be mitigated by working longer. the spotlight should be turned to policies that foster productivity gains. * * * * [ slide 6 : europe faces an r & d gap ] advanced economies have turned towards sectors where productivity gains are harder to achieve. the development of new ideas is therefore essential for unlocking future growth. historically, europe has produced some of the most successful companies in the world. its starting point is not bad. but europe suffers from an r & d gap relative to global hotspots. it spends less than 2 per cent of gdp on research and development each year. this is significantly below the americans and about half of what the frontrunners in south korea invest. [ slide 7 : global innovation is the engine innovation ] side 4 af 8 the vanguard of innovation is not in europe. the hotspots dominating global patent applications are tokyo, shenzhen, san francisco, osaka and seoul. the top european region – munich – is number 13. back in 1989 seven european regions were in top 20. today, it is down to three. asia is increasingly the innovation centre today. but the relative decline of europe is not a problem in itself. prosperous neighbours do not make europeans worse off. * * * i said earlier that europe is a tale of three stories. when it comes to patent applications, there are clear regional differences as well. [ slide 8 : regional dimension to european innovation ] the most innovative clusters are located in central europe and scandinavia. they will have to generate growth by pushing the frontier. free global markets and competition are the best catalysts for companies looking to spur new ideas. they keep businesses on their toes. they are the real drivers of innovation. * * * * i see two key challenges to innovation in europe. europe faces shortage of skills. eight out of ten innovating companies consider the lack of skilled staff a barrier to investment. well - trained workers are essential for creating an economic powerhouse in the future. strengthening venture capital would support creative disruption. an oecd study suggests that the us venture capital market is significantly larger than the european. patterns are changing in investment finance. europe is a bank - based economy. side 5 af 8 but bank credit is not always ideal for intangible investments. these investments are riskier and harder to collateralize. access to a broad range of financing sources provides companies with better opportunities for innovation. in this respect the capital markets union initiative has an important role to play by stimulating alternative sources of risk financing.

* * * the decision of the united kingdom to leave the european union is regrettable. but brexit has had at least one positive side effect : it has increased the awareness in the remaining 27 eu member states of the significance and benefits of the single market. [ slide 9 : eu needs a single market for financial services ] the single market provides the citizens and the companies in the eu with incredible opportunities. it provides access to purchase and offer goods and services freely in a huge market place. via brexit, it has become crystal clear just how big an advantage this is. it now seems to be more widely accepted, that the maintenance and continued development of this market is a key driver for economic growth in our countries. the single market is far from fully developed in all sectors. one example is the banking sector. there has been a tradition to see banks as companies requiring special protection – and ultimately government support in order to survive. with the banking union a big step has been taken in the direction of allowing banks to function on market terms – without compromising financial stability. the single supervisory mechanism and the single resolution mechanism go a long way in establishing a level playing field for banks. side 6 af 8 it opens up for much wider cross border competition in financial services. * * * [ slide 10 : a level playing field for banks is important ] furthermore, the common framework for recovery and resolution of banks ( the brrd ) is essential for ensuring that a failing bank – as any other kind of private company – may be resolved without the use of government funds. in other words : give banks the right to fail! the danish government has announced that a decision on denmark's participation in the banking union will be taken by the autumn of 2019. while fully acknowledging that it is a political decision, it is our view in danmarks nationalbank that it would make good sense for denmark to join. danish banks face competition in the nordic region but in reality not on a european scale. we are making a great effort to handle the challenges arising from cross border banking in the nordic countries through numerous arrangements and agreements between relevant authorities. the banking union provides a solution to these challenges on a european scale. furthermore, the increased competition following from joining the banking union would be healthy for the danish financial sector. in the banking union danish banks would compete on harmonized terms in a much larger market. increased competition is the path to more growth – and indeed to more favourable conditions for consumers and non - financial companies