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COMMISSION OFTHEEUROPEAN COMMUNITIES
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COMMISSION COMMUNICATION TOTHECOUNCIL
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CONTENTS
Introduction
1.Thenecessity ofincreasing investment
2.Theobstacles toinvestment
3.Theroleandinstruments ofgovernment
4.Linesofactionatnational andCommunity level
5.Summary andconclusions
Annexes
I

Introduction
TheEuropean Council of29to30March expressed itsconcern atthe
Level ofproductive investment inEurope ,especially inthegrowth indus­
tries ofthefuture .Itagreed ontheneed fortheCommunity andeach Member
State totake ,asfrom this year ,each asfarasitwasindividually
concerned ,allappropriate steps orinitiatives toreverse this trend .
Itconfirmed theimportance itattributed tothe lowering ofinterest
rates and thestrengthening ofthe Community lending instruments for
thebenefit ofinvestment ,particularly inthe fields ofenergy and
industrial andagri-foodstuffs development .Itrequested the Commission
tomake anyproposals itdeemed useful and the Council toadopt the
means andprocedures forattaining these objectives .Itrequested a
preliminary report forthemeeting inJune .
Thepresent document recalls the growth ofinvestment inrecent years .
Itanalyses the role ofgovernment and the Community 'spossible contri­
bution inthearea ofinvestment ,with aview toproviding aframework for
the initiatives and theproposals for acoordinated investment policy .

-2-
1.Thenecessityofincreasing investment
1.1.Theshareofgrossfixedcapitalformation inGDPin'theCommunity
hasdeclinedappreciably relativetothefirsthalfofthe1970s:
thistrendiscommontoalltheCommunity countries,exceptIreland,
althoughitdiffersindegree.Itisduetothefallinabsolute
termsrecorded in1974and1975andtoamarkedweakness overthe
recoveryperiod1976-80,exceptforGermanywheretheshareof
investment inGDPhasnevertheless notmanagedtoclimbbackto
thelevelrecorded intheearly1970s.Thepreliminary figuresfor
1981show,againwiththeexception ofIreland,anewfallinreal
termswhichwillcontinue into1982according tothelatestfore­
castsforthemajority oftheMemberStates-thepositive ratesof
Ireland,Italy,Luxembourg andtheUnitedKingdomremaining very
low.
Withinthisoveralltrend,theshareinvalueaddedofinvestment
inindustrial production istendingtodeclinerelative
tothefirsthalfofthe1970salthough thevolumegrowthrate
hasfluctuated fairlysharplyovertheperiodandin1979inpar­
ticular.Further,forequipment investment ,thegrowthratewas
generally higherthanfornon-residential building,reflecting a
greater needtorationalize asaresultofthechangesinrelative
prices.Thereisalsoevidence ofadecline,since1974,inthe
investment shareinvalueaddedforthemarketservices sector,
andsince1976forenergyproducts .Lastly,theshare
ofgeneral government fixedinvestment inGDP,andevenmorein
totalpublicexpenditure ,hasshownafallinthesecondhalfof
the1970s.(Seeannexed tables.)
1.2.Thisinvestment trendmustbereversed because :
-theconsequence oftheweakness ofinvestment isanageingof
productive equipment andaslowdown intheincorporation of
technological progress atatimewhentheCommunity must
•·/··

maintain andincertaincasesre-establish itscompetitiveness ,
ifitisnottoLoseout,onbothdomestic andthirdmarkets,
toitstradingpartners intheraceforprofits andnewjobs
deriving fromanimprovement ininternal andinternational
demand;adynamicabilitytoadapttonewmarketprospects
depends onthemodernity oftheproductive apparatus .
Although markedly greater thanthatofitschiefindustrialized
partners,theCommunity'smarketshareinextra-Community trade
inmanufactured products hasfallen,whereasthoseoftheUnitedStates
andJapanhaveincreased ;thelossesincertainintermediate
technology sectorsaregreaterthanthoseoftheUnitedStates,
anditisbeginning tofallsignificantly behindinthehigh-tech-
nologysectors :
1973-80 Achange
inmarketshares EC USA Japan
Manufactured products "0,2 +0,7 +2
ofwhich:steel "1/7 -0,1 +2,3
Equipment goods "0,7 -0,1 +4,3
ofwhich:
officeandtelecom-. __ .to
».• f ™"I *£ T|.Qmunicatiors equipment
roadvehicles "3,7 "3,2 +10,3
Inparticular ,despite apositive export-import balanceforhigh-
technology products (120,compared with597forJapan,whilethe
USAisinequilibrium ),themovement initsrelative position as
regardstheshareofexportsoftheseproducts intotalexports
wassomewhat unfavourable (anindexnumberof100indicates aratio
ofhigh-technology products tototalexportsequaltothatofthe
0ECD):
Hightechnology products
specialization intheOECD EC USA Japan
1963 102 129 56
1970 94 127 87
1980 88 120 141
Whiletakingintoaccountthefactthatforinvestment goodsthe
EEC'smarketshareinexportstotherestoftheworldisgreater
thanthatoftheUSAandJapan(in198028.4%compared with15%
and15.1'%respectively ),itshouldbenotedthattheexport/import
ratioforthesegoodshasdeteriorated significantly,reflecting a
growingpenetration ontheCommunity market,andaninadequate
performance onthirdmarkets :
Investment goods:
export/import EC USA Japan
1973 151 130 572
1980 139 132 809EC USA Japan
-0,2 +0,7 +2
"1/7 -0,1 +2,3
-0,7 -0,1 +4,3
-1 +2,2 +1,8
-3,7 -3,2 +10,3

aLastingrelaxation oftheenergyconstraint ongrowthdepends
eitheroninvestment inthissector,orontheconversion of
industrial plantandequipment ,whichislinkedtothe
rateofsubstitution ofexisting capital;
According toavailable estimates theshareofenergyinvestment
between 1981and1990islikelytobesome2%ofgrossnational
product.Buttheseratesremainappreciably belowthoseforecast
fortheUnitedStates (4%)andJapan(3to3.5%)overthesame
period.
thepossibilities ofanon-inflationary returntogrowthare
connected withtheexistence ofadequate production capacity :
now,alevelofcapacityutilization which,according toavailable
estimates islow(78%forindustry intheCommunity in1981)can,
asaresultofeconomic obsolescence causedbythechangein
energypricesandbytheslowdown intherateofsubstitution of
capital,provequiteinsufficient topreventbottlenecks andnew
burstsofinflation :apparent capacity nolongercorresponds to
economic capacity .
thecreation oflastingjobsrequires theproportion ofinvestment
inGDPtobeincreased ,inordertohelptoabsorbexisting unemployment ,
orbecause,asaresultoftechnological progress andtheneed
toadoptmoreenergy-saving production processes ,
theaverage volumeofinvestment neededtocreate a
newjobinindustryand.serviceshasprogressively risen,orbecause
partoftheexisting unusedcapacities areanywayobsolete .
Bywayofillustration ,in1980averagecapitalintensity in
industry (at1970pricesandexchangerates)wassome20.000ECU•
perannumperemployed person.Usingthisaveragefigureasan
approximation ,itispossibletoestimatethatthecreationof
5million newjobs(abouthaIfofcurrentunemployment )woulddemand
avolumeof100.000million ECUofinvestment,orabout12,5%ofGDP.

Atcompanyorevenindustry level,investment may
possiblyresultinalossofjobs;however,attheleve.lofthe
economy aswhole,increased capitalformation determines the
competitivity oftheindustrial sectorinparticular ,andis
henceanimportant determinant ofthemaintenance ofalarge
proportion oftheexisting jobsandofthecapacity tocreate
lasting newones.Thefearofunfavourable effects onemployment
isveryoftenduetoaninsufficient awareness ofthefullforward
andbackward linkages andtheireffectspnemployment ,inclu­
dingemployment intheserviceactivities (e.g.thedevelopment
ofautomated industrial installations creates aheavydemand
forspecialized technicians ).

-6-
2.The obstacles toinvestment
Ifinvestment istostage atasting recovery ,the chief requirements
are the re-establishment ofamore stable andmore predictable
macroeconomi cenvironment ,andmore optimistic expectations asto
the future ofexternal and internal demand .
Inthepresent slow-growth situation anumber offactors form a
particular barrier toinvestment decisions .
These are :
2.1 .ahigh level ofuncertainty concerning :
.themovement ofexchange rates :inrecent years ,theECU has .in
turn appreciated anddepreciated almost 50%against theyenand
depreciated byasimilar amount against thedollar (1);these
movements donotcorrespond toequivalent divergences ininflation
orinthe movement ofcosts .
.themovement ofrelative prices :high inflation rates (still
above 10% for the Community asawhole )make itmore difficult
forthose involved inbusiness activity todistinguish between
price variations determined bychanges inthedemand forvarious
goods orbythegeneral increase inprices ;added tothis are
theuncertainties astothe future ofcertain prices ,such as
oilandenergy prices ,thedetermination ofwhich depends also on
non-economic factors ;
.the level andvariability ofreal and nominal interest rates .
In1981 ,rea Ilong-term rates stood atlevels above 5%inBelgium ,
Denmark ,the Federal Republic ofGermany and theNetherlands :
because oflower growth prospects ,these real rates have agreater
impact than thesimilar rates recorded inthe1960s .High nominal
rates bear particularly heavily ondeferred-profitability invest­
ment (e.g. inthefield ofconstruction ,certain types ofenergy
investment ,and inthe case ofplans fortheintroduction ofnew
products )andreduce theincentive toinvest ,inparticular when
the company has noaccess toadditional sources offinance for
theperiod during which the investment isnotproducing profits .
Then again ,the variabi lity ofinterest rates makes itmore
difficult toforecast the cost ofthecapital ,andtheburden
ofindebtedness ,andtends toresult ,atleast intheshort term ,
inawait-and-seeattitude onthepart ofcompanies .
■satmmm
(1)ECU/Yen :February 1980 -August 1981 50%devaluation (preceded byan
equivalent revaluation between August 1978 andNovember 1979 );
ECU/2:45%devaluation between July 1980 andAugust 1981 .In1981 ,
thevariability ofEuropean currencies against theECU,measured by
thevariation coefficient ,stood at14.2 (non-weighted average ),as
against 62.3 forthedollar .

Theincreased uncertainty isaccompanied byanincrease inthe
degree ofrisk ,which means that therate ofreturn must behigher
for the investment tobeundertaken .
Thetrend inprofitability ;thenetyield onbusiness
capital inmanufacturing industry wasparticularly lowinthe
Community inthelate 1970s :fortheFederal Republic ofGermany ,
France ,theUnited Kingdom ,Italy ,thenetyields onfixed capital
(%-annual average )were markedly lower than intheUSAandJapan
Net operating surplus
as%offixed capital 1960-73 1974-79
EC (FRG,F,I,UK) 18,7 13,4
USA 29,1 20,6
Japan (gross surplus ) 34,2 32,0
Thegrowth inlabour costs ,when itisgreater than that ofproduc­
tivity adjusted bythemovement ofthe terms oftrade and of
indirect taxation ,isreflected inadrain onprofits :compared
with 1973 ,therelationship between productivity adjusted inthis
way and real wages moved asfollows :
Adjusted productivity /
real wages (1973 =100) CE USA Japan
1979 102,1 99,5 109,3
1980 103,0 100,4 110,6
1981 , 105,8 100,6 111,7
Itshould benoted that ,although real wages inJapan rose more
rapidly relative toadjusted productivity ,thewage share as a
percentage ofvalue added inmanufacturing industry remained at
alower level than inthe Community :
Wage share /V.A. 1962-73 1973-78
EEC (FRG,F,I,UK) 0,64 0,70
Japan 0,51 0,60
Then again ,,competitive edge also depends onthe level ofwage
costs :inthecountries where these areparticularly low,an
increase inthegrowth ofadjusted productivity cantake place
without altering competitiveness decisively :now,according to
certain estimates ,in1981 Japan 'sposition interms ofwage

-a-
costsperunitofoutputwasmarkedly betterthanthatofthe
Community (figuresinDM,D=100):
J)B F I NL UK USA'Japan
100115 91 119 99 123 97 82
2.3.insufficient channeling ofsavings towards mediumandlong-term
investment anddirectcompany financing ,eventhoughthepersonal
savingsratioishighintheCommunity (16.2%innominaltermsin
1981)andclosetothatinJapan(18.7%).Publicdeficits,partially
recession-induced ,absorbanexcessive proportion ofsavings and
1)increase thecostofcredit;thegeneralgovernment borrowing
requirement ,asapercentage ofGDP,whichaveraged-0.4forthe
period1961-70,hasremained veryhighfortheCommunity inrecent
years,andhigherthanthatoftheUSAandJapanin1981.
General government
financial deficit (%GDP)1974-78 .1979 1980 1981
EC -3,7 -3,6 -3,6 -5,0
USA -0,9 +0,5 -1,2 -0,9
Japan "3,2 -4,7 -4,2 -4,0
Further,atthetimewhentheslowgrowthofdemandandthepressure
ofcostswerenarrowing themarginsforself-financing andweakening
thefinancial structures ofcompanies ,agroupoffactors suchas
theinsufficient realaftei–taxyieldonsecurities issuedbycom­
panies,thereluctance toenterintolong-term commitments inan
uncertain climate,insomecasesanunder-development ofthe
activity ofnon-bank intermediaries (e.g.institutional investors
ormutualinvestment funds),imperfections inthefinancial market
(stockexchanges),themorefavourable taxtreatment ofsavings
invested inhousingorinsurance ,andthenominalratesofpublic
securities ,oftentax-exempt ,havehelpedtomakecompanies'
recourse toex••<Ifinancing moredifficult .
B..Inam
(1)FortheUSA,thesefiguresmayappeartocontradict thoseusuallyquoted.
Thefiguresinthetextrelatetothewholeofgeneralgovernment (i.e.
centralandlocalgovernment andsocialsecurityfunds):intheUSA,
thefederaldeficit(-2,1%ofGNPin1.981)ispartlyoffsetbythe
surplusesofthestatesandlocaladministrations (+1,2%ofGNPin1981).

-9-
IntheCommunity,inthelatterpartofthe1970s,thefundsraised
oncreditmarketsbythecorporate sector,asapercentage ofGNPdecreased : '
Recourse tocredit
markets (%GNP) 0 F UK USA JAP
1972-76 3,8 7,3 4,7 5,7 13,3
1977-79 3,4 5,9 2,8 6,1 6,3
In1979,thebreakdown ofrecourse totheshare,bondsandloan
markets,asa%ofGNP,wasthefollowing :
Recourse tocredit
markets (%6NP) D F UK USA JAP
shares 0,3 0,6 0,5 0,10,6
bonds -0,2 0,5 0,0 1,10,4
loans 4,1 3,8 2,9 5,44,7
total 4,2 4,9 3,4 6,65,7
Morerecently,inseveral MemberStates,companies' recourse to
thecapitalmarkets bytheissueofshareshasincreased sub­
stantially ;nevertheless ,furtherprogress alongthisroadis
necessaryifanupturnininvestment inresponse toanimprovement
evenmoderate-ingeneral economic conditions isnottobeheld
backbyunbalanced financial structures orisnottoruninto
bottlenecks becauseofspecific inadequacies inthefinancial
channels .Theseobstacles canbeparticularly severeinthecase
ofsmallormedium-sized enterprises whichcanbehampered from
exploiting theirinnovation potential ,orinthecaseofcertain
deferredprofitability projects-R&Dinparticular -bylarge
companies whidhinvolvethemobilization ofsubstantial financial
resources .
2.4.insufficient adaptability oflabouratthelevelofworkerquali­
fication orcompany management ,whichconstitutes anobstacle
totheuseofthemostsophisticated andefficient equipment,and
production andorganizational techniques ,soimpeding aspeedyand
widespread introduction oftechnical progress .
2.5.inadequacy ofoutlets:aninsufficient levelofdemandofcertain
Europeanproductlinesoftenreflects companies' inability to
satisfy apotential orexisting demandbyoffering abetterdeal
intermsofcosts,quality,delivery dates,financing andafter-
salesservice.
••■/••■

-10-
3.The role and instruments ofgovernment
3.1 .Government has acrucial role ,atthemacroeconomi clevel .Inthe
current situation ,ithas to :
-reduce uncertainty bystrengthening confidence inthepolicies of
fighting inflation andofrestoring the keyeconomic equilibria .
-improve thegeneral climate and create more optimistic expectations
bytaking ,attheappropriate time ,every possible opportunity
tosupport internal and international growth ,therecovery of
which isstill fragile and extremely vulnerable toexogenous
external shocks ;interest rates must bebrought down inline
with the slowdown ininflation and must also result from the
reduction ofexcessive public deficits .
3.2 .Irrespective oftheir responsibilities instabilization policy
governments exert apositive ornegative influence
oncapital formation through .thestructure and "quality "
ofpublic expenditure ,theaction ofthepublic sector asbroadly
defined ,taxandfinancial incentives tocorporate investment ,and
regulations ;onamore general level ,structural policies ,such as
industrial policy ,research andinnovation policy andvocational
training policy ,have aninfluence ,though onewhich isdifficult
toquantify ,onthe rate ofincrease and thequality ofthe capital
stock .
3.3 .Efforts toreduce public deficits have concentrated ,particu­
larly incertain member countries ,onreducing public investment
rather than consumption :in1981 ,general government gross capital
formation ,which in1970 represented 4.1% ofGDP,stood at3.1% of
GDP,while total current expenditure hasincreased from 33% to45%
ofGDPonthe same period .
Investment bypublic undertakings also represents alarge proportion
ofcapital formation .Since these undertakings predominate ,inthe
Community ,inthetransport ,energy andtelecommunications sectors ,
their investment can becrucial for themodernization of
••■/•mm

-11-
infrastructures oftheMemberStates,whiteatthesametime
representing ademandforhightechnology products .
Anindiscriminate reduction ofpublicsectorinvestment underthe
pressure ofthefinancial constraints whichareparticularly evident
inthedeferredprofitability areascertainly impliesrisksforthe
qualityoftheservices offeredtotheproductive sectorandfor
theactualcompetitiveness oftheeconomy.
Thisassessment needstobequalified intwoways.
First,iftheoverall impactofpublicsectorinvestment istobe
positive,theaspectsofmedium-term profitability mustbecorrectly
incorporated intothedecision-making process andpreference must
begiven,inpublicinvestment ,toexpenditure ,including infrastruc­
tureexpenditure ,whichhelpstodevelopproductive activities .
Second,certain elements ofcurrentpublicexpenditure inreality
haveaninvestment valuetotheextentthattheyfinancetheimprove­
mentofhumancapital,vocational training andthedissemination
ofitsresults,andoffercompanies marketprospects bycreating
alevel .ofdemandhighenoughtopermittheproduction ofadvanced
technology products .Incertain cases,theissueshouldalsobe
tackledofthe'submission tomarketrulesofsometypesofpublic
services andproducts .
3.4.Taxandfinancial investment incentives (grants,taxbreaks,interest
ratesubsidies )haveseentheirweightinthepublicbudgets become
progressively significant .Becauseofthissteadyincreaseina
periodofgreaterbudgetdeficits,reconsideration isjustified of
theireffectiveness inassisting capitalformation andpromoting
theoverallcompetitiveness oftheeconomy.
•••/•••

-12-
Investment grants (national accounts definition )accounted fori %of
Community GDPonaverage inthe1970s .Ingeneral total gross
fixed capital formation was subsidized inthis waybyroughly 4%
inthe first half ofthe 1970s and by5%since then .Levels and
trends varied substantially between countries ,reflecting toa
large degree thevarying emphasis placed ondifferent instruments
(like interest-rate subsidies ,investment grants ,and tax
depreciation allowances ).
Asregards taxation ,theadjustment ofdepreciation allowances
isanimportant instrument ,onwhich the recent tax reform inthe
USA hasrelied heavily .However ,its impact isafunction ofthe
marginal rates ofcorporation tax,and ofthe other taxes oncosts
orincome from capital .
The interaction between tax structure ,inflation and technological
progress isalso clear :the replacement ofinvestment goods inan
inflationary climate requires higher nominal expenditure and
liquidity (thereplacement cost ofacapital good after 10years'
use,in1970 ,was inthe Community some 32% higher than thenominal
capital costs recovered ,but in1980 this figure rose to62%),
while theacceleration oftechnological progress reduces theuseful
life ofthe capital .
The ratio ofinternal toexternal financing ,and thepossibilities
ofexternal corporate financing (recourse torisk capital ,medium
and long term indebtedness )also partly depend onthetaxation of
thedifferent types offinancial assets ,which isoften designed
tofavour theplacement ofpublic securities inorder toenable the
financing ofthepublic deficits .
3.5 .Public intervention inthe form oflaws oradministrative regulations
has agreat impact ,although onewhich isdifficult toquantify ,on
thewhole investment process .The laying down ofmeasures andthe
setting ofstandards forthepurposes ofsafety ,environmenta Iprotec­
tion ,andtechnical compatibility determine the characteristics of
products andmanufacturing processes ;measures governing working
hours andconditions affect thedegree ofequipment utilization
and,intheend,therelative factor cost ;therules governing the
financial sector ,inparticular when they arerigid inlaying down
operational possibilities (e.g. ,bylimiting theacquisition of
certain types ofassets )influence themechanism forchannelling
savings into productive investment .
•mi«t

-13-
Ingeneral ,intervention inthe form ofregulations must respect
abalance between thespecific objectives inview (e.g. safety ,
environmental protection ,etc.)andtheir possible action asa
brake oninvestment andinnovation .Inanyevent ,newregulations
orchanges tothem -justified onthegrounds ofchanges in
technology -must beaspredictable aspossible ,sothat they
can beincorporated into companies' investment decisions .
3.6 .Ifconcrete results aretobeobtained ,thepublic authorities
must use all the different instruments available tothem (macro­
economic policies ,public expenditure ,incentives ,regulations ),
which support capital formation and channel it,directly or
indirectly ,atstructural level ;the instruments must beused
coherently ,thecriterion always being ajudgment ofpresent and
potential relative advantage .Theeffectiveness ofthese specific
instruments depends ontheir simplicity andontheguarantee that
they will bedurable atleast asmuch asontheir volume .
••/•■

-14-
4.Linesofactionatnational andCommunity level
4.1.Therecovery ofinvestment depends oncoherent publicauthority
actionatmacroeconomi candstructural level,andthisaction
mustbesupported bythesocialpartners ;sincemostoftheinstru­
mentsforthisactionareavailable atnational level,thisisthe
levelatwhichthechiefeffortmustbe-made.
Nevertheless ,theCommunity hasaspecific roletoplayatdifferent
levelsbecause :
-jointactioninthefieldofeconomic policycoordination may
facilitate moreconvergent trends,promotegreater exchange rate
stabilityandleadtoamoreorderlyevolution ofpayments
balances;furthermore ,concerted actionwiththeotherindustria­
lizedcountries andcooperation withthedeveloping countries
ifitistoproduceconcrete results,particularly intermsof
growth,cannotresultfromunilateral uncoordinated initiatives ;
-thesystematic exploitation ofacontinent-sized commonmarketcan
provide averysubstantial supportforinvestment activity for:
.theguarantee ofareallyopenCommunity-scale commonmarket
represents acondition ofstability andexpansion forcompany
activity;
.optimumsize,notablyintheadvance technology industries ,
willhenceforth begreaterthanthatdefined bynational
markets,andifthecrisissectors arerestructured and
converted onapurelynational scale,theresultsareliable
toproveincompatible atCommunity level;
-thepoolingofexperience byMemberStatescanleadtoaconver­
genceofchoices onthemosteffective models;furthermore ,a
systematic jointanalysis ofthepolicies pursuedisawayof
ensuringtheircoherence andtheircompatibility withtheobli­
gations stemming fromtheCommunity 'sexistence ;
-selective supportatCommunity levelcandirectnationalpolicies
towardsthecommonobjective ofimproving competitiveness .
•••/•••
C1)AnnexIIoutlines recentCommunity measures ormeasures inpreparation
wichhavedirectandindirect effects oninvestment .

-15-
4.2 .Forthese reasons ,aCommunity approach canmake apositive
contribution .Itshould keep tothefollowing guidelines :
4.3 .animprovement ofthemacroeconomi cenvironment ,with aview tosupport
company expectations :Community coordination within theframework ofthe
EMSmust enable each member country totake every possible opportunity ,
with reference tospecific situations ,tosupport growth ;acoordinated
lowering ofinterest rates inline with the results achieved inreducing
inflation isanessential element ofthe joint action .
4.4 .aprogramming ofthepublic budgets inamedium term perspective :the
first requirement istoreduce thedeficits ,inorder tolimit their
inflationary effects andthedrain onprivate savings ;secondly ,the
need istoincrease thepositive impact ofcurrent expenditure ,,capital
expenditure andtaxandfinancial incentives oncorporate investment .
This implies arevision ofpublic expenditure andofitsstructure ;the
areas ofpublic expenditure (forinstance ,inthefield ofinfrastruc­
ture ,R+D,vocational training )which make theeconomy more competitive ,
asfaraspossible ,tobeincreased relative tototal expenditure ,but
above all made more effective .
These questions rnust beexamined jointly when thebudget guidelines
are laid down .
••a/•m■

-16-
4.5.Anefforttorationalize taxationandimprovethefinancingofpro­
ductiveinvestment :theCommissionhasinitiatedanalytical work
oninvestmentincentives andwillreviewideasontheobstacles
(especiallyforPME)tothechannelling ofsavingsintocorporate
investment;theobjectiveisnottoseekharmonization "foritsown
sake",nortosubstitute Communitymeasures,buttotakeadvantageofthe
experienceofMemberStatestoidentifythemosteffectivemechanisms.In
anyevent,theuseofthevariousformsofinvestmentincentivesin
theCommunitymustremaincompatiblewithtreatyrules,soavoiding
thecreationofdirectorindirectformsofdistortionwithinthe
commonmarketandthedangerofcompetitive biddingwhichcanreduce
theiroveralleffectiveness appreciably.
Furthermore,greaterfreedomofcapitalmovementswithintheCommunity
couldalsohelptoimprovetheallocationoffinancialresources.
4.6.Arevisionofregulatoryactivityinthelegalandadministrative
fieldswithadualobjective:
-tomaketheregulatory frameworklesscomplex,andchangestoit
morepredictable,inordertopreventuncertainties asregards
theconditionsforgainingaccesstomarketsanddelaysininvest­
mentdecisions;
~tostrengthenthecommoninternaImarketwhichmustrepresentanassured
basewhichCommunityindustrycanuseasaspringboardfortackling
international competition .
4.7.Amorepositiveapproachincertainsectorsofactivity:
-inthecrisissectors,therestructuring inclosecooperation bet­
weentheMemberStatesandtheCommunitymustpermitanautonomous
capacityfordevelopment,withoutfreezingproductivestructures,
sothatthemostdynamiccompaniesandsegmentscanbecomemore
competitive withthirdcountries.
s•/■•

17
-inthestrategic areaofadvanced technology ,amoreconcrete
commitment mustmakeitpossible :
.tomakeupthegroundlostincertainindustries ofthe
I
future,inwhichprolonged technological dependence
inevitably hasrepercussions onthecompetitiveness of
theeconomy asawhole;
.torenewtheindustrial fabricindepth,sothatparticularly
theintermediate technology-based sectorsareabletointro­
ducenewproductive processes andsatisfytheexpanding
demandfornewproducts ;
-inthefieldofenergy,theguidelines recently decided onbythe
Council mustbeimplemented withoutdelay;aregulatory andfinan­
cialcontribution atCommunity levelcansupportnational policies .
-inthefieldofsmallandmediumenterprises ,aswellaslocal
initiatives ,itisimportant tosupporttheirinvestment activity,
whichcanrepresent asourceofinnovation andbeparticularly
job-creating ,bymeasures aimingtoreducetheirhandicaps interms
ofaccesstocredit,information ,know-how andmanagement .
4.8.greaterattention oftheimprovement ofhumancapital:effortsat
national andCommunity levelmustmorecloselymatchthisfactor's
realcontribution ,toageneralrecovery ofinvestment ,overand
aboveitsspecific roleinactiveemployment policy.Inthisfield,
Community recources willreinforce,throughtheSocialFund,the
adaptation ofthatpartofthelabourforceaffected byrationali­
zationinvestment ,sothatworkerswillbeabletotakejobscreated
bytheintroduction ofnewtechnologies andbyjob-creating sectors.
4.9.thestrengthening ofCommunity lendinginstruments forthebenefit
ofinvestment ,inresponsetotheinvitation oftheEuropean Council.
Thisprocessmustnotbemerelyquantitative innature,butshould
alsobeaccompanied byagreaterconcentration ofresources on
specific schemestomodernize production structures .TheCommission
willpropose,tothisend,theadoptionofanewtrancheofNCIloans
amounting to3000million ECU.
•••/•aa

18-
5. Summary and conclusions
5.1 .Aninvestment drive isnecessary for reasons ofcompetitiveness ,to
relax the energy constraint ,topermit anon-inflationary return to
growth ,and tocreate new jobs .
5.2 .Theobstacles toinvestment can beidentified intheuncertainty relating
toexchange rates ,inflation and interest rates ;ininsufficient profi­
tability ;incertain financing constraints ;inshortcomings inthe
adaptation ofhuman capital ;ininadequacy ofoutlets ;inregulations
constraining themore efficient use ofcapital .
5.3 .Government influences capital formation through macroeconomi cpolicies ,
the level ofdeficits ,thestructure andquality ofcurrent and capital
expenditure ,incentives toprivate investment ,and regulations .
5.4 .Aglobal strategy forpromoting investment must include greater macro­
economic stability ,the reduction ofpublic deficits and ashift inthe
structure ofpublic expenditure ,therationalization oftaxation ,the
improvement ofthe financial channels and theelimination ofregulation -
induced distortions ,and support measures inspecific areas .This is
the context which will provide aframework for theinitiatives andproposals
tobeput forward bythe Member States and the Community inthemonths
ahead .

Annex 1
Table 1Investment intheCommunity
Table2Grossfixedcapitalformation as%ofgrossdomestic
productintheMemberStates
Table3Volumegrowthrateofgrossfixedcapitalformation
intheMemberStates
Table4GrowthrateofGFCFbymajorproductcategories
Table5General government grossfixedcapitalformation

Investment inthe Community ANNEX I-Table 1
Investment ratio
(Gross fixed capital
formation as%ofGDP )
Growth rate %(volume )
Investment ratio bybranch (1)
(GFCF /value added %)
-fuel andpower products
-manufactured products
-market services
Growth rate %(volume )(1)
-fuel andpower products
-manufactured products
-market services
General government gross fixed
Capital formation as%ofGDP1970 1971 1972 197i 1974 1975 1976 1977 1978 1979 1980 1981 1932
22/9 23/122,8 22,9 22/4 21.3 21/120/720/7 21/021,2 20,2 19,7
6/2 3/9 3/6 4/6 -3/7 -4,3 3/5 0/9 2,8 4/1 2/0 -4/2 -1,3
33/5 35/335/333/238/7O,τ37/133/132,4 32,0-
16/7 16/3 14y614,2 14,2 iΖ,'12/5 12/411,9 12/3
29/8 30/431,4 32/230,1 23,2 2«,428,6 23,8 28/3
-0/5 8/7 2/6 -1/8 8/3 10/6-0/1-4/4 4/0 5/9
18/3 -1/3 -6/3 2/4 -0/8-12,6 1/« 0/6 -0/9 6/3
3/4 7/2 8/2 6/7 "5/5 -5/0 A/7 3/9 4/4 3/2
4/1~ 3/9 3/7 3/7 3/8 3,8 3/6 3/2 3/1 3/2 3,2 3/1 2/9
Sources :EURQSTAT National accounts 1970-79
Economic Budgets DGII1981-82
(1)EC-6

INVESTMENT RATIO
(6FCFas7.ofGDP)
currentpricesANNEXI-Table2
Year 1970 1973 1976 1979 1980 1981 1982
Country
θ 22.7 21.4 22.1 20.6 21.4 19.5 19.0
DK 24.7 24.8 23.0 20.5 18.3 15.6 15.7
D 25.6 24.5 20.7 22.6 23.6 22.8 '21.4
GR 23.6 28.0 21.2 25.6 23.5 20.8 19.7
F 23.4 23.8 23.3 21.4 21.6 21.1 20.3
IRL 22.7 25.3 24.8 31.4 28.9 30.1 28.5
IT* 21.4 20.8 20.0 18.9 20.0 20.3 20.1
L 23.5 27.4 24.5 25.0 25.3 25.1 25.7
NL 25.7 23.0 19.2 21.1 21.0 19.0 18.2
UK 18.6 19.5 19.0 17.8 17.8 16.2 16.2
EC-10 22.9 22.9 21.1 21.0 21.2 20.2 19.7
USA 17.6 19.1 17.2 19.4 17.7 18.1
JAP 35.5 36.4 31.3 32.0 31.7 31.0•
Sources:EUROSTATNational Accounts 1970-1979 andEconomic Budgets DGII1981-1982

GROSSFIXEDCAPITAL FORMATION
(Volumegrowthrate-1975prices)ANNEXITable3
Period/year»1960-65
*1965-70
θ1970-73
e1973-76
01976-cO
01973 1979 1980 1981 1932
Country
Β 7.3 Α.A 2.8 2.8 1.6 2.A-2.6 5.6 -8.5 -3.A
DK 8.9 5.7 Α.8 2.1 5.1 2.A-1.7-13.8 -16.3 3.6
D 5.7 3.7 3.A-3.1 7.0 5.0 8.A 3.7-3.3-
GR 11.0 7.6 12.3 -6.A A.2 6.0 7.9-8.6 -10.0 -2.0
F 9.1 6.5 6.8 O.A 0.9 0.8 2.7 0.8-2.0-o.v
IRL 13.0 6.A 10.9 -1.5 10.1 15.9 12.1-7.7 5.0 1.7
I 2.7 7.5 5.7 -2.A 5.0 -0.1 5.8 10.0-0."2 0.2
L 7.2 0.1 10.7 -5.2 3.6 8.1 1.0 1.3 -3.6 1.2
f-L 7.2 6.9 1·7-3.5 5.1 2.7 -1.5-2.6-11.'3-1.6
en 6.A 3.7 2.9 -0.8 0.2 3.3 0.3-0.7 -7.6 2.3.
ElR-10 6.A 5.2 A.O -1.7 3.A 2.8 A.1 2.0-A.2-1.3
JAP- Α.5 9.A-2.A 5.2 9.A 6.6 0.2 2.1 0.7
USA 6.8 1.2 6.5 -3.9 5.9(1)7.1 1.7-7.2 0.5 -A.A
(1)1976-79
Sources :EUftOSTAT,National Accounts 1970-1979 andEconomic Budgets ,DGII1980-82

GROSSFIXEDCAPITAL FORMATION 3Y*1AJORPRODUCT CATEGORIES
ANNEXI-Table4
(averageannualgrowthrateat1975prices)
P-,CountryΒ t>Κ D F IRL I NL UK E.C-8
Period:
category :-
-
970-1973
1.Equipment
2.Non-residential building
3.Residential building3.2
3.6
0.65.3
2.6
'11.31.6
1.3
8.59.1
2.3
7.59.9
5.2
20.45.9
0.2
-3.01.8
-3.8
8.45.3
1.2
2.44.7
1.3
5.6
973-1976
i1.Equipment
2.Non-residential building
3.Residential building3.1
-1.4
9.55.2
-3.1
-8.4-1.3
-2.2
-7.70.4
0.4
0.2-0.7
-6.1
-1.0-1.9
-2.0
-4.1-3.4
-2.5
-6.0-1.0
-2.6
0.9-0.7
-1.6
-3.3
976-1979
1.Equipment
2.Non-residential building
3.Residential building•
-1.8
2.9
-2.60.3
2.3(1)
4.2(1)8.2
4.5
4.43.0
-1.3(1)
-2.3(1)13.5
16.2
13.22.6
0.3
1.28.3
5.3
4.15.2
-4.5
-5.75.1
0.3Π ?
1.2(1)
9Í0
1.Equipment
2.Non-residential building
3.Residential buildingJ-7.3
0.9-7.6
-16.92.9
4.4--9.6
-6.017.3
3.87.3
0.95.2
-6.7-
981
1.Equipment
2.Non-residential building Λ
3.Residential building r-4.9
-10.3-6.9
-21.8-3.1
-3.4- 8.1
2.5-1.3
0.8-11.7
-10.8-5.3
-10.1-
982i/
♦
1.Equipment
2ÜNon-residential building Λ
3.Residential building J2.0
-6.18.8
0.0-2.7
-5.34.4
-0.7-0.7
1.10.9
-3.43.5
0.9-
(1)1976-1978
Sources;EUROSTAT-National accounts 1970-1979 andEconomic budgets D6II1980-82

Generalgovernment grossfixedcapitalformation ANNEXI-Table5!
\
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 198*
as%ofgeneralgovernment currentandcapitalexpenditure
Ô 11,9 11,4 10,3 9,4 9,4 8,2 7,6 7,1 7,6 8,0 8,4 7,6 6,8
f 10,1 9,8 9,3 9,1 9,1 8,9 8,4 8,0 7,5 6,6 6,2 6,1 6,0
I 9,6 8,5 8,1 7,6 8,4 8,7 8,9 8,5 8,4 6,9 7,0 6,5 6/7
NL 10,8 11,0 9,6 8,5 8,0 7,8 7,5 6,5 6,1 5,5 5,7 5,4 5,3
8 9,5 10,7 10,3 8,6 8,0 7,7 7,7 7,4 6,8 7,2 7,2 7,1 6,7
I 10,8 11,812,4'10,2 14,1 13,4 12,4 13,5 -14,3 13,9 16,0 15,3 15,3
UK 13,6 13,0 11,9 13,5 .12,9 11,3 10,6 8,6 6,9 6,5 5,9 4,5 4,3
IRL 9,9 10,0 9,8 10,5 12,0 10,5 8,3 8,8 9,6 11,4 12,0 11,7 11,4
OKa
«11,0 10,4 9,1 8,6 8,1 7,9 8,0 7,6 7,0 5,6 4,8 4,5
I as%ofGDP
D 4,3 4,2 4,0 3,6 3,9 3'73,4 3,1 3,3 3,7 3,9 3,6 3,3
F 3,6 3,4 3,2 3,2 3,3 3,6 3,4 3,3 3,1 3,0 2,9 3,0 3,0
I1 3,0 2,8 2,8 2,6 2,9 3,6 3,6 3,4 3,7 3,2 3,2 3,3 3,5
!NLM 4,9 4,3 ,3,8 3,8 4,1 3,9 3,4 3,3 3,2 3,3 3,2 3,1
Β 3,9 4,5 4,4 3,7 3,4 3,7 3,8 3,8 3,6 3,8 3,9 4,2 3,9
L 3,3 4,0 4,3 4,7 4,7 6,1 5,7 6,8 7,1 7,4 9,1 9,3 9,3
sUK A,84,5 4,3 5,0 5,3 4,8 4,4 3,4 2,7 2,8 2,6 2,0 1,9
IRL 3,7 3,9 3,6 4,0 5,0 4,8 3,8 3,9 4,4 5,8 6,5 6,6 6,1
!UK·
S•• 4,8 4,5 3,7 4,0 3,9 3,6 3,7 3,7 3,8 3,3 3,0 2,8
Sources:SOEC:generalgovernment accounts andstatistics 1970-78
DGII:Economic 'budgets 1980-1982

Annex II
Summary ofCommunity policies andmeasures
which have direct and indirect effects
oninvestment
Over andabove thedirect support toprivate orpublic investment
activity which theCommunity provides through theRegional Fund ,
theGuidance Section oftheEAGGF andthe Community lending instru­
ments ,this annex outlines the recent measures orthose about to
beproposed which also have direct orindirect effects oninvest­
ment inthefollowing areas :the internal market ;research and
development and industrial innovation ;energy ;theadaptation of
human capital ;thestrengthening ofCommunity lending instruments .

-2-
1.Strengthening the internal market
Inresponse toaCommission communication ,the European Council
of29-30 June 1981 agreed 'that aconcerted effort must bemade to
strengthen anddevelop the internal market which lies atthevery basis
ofthe European Community and which isthe platform from which it
conducts its common commercial policy' .The Commission referred to
the Council on21October aresolution onthe strengthening ofthe
internal market which isdesigned both toensure progress onanumber
ofproposals now held upinthe Council and tosimplify formalities at
theCommunity 'sinternal frontiers inthe areas ofcustoms ,taxation
and statistics .
-Theproposal for adecision oninformation andmutual consultation
inthe field oftechnical standards and regulations should be
implemented this year ,once the Council has completed itswork .
Inthe field ofmeasures having aneffect equivalent toquantitative
restri ctions ,the Commission ,asithaddone inthepast inrespect
ofcertain cases ofwidespread infringement ,instituted proceedings ,
notably inthe area offormalities -such asautomatic licences ,
technical approvals andcertificates oforigin -required for imports
ofcertain products which were not justified byCommunity law .
-Asregards the removal oftechnical barriers totrade ,theCommission
iscontinuing with work onharmonization (directives concerning
industrial products ,foodstuffs ,proprietary medicinal products ,
etc.).
-On20April 1982 ,theCommission forwarded totheCouncil aproposal
for adirective ontheeasing offormalities and controls ongoods
transport between Member States .
-The Commission will forward tothe Council twodraft proposals for
aregulation simplifying formalities intrade within theCommunity
and Community transit .
Inthe field ofbusiness law,the Council 'ssubordinate bodies are
continuing their work ontheproposal for aseventh Directive con­
cerning group accounts ;ontheamended proposal for aneighth
Directive concerning the approval ofpersons responsible forcarry­
ingoutstatutory audits oftheannual accounts ofcertain types
ofcompany ;ontheproposal onthedivision ofpublic limited
companies ;andonthe regulation oftheEuropean Cooperation Group­
ing .Theexamination oftheproposal for aregulation onthe
Statute for European companies hasbeen discontinued .Theexamin­
ation isinprogress oftheproposal for aDirective ontheapproxi­
mation oftheMember States' trade-mark laws andtheproposal for
aregulation creating aCommunity trade-mark and aCommunity Trade­
marks Office .

-Asregards theopening upofpublic contracts -theCommission
.iscontinuing tomonitor theimplementation oftheCommunity
Directives coordinating procedures fortheaward ofpublic
works andpublic supply contracts ,andtheGATT agreement on
Government Procurement ;
.iscontinuing direct action forfurther progress inthis area ,
inparticular with aview totheuse ofpublic contracts for
purposes ofindustrial policy andCommunity innovation ,without
however affecting theCommunity 'sinternational obligations .
Itisawaiting aCouncil decision fortheopening ofpublic
telecommunications contracts .
Framework and support inthe fields ofresearch anddevelopment ,
innovation and industry
2.1 .The Commission has recently forwarded basic policy documents to
the Council :
-on15October 1981 ,aCommunication devoted tothe future
strategy ofthe Community with regard toresearch anddevelop­
ment .On9November 1981 ,the Council requested the Commission
topresent concrete proposals inparticular on:the concept
ofoutline programme aiming ataglobal strategy ;thestimu­
lation ofthe European research system ,theorientation of
R&Dprogrammes towards theneeds ofindustrial innovation ;
-On24May1982 ,aCommunication proposing newguidelines for
the Joint Research Centre 's1984-87 multi-annual research
programme .
ι
-On26October 1981 ,aCommunication onindustrial strategy
concerning thecreation ofagenuine European industrial area ,
inparticular bytheimplementation ofEuropean policies for
energy ,research ,innovation andthedevelopment offinancial
instruments for these policies .
-On28October 1981 ,aCommunication onaCommunity strategy
for industrial innovation .The Commission proposed :the
improvement oftheinternal market andtheopening ofpublic
contracts ,inparticular bytheintroduction ofnewtechnolo­
gies ,there-examination oftaxmeasures andother regulations
likely toprovide selective encouragement forhigh-risk pro­
ductive .investment ,theacceptance ofnewtechnologies bythe
public ,thecreation ofappropriate infrastructures atnational
andtransnational level tosupport primarily new-technology -
oriented SMEs andimproved coordination between Community
loan instruments andnational instruments ,giving priority to
innovation .

-4-
2.2.Initiatives havealsobeentakeninspecific sectors :
-dataprocessing ;underthemulti-annual dataprocessing
programme (1979-1983 )afterthefirstcallforproposals ,
supportprojects,totalling 4million ECU,wereputinhand
in1982.Severalprojects werelaunched,including thestudy
ofanautomatic data-exchange systemforEuropean ports,a
projectforthedevelopment ofhydrological modelsandthe
writingofsoftware fortheAdalanguage .Following asecond
callforproposals ,otherprojects havebeenorwillshortly
bethesubjectofcontracts between theCommunity andvarious
European data-processing companies .
-microelectronics :onaproposal fromtheCommission ,the
Council adopted on7December 1981aregulation providing for
directCommunity supportof40million ECUenteredinthe1981
budget,foruseovertwoyears,forprojects toprovide
Community industry withhighlyspecialized equipment forthe
designandmanufacture ofsubmicronic integrated circuits .
information technologies :
.theEuronetnetwork,setupbytheCommunity withtheassis­
tanceofthenational postsandtelecommunications adminis­
trations givesaccessstoover300databasesandbanks;
thisdataismarketed underthenameofDIANE(DirectInfor­
mationNetworkforEurope);charges arebasednotondis­
tancebutonutilization time;
.theINSISandCADDIAprojects (draftdecisions forwarded to
theCouncil on15July1981)concernthecoordination ofthe
activities oftheMemberStatesandtheCommunity :forthe
circulation ofadministrative information through theinter­
connection byintegrated numerical networks ofCommunity
institutions andthecapitals oftheMemberStates (INSIS);
forthecomputer transmission ofinformation onexports and
imports,andthemanagement andfinancial controlofagri­
cultural marketorganizations (CADDIA).
-innovation :theCommission willforward totheCouncil a
Communication ,andadraftCouncildecision relating toatrans­
national plantodeveloptheinfrastructure assisting innovation
andthetransfer oftechnologies .Theobjective istopromote
therapiddissemination ofnewtechnologies ,inparticular at
SMELevel,bygiving aEuropean dimension tothenational
bodiesresponsible forpromoting innovation (including the
financial institutions specializing inthefinancing ofinno­
vation),helpingtosatisfytraining needsandstimulating the
exchange ofexperience andthedevelopment ofpilotprogrammes
intheMemberStates.

2.3 .Intheautumn theCommission will propose tothe Council anover­
allstrategy forthedata-processing andmicroelectronics sector :
at'the endofthemonth itwill present theEsprit research
programme totheCouncil :itsobjective istodevelop between
nowand1990 aEuropean information technology industry by
encouraging research inthepre-commercial phase .
Framework and support inthe field ofenergy
3.1 .Thegeneral framework foraction inthefield ofenergy isrepre­
sented by:
.theCouncil Resolution ofJune 1980 inviting theMember States
topresent totheCommission annually their energy policy
programmes to'1990 (andimplicitly theenergy investment on
which these programmes arebased )and requesting theCommission
toevaluate these programmes (this wasdone for the first time
inFebruary 1981 inC0M(81 )64);
.theCommunity 'senergy strategy ,laid down inCommunications
C0M(81 )540andC0M(82 )36forthenuclear aspect ,which places
energy investment atthe centre oftheprocess ofadapting the
Community economy tothenew energy situation andmakes itan
essential element ofmedium-term economic policy ;
.theCommunication of5February 1982 oninvestment inthe
rational use ofenergy (RUE)(CGM(82 )24),inwhich theCommission
analysed the chief obstacles toRUE investment andproposed a
number ofmeasures ,some ofwhich aim toimprove thefinancial
circuits .Inthis connection ,the Commission isstudying the
desirability ofspecific financial incentives toassist certain
types ofRUE' investment .
3.2 .Intheresearch field ,theCommission hasproposed totheCouncil ,
which hasgiven itsapproval ,afive-year (1982-86 )research pro­
gramme inthefield ofcontrolled thermonuclear fusion .Thetotal
financial costs oftheproposed programme ,including the contri­
butions oftheMember States' associated bodies ,issome 1500
million ECU,ofwhich 620million ECU will beprovided byCommu­
nity institutions .
3.3 .The Commission haspresented itsevaluation ofthe present pro­
grammes forthesupport ofdemonstration projects ,andhaspre­
sented proposals fortheextension ofthese programmes toother
areas .
3.4 .N.B. :EIBandNCI loans inthefield ofenergy ,Euratom loans
fortheindustrial production ofnuclear energy andindustrial
fuel cycle installations ,ECSC loans todevelop theconsumption
ofCommunity coal .

-6-
4.The adaptation ofhuman capital tochange
The Commission will present concrete proposals onvocational
training ,foryoung people inparticular ,and will propose newCommunity
initiatives for theperiod 1983-87 asregards thenew information
technologies .
5.The strengthening oftheCommunity lending instruments for thebenefit
ofinvestment
5„1° InOctober 1978 ,the new Community borrowing and lending instrument
was created ,empowering the Commission tocontract loans not ex­
ceeding 1000million ECU tofinance investment projects which
help attain the priority Community objectives intheenergy ,
industry and infrast ructure sectors .The Council decided to
prolong this scheme andauthorized the Commission on15March 1982
tocontract new loans totalling 1000 million ECU tofinance in­
vestment projects inthe rational use ofenergy ,infrastructure
and the productive investment ofsmall and medium-sized enterprises .
Asaresult ofthe conclusions ofthe European Council cf29and
30March 1982 ,the Commission feels itnecessary for this scheme
tobecontinued :itwill propose tothe Council theadoption ,
under thenew Con;munity instrument ,ofanew tranche ofloans ,
theprincipal being 3000million ECU;this wasdiscussed atthe
European Council inLondon inNovember 1981 ,and the field of
application will bebroadened .
Inaddition ,asaresult oftwosuccessive increases ,in1978 and
1981 ,the EIB'ssubscribed capital has been increased from
3500 million ECU to14500 million ECU „These increases have
greatly strengthened the Bank 'spower tointervene inorder to
finance investment .