’s track record is thin. Only two substantial achievements stand out: the creation of a single European access point for public financial and non-financial data, and the introduction of a consolidated tape offering real-time market data.
Bolder proposals — like centralised financial market supervision or harmonised insolvency rules — remain stuck in neutral.
By contrast, Finance Europe may offer a more viable alternative to another CMU flagship: the Pan-European Personal Pension Product (PEPP). Introduced in 2022, the PEPP has largely floundered, dismissed by the industry as overly complex and commercially unappealing.
In March, the European Commission unveiled its Union of Savings and Investment strategy — an effort to breathe new life into the CMU. Among its aims: revisiting the PEPP, deepening market integration, and enhancing supervisory convergence.
The Finance Europe label may not be the silver bullet Brussels has been searching for — but it could mark a rare instance of pragmatic progress in a space long plagued by inertia.
In Case You Missed It
EUROPEAN SEMESTER • On June 4, the European Commission released its country-specific recommendations (CSRs) as part of the European Semester — an annual process for coordinating economic, fiscal, social, and employment policies across the European Union.
This is the first full implementation of the new fiscal rules, which came into force on April 30, 2024.
Of the eight countries currently subject to an Excessive Deficit Procedure (EDP), six — France, Italy, Malta, Poland, Slovakia, and Hungary — have had their efforts acknowledged by the Commission, which concluded that “no additional measures are needed at this stage.”
In contrast, Belgium has been asked to correct its fiscal course, which the Commission considers too lenient. Moreover, despite being a member of the so-called “Frugal Four” (with Denmark, the Netherlands, and Sweden), Austria is now recommended for an EDP due to budgetary slippage linked to recent political instability.
Romania, under an EDP since 2020, received a sharp rebuke. The Commission urged the Council to formally acknowledge the lack of effective corrective action and is considering suspending EU funds.
These recommendations must still be approved by a qualified majority in the ECOFIN Council, following endorsement by the European Council. Countries that are ultimately subject to the procedure will be required to follow a specified fiscal adjustment path or face potential sanctions.
In addition, on the same day, the Commission announced that Bulgaria — an EU member since 2007 — is ready to join the euro area. A final decision is expected at the Eurogroup meeting on July 8, paving the way for Bulgaria’s entry into the eurozone on January 1, 2026.
FLIGHT DELAYS • After 12 years of negotiations (a seriously delayed flight!), European transport ministers have agreed on a reform of air passenger rights.
According to the position reached by the Council, passengers would have to wait four hours (instead of three) to claim compensation for short-haul flight delays, and six hours for long-haul flights. Compensation would be slightly increased for short-haul flights (from €250 to €300), but reduced for long-haul flights (from €600 to €500).
This revision marks a turning point for European passenger rights. The adopted compromise reflects a balance between consumer protection and the demands of airlines, which had called for more flexibility to reduce cancellations.
Airlines for Europe (A4E), representing several major groups, welcomed the move, claiming it could help avoid the cancellation of millions of flights per year.
Several member states, including Germany and Spain, opposed the increased delay threshold before compensation. German MEPs (EPP) expressed regret over a “step in the wrong direction.”
The revised regulation still needs to undergo negotiations between the Council and the Parliament before it can be adopted.
INFLATION • On June 5, the European Central Bank cut its three key interest rates by 25 basis points. This is the eighth cut in a year.
The deposit rate is reduced from 2.25% to 2.00%, the main refinancing operations rate to 2.15%, and the marginal lending facility rate to 2.40%. These adjustments will take effect on June 11, 2025.
The ECB also revised down its inflation forecasts: 2.0% in 2025 (previously 2.3%), 1.6% in 2026, returning to 2.0% in 2027. This revision is mainly due to falling energy prices and the strengthening of the euro.
At the same time, eurozone growth forecasts remain modest: +0.9% in 2025 (unchanged since March), but slow to +1.1% in 2026, compared to the previously anticipated +1.2%.
According to the ECB, growing trade uncertainties linked to U.S. tariffs are holding back economic recovery.
What We’ve Been Reading
In a Project Syndicate column, Daniela Schwarzer writes on ‘the end of German complacency.’
In the FT, Adam Tooze argues that the real ‘scandal’ in European defense is how little EU states get for what they spend. He contends that shared procurement will be essential to ensure the extra billions of euros being poured into defense are not wasted.
This edition was prepared by Agustin Bourleaud, Mathieu Solal, Thomas Veldkamp, Léopold Ringuenet, Lucie Rontchevsky, and Maxence de La Rochère. See you next week!