##ing deep and diversified capital markets that provide a wide source of financing options to european companies and individuals is one of the cmu ’ s primary objectives. this is key to enhancing innovation and growth and to strengthening the cross - border dimension of investments in the eu, thereby promoting deeper integration and development of markets. better - integrated capital markets can also help to enhance the resilience of the euro area and complement the banking union by facilitating financial risk - sharing. cross - border financial integration has not yet exhausted the potential for bringing cross - border private risk - sharing up to the level we would like to see in emu. compared with the united states, where 60 % of shocks to gdp growth can be mitigated through diversification via capital markets, only 20 % of shocks to gdp growth are mitigated in the euro area. https : / / www. ecb. europa. eu / press / key / date / 2019 / html / ecb. sp190907 ~ 81df41228e. en. html 2 / 4 9 / 9 / 2019 growth and competitiveness in the euro area european capital markets are currently small and fragmented. policies that foster innovation and market size and that remove cross - border barriers will help develop more vibrant european financial markets and intermediaries that are able to compete internationally. let me point out here that the creation of a single rulebook for calculating taxable profits throughout the eu also offers a welcome opportunity for removing the debt bias in corporate taxation. [ 22 ] most tax systems currently favour debt financing due to the deductibility of interest rate payments from the tax base, while other forms of financing instruments are not considered. this is an obstacle to a larger equity base for firms and is therefore a significant impediment to the creation of a cmu. finally, fiscal policy can play a greater countercyclical and stabilising role. fiscal space should be used wisely in countries where it exists, while all countries should work towards a more growth - friendly composition of public finances. furthermore, a fiscal capacity at euro area level would be a great achievement that would complement national stabilisers. let me conclude. it is vital to continue implementing reforms to address the structural challenges facing the euro area. reducing barriers to trade in services and disparities in national corporate tax systems could provide a new impetus to the european single market and stimulate investment. deepening european integration requires us to pursue an ambitious agenda for the financial system

6 ] a growing share of investment is gradually being directed towards intangible assets. [ 7 ] this might not be fully accounted for in national and firms ’ accounts. firms tend to invest less in a declining and ageing economy, unless labour could be replaced by capital. finally, production in advanced economies is gradually shifting from manufacturing to services, [ 8 ] where equipment matters less. weak investment since the crisis has been accompanied by slow productivity growth across virtually all advanced economies. labour productivity growth had already begun slowing well before the crisis. since 1995 it has averaged 0. 3 % per year in italy, compared with 1 % in the euro area as a whole and 2 % in the united states. there are many underlying reasons for this decline in productivity growth, so let me focus on two : the role of technology and population ageing. evidence suggests that the failure of firms to adapt to the ict revolution has played a central role. this may be why a relatively large number of very small firms are not growing, [ 10 ] and the resulting resource https : / / www. ecb. europa. eu / press / key / date / 2019 / html / ecb. sp190907 ~ 81df41228e. en. html 1 / 4 9 / 9 / 2019 growth and competitiveness in the euro area misallocation may contribute to the productivity gap across countries. some see the decline in the rate of radical innovation as a key factor in the global decline of productivity growth, simply because new ideas are becoming harder to find. [ 11 ] others claim that the current lull can mostly be attributed to the depth of the great recession, [ 12 ] or to the fact that innovation comes in waves, and the economy has only recently begun to commercialise discoveries from fields such as nanotechnology, genetic engineering and quantum computing. in any case, innovation is changing the nature of production and employment, with digitalisation having already transformed how we do business. automation, in particular, is replacing labour in certain jobs, particularly in manufacturing, but it has also raised demand for highly skilled professionals in other areas. [ 14 ] both of these processes are likely to contribute to higher productivity growth, but also to higher income inequality in the future. a more troubling scenario is one in which artificial intelligence focuses exclusively on automation. if it provides small productivity improvements over human activity it may destroy more jobs than it creates – take automated call centres as an example. [ 15 ] while