OeNB-EIB joint conference „Financing investment in innovation and growth“

On April 16, 2018, the European Investment Bank (EIB) and the Oesterreichische Nationalbank (OeNB) will host a joint conference on “Financing investment in innovation and growth” in Vienna. Funding investment is a vital task of the financial system as it creates the foundation for future growth and employment. At the conference, outstanding experts will discuss the current state of investment in Austria and the existing capital structure of the Austrian economy, the effectiveness of Austria’s financial system in allocating capital to its most productive use, potential bottlenecks in funding innovation and the efficiency of Austria’s business ecosystem in financing start-ups and innovative SMEs.

In Austria, investment activity recovered faster after the crisis than in the EU as a whole, driven mainly by R&D investment and, most recently, by investment in machinery and equipment. Infrastructure investment has remained stable. The OeNB’s most recent forecast sees further buoyant investment growth in the first half of 2018, given the currently high degree of capacity utilization.

According to the EIB Investment Survey, business investment in Austria is strong in comparison with other EU Member States. Austrian firms in the construction and manufacturing sectors will likely invest in capacity expansion over the next few years. According to the survey, many firms in Austria regard lack of skilled staff or business and labor market regulations as major obstacles to their investment. Access to finance is in line with EU average; only 6% of Austrian firms feel financially constrained.

In general, innovative firms face stricter credit constraints than others. Hence, more diversified sources of innovation finance would be helpful as, for the time being, Austria’s innovators mainly rely on internal funds and retained earnings as sources of funding. Young SMEs and start-up companies are often drivers of innovation, but when confronted with a deficiency of risk capital and other financing sources, they cannot fulfill their potential. Austria has enacted several stimulating measures in this respect over the last few years.

The EIB plays an important role in promoting sound investment in Europe and beyond. It provides much needed long-term finance to support private and public investment spending. Using its AAA credit rating, the EIB raises funds on the international capital markets and lends them to address market failures and financial frictions. Therefore, the assessment of such failures and frictions is of utmost importance for the EIB’s core activities.

As a member of the Eurosystem, the OeNB is tasked with conducting monetary policy aimed at price stability and macroprudential supervision aimed at financial stability. Both tasks contribute to sustainable investment. On the one hand, firms’ investment decisions are strongly based on their expectation of future prices and on the other hand, only stable financial markets can generate a stable flow of credit and investment funding. In return, investment demand has a strong impact on price dynamics and financial market stability.

Some of the questions the joint OeNB-EIB conference attempts to answer are:

• Are current private credit flows sufficient to finance investment in Austria?
• How can the EIB support investment growth in Austria?
• Which areas of the Austrian economy suffer the most urgent shortage of investment?
• Is innovation in Austria hampered by restricted access to finance?
• How can the public sector support sustainable investment in addition to existing programs?

Vice President Andrew Mc Dowell from the EIB and Governor Ewald Nowotny will open the conference. Along many other distinguished speakers we have the pleasure to welcome Mrs Sabine Herlitscha, CEO Infineon, Bernhard Baumann, CEO Shpock, and Stefan Dörfler from Erste Bank.