Brian Hayes MEP today said that the EU’s new Capital Markets Union (CMU) project represents a major boost to improving the financial services sector in Ireland. Mr. Hayes was reacting to the launch of the Capital Markets Union Action Plan by European Commissioner for Financial Services, Jonathan Hill.
“One of the major problems in Ireland and Europe at the moment is that businesses have to rely too much on banks for lending and often banks are not willing to lend. According to a recent ISME survey, 45% of Irish SMEs that applied for funding in the last 3 months were refused by their banks.
“This financing problem for companies is exactly what the EU’s new Capital Markets Union seeks to address. This major project which will be introduced throughout the lifetime of this European Commission (2014-2019) will open up new alternative forms of lending to businesses, especially small businesses.
“Through today’s Action Plan on CMU, the Commission has outlined a balanced and realistic timetable with proposed actions to be launched over the next 3 years. These include initiatives such as: introducing a pan-European venture capital fund, building a harmonised EU market for Securitisations and removing barriers for small firms who want to be traded on public markets.
“The big opportunity for Ireland is in the area of securitisation – this is something that the IFSC has real expertise in. Since the crash securitisation has reduced by at least half and Dublin could be a big winner if the skills behind securitisation take off again. In the area of crowdfunding and venture capital funding, Dublin is way ahead of other financial centres. It is interesting to note that 10% of the industry submissions on CMU came from Ireland. This shows that there is major interest in non-bank lending from an Irish perspective.
“Essentially, Irish banks cannot fill the funding and investment gap that Ireland needs. Because of the crisis, the banking sector must become safer but that means it cannot operate at the same size it has in the past. Something must come and replace it. That replacement can only be investments that are channelled through the capital markets.
“In Europe we are miles behind the US in terms of non-bank lending. In the EU 70% of borrowing comes from banks and only 30% from capital markets; in the US it is the opposite – 70% of borrowing comes from the capital markets.”
Dublin MEP, Brian Hayes has today (Tuesday) said that voting in future European Elections may be about to get easier. MEP Hayes made the comments following the adoption of a report on the issue in Brussels this week.
“Under the Lisbon Treaty, MEPs have the right to initiate reforms of the European Electoral Act. It is then a matter for each member state to extend these reforms to their citizens. Reforms successfully passed by the Parliament’s Constitutional Affairs Committee this week include the introduction of internet voting as well as voting by post. The reforms also include extending voting rights to EU citizens living outside the EU. “
“Voter turnout has decreased in each European Election. The first elections took place in 1979 with a 62% voter turnout. Last year only 42.6% voted. It is clear that something needs to be done to encourage voter participation.”
“We need to find new ways to enable citizens to vote, especially our younger and older citizens. Some countries such as Estonia have already introduced internet voting for their national elections so precedence already exists.”
“The report will now go before a plenary session of Parliament where it is expected to be passed by a large majority” concluded MEP Hayes.
Dublin MEP, Brian Hayes has today (Friday) expressed concerns that the European Commission may refer Ireland to the EU Court of Justice. The possible action is due to Ireland’s failure to introduce biometric identifiers in resident permits issued to third country nationals.
“I am concerned to learn that Ireland could potentially be brought before the European Court of Justice for not implementing the Biometric Regulation for third-country nationals. The Regulation came into force over three years ago. Ireland is the only country that has failed to introduce the measure.”
“The regulation was established to ensure that all EU countries have a uniform approach in issuing permits to third country nationals. The use of biometric technology is an important tool in the fight against false identity and fraud. Given the current refugee crisis I believe this is an important issue in which the Government needs to address immediately.”
“I will be raising this matter directly with the Minister for Justice. The European Commission has given Ireland two months to introduce the Regulation. If action is not taken, Ireland may find itself before the European Court of Justice” concluded MEP Hayes.”
Speaking tonight (Thursday) in the Spawell, Templeogue, Brian Hayes MEP said that heavy taxes are draining talent from Ireland. Mr Hayes was speaking at a public meeting on Tax Reform organised by Cllr Colm Brophy.
“When a comparison is made between Irish tax rates and those of our close competitors it is very obvious that our tax rates are completely out of kilter with other countries. The UK, US, Australia and Canada are traditional emigration destinations for Irish people. But they are also competitors with Ireland for well-educated young graduates across many disciplines.”
“Ireland is an extreme outsider as regards tax rates on single people when compared to our four main English speaking competitors”
“Income levels and tax rates are an important part of a decision to emigrate and an even more important part of a decision to return to Ireland or stay away. The extraordinary low income level at which young Irish people enter the higher tax rate is compounded by the fact that the higher rate of tax in Ireland is also significantly higher than our competitor countries.”
“Ireland is in competition for talent and expertise with many other countries, particularly with English speaking countries. Well qualified Irish graduates find it relatively easy to get jobs overseas. The longer they remain abroad the more unlikely they will return. Our personal income tax rates need to reflect these realities. An attractive personal tax regime is a central element of this country staying competitive.”
“There are compelling arguments for widening the tax bands and reducing the top rate of tax. A start should be made in the coming budget and a clear statement of intent to continue the policy during the next five year political cycle” said MEP Hayes.
European Banks cannot fill the funding and investment gap that Europe needs – building a Capital Markets Union is part of the solution
Remarks by Brian Hayes MEP to the Annual RBS Macroeconomic Conference, Thursday 24th September, London
Europe has gone through close to a decade of falling investment and falling bank lending. Pretending to EU citizens that recently re-capitalised banks will suddenly become engines for dramatic growth across Europe represents dangerous group think. As the recovery has been painfully slow since the worst financial shock since the 1930s, so too will the ability of the traditional banking model be slow to fill Europe’s real investment needs. We need new solutions to finance the real economy.
Just as EU member states must get their deficits down by prudent fiscal decisions so too will Europe’s banks have to follow a slow and painful recovery path. Prudence and cautious lending will remain with us for some years as the entire banking sector tries to recover its confidence. The new EU-wide legislation put in place since 2009, should never again mean that EU taxpayers have to bail out the banking sector after reckless lending and light touch legislation that were such hallmarks of the last two decades.
Europe’s slow recovery is now underway. While doubts about the viability of the Euro project still exist, the currency has withstood the worst effects of the crisis and has grown from 18 to 19 Member States. All of the doomsday predictions in 2010 that the euro would break up have been proven to be groundless. Countries that were in the grip of a troika programme are now able to fund themselves from the market. The ECB has responded and its liquidity has helped to bolster the position of Europe’s banks.
I believe that the potential of developing a proper Capital Markets Union (CMU) during the lifetime of this European parliament and Commission must be a top priority. It’s an essential part of the Commission work programme and will represent a major part of the work of Parliament’s ECON Committee in the year ahead.
Through CMU, we have the capacity and knowhow here in Europe to make a transition from a funding model based almost exclusively within banks, to one where capital markets play a growing role in the funding of the real economy. Instead of a plan that divides Europe, in terms of Euro and non-Euro member states, a properly functioning CMU can work for all 28 together. It doesn’t have to respect the euro difference; it’s something that can unite Europe.
I suppose one of the major difficulties in Europe that policymakers currently have to deal with is the rising financing gap for businesses. The fact that in Europe our capital markets are not as developed as those in the US is a point of key concern. In the U.S., approximately 70% of corporate funding is through the capital markets while in Europe, it is the opposite – businesses heavily rely on bank lending here. And what’s more worrying is that SMEs don’t get the financing they require from banks. In the euro area, 35% of SMEs didn’t get the complete financing they asked their banks for.
We are at a moment of transition in Europe. The banking sector must become safer but that means it cannot operate at the same size it has in the past. Something must come and replace it. That replacement can only be investments that are channeled through the capital markets.
Developing a strong capital markets culture into the future
It is our task to examine what part we can actively take to ensure that capital markets can play in the provision of long term, sustainable and growth-enhancing finance in our future.
Capital markets are much more complex and diverse ecosystems than are the banking markets. There is a vast and sophisticated chain between the saver and investor and the company or a project that receives financing. We must also remember that capital markets are very different on a country by country basis.
Funding vehicles such as Venture capital and Crowdfunding are playing an increasingly important role in Europe but activity is still overshadowed by the U.S.
Over the past decade, European venture capital investment has been approximately one-fifth to one-third the size of investment in United States. Also, the number of venture capital deals in Europe is higher than in the United States, showing that venture capital firms in Europe are, on average, dispersing funds more broadly through smaller deals.
We must acknowledge that the CMU project will not come in the form of one piece of legislation. It will consist of a wide range of complementary measures which will probably involve re-examining existing EU legislation. But scrutiny from the Parliament and ECON Committee will be very necessary to progress this project in a meaningful way.
We have already seen some major movements from the Commission in relation to the Capital Markets Union – through the publication of the Capital Markets Union Green Paper and through the consultation on the Prospectus Directive and Securitisations. It is my understanding that Commissioner Hill will produce a legislative proposal on Securitisation in September 2015 followed by a review of the Prospectus Directive in November 2015. The signals of the CMU plan are already positive but ultimately we need the right approach between pragmatism and ambition.
Brian Hayes MEP today welcomed Ireland’s tax measures which bring us into line with international tax principles but said that we should not adopt measures which are out of sync with other countries. Mr. Hayes made the following comments after reports that Ireland is set to become one of the first countries to introduce country-by-country tax reporting:
“Country by country reporting has been a key requirement of the European Parliament for years. This is all about tax transparency and transmitting tax information from one authority to the next.
“There is a debate about whether country by country reporting should be publicly available – I think this is something that needs to be assessed on an international level after a number of years.
“It is very welcome that Ireland has moved in line with OECD international tax standards – the Double Irish has been removed, Irish registered companies can no longer be considered ‘stateless’ for tax purposes and Ireland was one of the first to sign up to the FATCA tax transparency agreement with the US.
“While I accept the need to introduce more tax transparency measures, we should not do it out of sync with other countries.
“We should also remember that this is not about moving towards a harmonised EU tax system. Tax competition between Member States is good for business. The EU has no competency on corporate tax rates – this is a matter solely for Member States.
“When tax matters are decided at EU level, there should be respect given to the unanimity principle which means that tax proposals must be agreed unanimously by Member States before being adopted.”
Fine Gael MEP for Dublin says that a compulsory national ID card system would make public services more efficient for everyone in Ireland
Brian Hayes MEP today called for the introduction of a compulsory national ID card system for Ireland, noting the significant benefits that national identity cards have given to millions of EU citizens.
“All 28 EU member states except for Denmark, the UK and Ireland issue their citizens with national identity cards with the majority of Member States making it compulsory to hold one. In many Member States, the national ID card incorporates a person’s social security card, birth certificate, bank card and sometimes even driver’s license all into one.
“A national ID card system would help to clarify exactly how many people are living in the country. Census results from 2011 showed that there was more than 100,000 people in Ireland than previously thought. Our methods of documenting citizens has become outdated and needs to be modernised. A comprehensive national ID card system is achievable and because of Ireland’s relatively small population compared to other EU countries, it would be cost-effective.
“The introduction of Public Service Cards (PSCs) in 2012 is a welcome development with over 500,000 cards issued already. But this is a small first step. A compulsory national ID card system would make public services more efficient and user-friendly for everyone. In most other EU countries, your national ID card can be used for health care, social services and paying taxes. In Estonia, for instance, taxes take less than an hour to file and setting up a company takes only a few minutes using an Estonian ID card.
“We need to be ambitious about this – I believe the government should put in place a strategy to develop a compulsory national ID card system. Ireland is a long way behind other EU countries on how we document and identify citizens.
“If we have a well-developed national ID card system in place, it will help prevent social welfare fraud, tax evasion and in helping police authorities to easily identify citizens and manage anti-social behaviour and criminal activity.”