Davos: A European savings and investments union will be established in the next five years, European Commission President Ursula von der Leyen told the annual Davos summit on Tuesday. She emphasized that EU capital markets are currently fractured, highlighting the significant disparity between European and US household savings.

According to Anadolu Agency, von der Leyen pointed out that European household savings have reached almost £1.4 trillion ($1.45 trillion), compared to just over £800 billion in the US. She noted that £300 billion of European family savings are invested abroad annually, a factor she identified as restraining the growth of tech start-ups and impeding the development of the innovative clean tech sector within Europe.

Von der Leyen stated that while the EU does not lack capital, it requires an efficient capital market to convert savings into investments. She outlined plans to create a European Savings and Investments Union, which would feature new European savings and investments products, fresh incentives for risk capital, and initiatives to facilitate the seamless flow of investment across the union. The goal is to mobilize more capital to foster innovation and risk-taking under the 'Made In Europe' banner.

In addition to the savings and investments union, von der Leyen announced the introduction of a competitiveness compass. This initiative forms part of a broader three-foundation plan aimed at sustaining the growth of European countries over the next 25 years.