The Investment Association (IA) has launched its Foundations of Growth report, setting out how Europe can harness private markets to deliver long-term growth, innovation, and resilience.
The Association writes that Europe faces a decisive moment, as policymakers work to deliver the Green Deal, accelerate the digital transition, and keep the EU a leading destination for global capital.
“With public finances stretched and traditional sources of funding unable to meet the scale of investment required to reach these ambitions, the European Commission estimates an additional EUR800 billion annually by 2030 is needed to meet the green transition alone. Private markets have therefore become increasingly vital in funding strategically important projects across Europe.
“Private markets are already a growing force across Europe, with private equity and venture capital firms now managing approximately EUR1.25 trillion in assets, more than double their size a decade ago. They play a critical role in financing infrastructure, scaling SMEs, supporting innovation, reducing reliance on foreign investors, and creating jobs – in 2022, private equity and venture capital-backed companies supported 10.9 million jobs across Europe, equivalent to 5 per cent of the EU workforce.
“Yet despite this momentum, Europe risks falling behind global peers if structural barriers remain. Fragmented pension systems, regulatory hurdles, and inconsistent approaches across Member States continue to hold back investment. Without urgent reform, Europe risks missing a transformational growth opportunity.”
The IA’s Foundations of Growth report sets out four key recommendations for EU policymakers to help mobilise private capital:
Deepen capital markets integration under the Savings and Investment Union (SIU).
“Fragmentation continues to constrain growth by keeping capital segmented along national lines. Greater alignment of fund regulation, tax treatment, and disclosure standards – alongside simpler cross-border distribution – would allow private funds to scale and attract more inward investment into Europe’s infrastructure and innovation.”
Expand retail participation through the European Long-Term Investment Fund (ELTIF) framework.
“Private markets should not remain the preserve of large institutions. By raising awareness of ELTIFs, integrating them into mainstream savings products with appropriate investor protections, the EU can democratise access, enabling individual savers and retail investors to participate in the returns of Europe’s long-term growth.”
Promote education and inclusive investment.
“As capital will not flow without confidence, a joint effort from policymakers, regulators, and industry is needed to equip investors and advisers with the tools and knowledge to allocate responsibly to private markets. Improved financial education and better access to consistent data will ensure investors understand both the opportunities and risks of these assets.”
Build a transparent investment pipeline and strengthen public-private collaboration.
“Private investors need visibility of credible, investable projects. An EU-wide pipeline of strategic opportunities, backed by de-risking mechanisms from public finance institutions such as the EIB, would unlock more private capital at scale. Greater transparency and structured dialogue between the two parties will be critical to mobilising investment in areas such as green energy, digital infrastructure, and advanced manufacturing.”
The IA writes that its report emphasises that public and private markets must work hand in hand – with public markets providing transparency and liquidity, and private markets delivering long-term, patient capital to fund innovation and infrastructure. Together, they can channel investment into the projects needed to achieve Europe’s ambitions for sustainable growth.
Chris Cummings, Chief Executive of the Investment Association, says: “Europe stands at a crossroads. The scale of investment needed for the green and digital transitions is far beyond what public finances and banks alone can deliver. Private markets are a strategic necessity to meeting this challenge. However, policymakers must act now to break down barriers, broaden participation, and provide a clear pipeline of opportunities.
“Our recommendations set out a clear roadmap to ensure private capital plays its full part in building a stronger, more resilient Europe. Implementing these reforms will not only strengthen Europe’s financial resilience but also give citizens the chance to share in its growth story.”
