dearth : real estate and public investment have contributed to the post - crisis decline in total investment, but what matters the most for our economy is the contraction in business investment. the imf estimates that it stands 10 % to 15 % below pre - crisis forecasts in the euro area. ii however, to fully understand the situation, we need to take a closer look at the nature of business investment. we must distinguish between investment in construction on the one hand – which in itself does not spur innovation – and investment in research and development and industrial machinery on the other, which i call “ productive investment ”. iii the matter of concern is that productive investment is insufficient : across the economy as a whole, the productive investment rate has long been lower than before 2007 in the euro area and is persistently weaker in france than in germany. this brings us to the third important feature of this investment dearth : the behaviour of businesses ( slide 6 ). since mid - 2009 it has dramatically changed : given the weakness of business investment, non - financial corporations have turned from net borrowers into net lenders. thereby they have fuelled the current account surplus in the euro area. in short, all of these realities converge : the root of the problem today in europe is the investment deficit more than the savings glut. 2. now, why has this investment dearth happened? let me briefly elaborate on the key levers of investment. the first and most important one is expected demand ( slide 7 ). the overall weakness in economic activity acts as a deterrent for most businesses. the latest biannual survey conducted by bpifrance shows that demand remains the main obstacle to investment for french small business ownersiv. this diagnosis is confirmed at the macro level by one of our staff ’ s recent working papers, which investigated a panel of 22 advanced economies : expected demand appears as the main determinant of the slowdown in business investment ( negative contribution of more than 80 % ). v the second key economic lever of investment is confidence, or to put it another way, the level of uncertainty ( 17 % ). vi if the environment is blurred, complex or unstable – especially as regards rules and norms –, businesses opt for a “ wait - and - see ” behaviour and postpone their investment decisions. so, the simplification and stabilisation of rules is an often underestimated albeit key trigger of business investment. economic levers are of the essence, but financial ones also

. a major step has been the creation of a banking union that, as you all know, will delink bank and sovereign risks and ensure a harmonised and tough financial supervision. it is easy to underestimate this achievement. the idea was adopted less than two years ago. the single supervisory mechanism is now up and running. there is no example in contemporary european history when so much has been achieved in so little time. 2. we have launched a tough and comprehensive aqr and subsequent stress tests that should be completed by the end of this year. for the first time, these exercises will be conducted in a fully integrated way – under the aegis of the ssm – with full accountability of the results. completion should mark a turning point where there will bis central bankers ’ speeches be no more doubts about the sustainability of our banks and credit should resume at a normal pace. 3. in the longer run, a major policy challenge for the euro area is to “ reinvent ” a new and robust financial integration model. we need sound cross - border capital flows, because we do not want the eurosystem to intermediate permanently between borrowers and lenders from different countries. developing a safe securitisation process should be a priority, despite the major technical difficulties. ii. is europe facing the prospect of a lost decade? questions about long - term growth are not limited to europe. what we hear about our continent reflects a more general concern : the possibility of “ secular stagnation ” in advanced economies. secular stagnation rests on the assumption that the natural interest rate is negative. this may happen for two reasons : in the short run, we may have a downward shock on demand and an increase in savings resulting from the deleveraging process. i have just explained how we are currently addressing this issue ; in the longer run, ageing and slower innovation may push up saving rates and bring down the return on capital. therefore, the ultimate response to the risk of secular stagnation is to improve the return on investment, thus pushing the natural interest rate back into positive territory. again, this is not only a european problem. but we do have difficulties in this regard. structural reforms are not easy. many, however, are currently being implemented. france, although at too slow a pace, is reducing taxes on labour and has somewhat improved labour market flexibility. adjustments efforts conducted by several countries, especially in southern europe, are starting to pay off. competitiveness gaps between northern