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COM(82)390
Vol.1982/0134

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(82)390 final
Brussels ,18June 1982
f/:> 1•U Jt / '
'</J s •r
• <i">w/).
INVESTMENT
(Communication from theCommission totheEuropean Council ,
for itsmeeting inBrussels on28and 29June 1982 )
C0M(82 )390 final

COMMUNICATION FROM THE COMMISSION
TOTHE EUROPEAN COUNCIL
ON
INVESTMENT

InLinewiththeconclusions reachedbytheEuropeanCouncil
on29and30March1982andattheensuingmeetingsoftheCouncil,the
Commission senttheCouncilaninitialreportoninvestment .
Thereportisprimarily ananalysisofthesituation :the
presentCommunication drawsfromthatanalysistheimmediateconclusions
onwhichfutureworkwillbebased.
1.Alltheanalysespointtoadeclineininvestment inthe
Community andarelativefallintheCommunity'sshareofexportsof
olantandequipment andofhigh-technology goods.Thepriorityaccorded
toinvestment byeconomicpolicymakers isthusconsistent withtwoob­
jectives:
-economieswithahighstandardoflivingwhichareheavilydependent
onforeigntradeandwhoseprincipalassetistheirinnovativeskills
mustbecompetitive athomeandabroad;
~economies mustbeabletoadapttonewdemandconditions andtoever-
changingmarkets,i.e.theymustbeinapositiontosupplythegoods
andservicesbestsuitedtomarketneeds.
Ifthesetwoobjectives arenotmet,i.e.iftheCommunity
economiesfailtoharnesstheirinvestmentpotential,therewillbe
noadequateandsustained responsetotheproblemofunemployment .
Thislinkbetweeninvestment,competitiveness andemployment needsto
bejointlyrecognized bythepublicauthorities andbyallthoseinvolved
inbusinessactivity.
2.Toaverylargedegree,alastingrecoveryininvestmentwill
dependontheoveralleconomicsituation.Twoconditions mustbeachieved
asamatterofpriority:
-amoresettledinternational environment ,i.e.morestableexchangeand
interestrates,morereliableprospectsforopeninternational tradeand
asmoothrecyclingofcapital;

-2-
-umorestableframeworkwithintheCommunity,i.e.successfulpolicies
tocombatinflation andtoshrinkexcessivedeficits.
Implementation oftheCommunity'sproposalsbothinthemonetary
spnereandforcloserconvergence oftheeconomieswouldmakef')ntangible
progressinthisdirection.
j.Whereaspublic-sector investment shouldbesteppedupasameans
ofreinforcing economicstructures andboostingemployment,ithasbeen
de':i.iningsceadilyinrecentyears,whetherexpressed asaproportion of
GNKorofnationalbudgets.Yetinvestment canberaisedonlywithinthe
-inrritiriycasestight-limitsimposedonMemberSpatesbytheneedfor
strictbudgetary management .
Itisagainstthisbackground,whichwillentaildifficult budget
tradeoffs,thatwehavetoviewtheneedforMemberStatestomakemore
room"•r.th:.irbudgetsforpublicspendingtopromoteinvestment andtraining
andholddownproduction costs,i.e.tobringaboutsustainedgrowthinthe
i;conowv'jncjinemployment .TheCommissionwilltakeaccountofthisneed
for6policyrethinkintheproposalsforMemberStates'1983budgets
that'.willsendtotheCouncilinJuly.
Inordertoensurethatthisnewapproachhasthenecessary con-
tirsiivtyandscope,theCommission recommends thatMemberStatesplanmedium-
termbudgetprogrammesthatwillguarantee,withinacontrolled budgetary
pattern,anincreasing shareforinvestments gearedtofostering economic
growth.
4.Lowinvestmentisalsoattributable toanumberofhandicaps :
poorprofitability ,financingconstraints,inadequate labourskills,and
legislation constricting theeconomicuseofcapital.Primeresponsibility
forthedecisions neededtoremovetheseobstacleslieswiththeMember
States,whichhavethelegislative power,thefinancialresourcesandthe
armouryofthenationalbudget.

However ,theCommunity must beinvolved intheformulation and
■implementation ofsuch policies ir>;three main ways ,: v. >y},
»'-.V' ;; ' ^ '-,J.'P*' 'l*' "■ rr t--J ■■" V
".■Tti'i ? ' .J# _•i' •V «-*•" . ' s<*- v-v ^ Af \
r ■irtexploiting 'more -systematical lytheadvantages ,stemming ffem ^a.^in^le
market large enough tounderpin theexpansion ofindustrial activities
that are competitive internationally ;
-inthe joint assessment oftheeffectiveness ofMember States' policies
topromote investment and,bycomparing experiences ,intheprocess of
devising themost effective rules and financial mechanisms forboosting
investment ;
-inestablishing ground rules for initiatives launched atnational level ,
with the two-fold aim ofmeeting the Commission 'sTreaty obligations in
the areas ofaid and competition and ofensuring that national policies
aremutually consistent and have the utmost economic impact .
The Commission will put upfurther proposals onthese various
points inaddition tothe ones ithasalready presented .
5. - There are twoparticular areas inwhich the Community must
contribute directly tothe joint investment effort :
-itmust assume anincreasingly active role inthe common energy strategy ,
akeyfeature ofwhich isamajor programme ofinvestment inenergy
production and energy efficiency ;
-itmust also beinvolved inpolicies formodernizing theeconomy by
assisting theprocess ofadapting production structures tothe changing
pattern ofdemand ,notably with help totechnical and technological
renewal .
The Commission has already put forward proposals inthis connection
and would like tosee the work currently inhand producing concrete results
inthevery near future .

-4-
6.Lastly,theCommission considersthatasignificant and
jiricclexpiirr-ionoftheCommunity'screditinstruments forfinancing
investments wouldmakeamajorcontribution tothegeneralinvestment
effort.
Inlinewiththeconclusions reachedbytheEuropeanCouncil
inNovember1981,theCommissionwillinJulyproposeanincreasein
theresourcesoftheNCI,withtheintentionthatmeasurestomodernize
industrial structures shouldhaveapriorityclaimonthenewresources.
+
+ +
Atthisjuncture,theCommission isproposing ageneralframe­
workforanactiveinvestmentpolicydesignedtoimproveeconomicstructures
andameliorate theemploymentsituation.Thisframeworkwillbefleshed
outinthesecondhalfoftheyearbyfurthercommunications andproposals.
TheCommission requeststheEuropeanCouncil:
-toassertunequivocally theneedforinvestment asameansofreturning
toahealthiergrowthpathandimprovingtheemploymentsituation;
-totakeupasjointlyagreedguidelines thebroadthrustoftheanalysis
andmeasuresatbothnationalandCommunitylevel,proposedbythe
Commission;
-toreaffirmthat,sinceaprerequisite forhigherinvestmentisthe
restoration ofamorestableeconomicenvironment inEuropeandthrough­
outtheworld,theCommunityoughttotakeanactivepartininternational
cooperationinitiatives directedtowardsthisendana,inparticular,in
theimplementation oftheconclusions reachedattheVersailles summit
meeting;
-todecidethat,whereeachofthemisconcerned.MemberStateswilltake
accountoftheprioritytobeaccordedtoinvestment growthinformulating
theireconomicpoliciesandindecidingonthestructureandfutureshape
of'theirbudgets;

-toacknowledgethatitisinthecommoninteresttoexpeditethe
establishment ofasinglemarket;tointroduce 3Communitycodeof
groundrulesfornationalinitiatives whichwillguaranteethatthey
aremutuallyconsistent andobtaintheutmostimpact;•andto'ensure
thatjointactionisvigorouslypursuedintwoareasofspecial
importance,viz,theenergystrategyandtheadjustmenttoanew
demandstructure ,,interaliabyexpandingtheCommunity'slending
faciIities„
Inconclusion,theCommissionrequeststhattnsEuropean
Councilinstructthecompetent©institutions topursuetheirworkwith
allduedispatchandthatitreportbacktotheCommission.
V