Capital Markets Union Attractive to Europe's Corporate Borrowers

Banks lending to companies has dried up in recent years, a trend played out against the European economy battling to gain strength in the face of slowing disinflatory currents. This has lead to some companies on the fringes of the Eurozone being starved of credit. 

Bringing more uniformity to financial rules could help the proliferation of capital across the region and support lending between investors and business. However a capital markets union could bring broader economic benefits. 

A think-tank named New Financial maintains that countries with less developed markets on Europe's peripheries will benefit with a reduction in barriers to capital flows. 

Between 2008 - 2014, the value of bank lending to nonfinancial corporates in Europe fell by 11 per cent according to the report by New Financial. On the surface it seems the effect of this decline was eased by a €725bn increase in the overall value of outstanding corporate bonds - bank lending fell by €675bn. 

However, the large part of the increase in corporate bond issuance came about in only a few countries. Spain and Ireland suffered some of the biggest falls in bank lending in the wake of the 2007 financial crisis, and experienced hardly any growth in their corporate bond markets. The UK and France, meanwhile, account for two-thirds of the growth market since 2008.