Interview with Luca Enriques on the Savings and Investments Union and Europe’s innovation challenge

This interview draws on the ongoing research and policy engagement of Professor Luca Enriques, whose work examines European corporate law, regulatory competition, and financial integration. It builds particularly on themes discussed at the recent conference he co-organised, “Harmonisation and Competition in Corporate and Insolvency Law within the Framework of the Savings and Investments Union”. Explore more of Luca Enriques’ work here.

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What fundamental problem is the Savings & Investments Union trying to solve?

The Savings & Investments Union (SIU) is an attempt to address a deeper malaise than any of those labels—too little capital, too much fragmentation, or a lack of trust—can capture. Europe’s problem is not so much a shortage of capital, since savings abound, nor even simply excessive fragmentation, though our financial markets remain stubbornly national, but a structural misallocation of resources that leaves us stuck in what Daniel Gros aptly calls the mid-tech trap.

Why is Europe stuck in this “mid-tech trap”?

For two decades, Europe has invested heavily but not productively enough. Our firms excel in medium-technology sectors such as automotive and machinery, yet they lag far behind the United States and increasingly China in high-tech, software-based innovation. This is not because we lack funds, but because our institutional and financial architecture channels savings into safe, tangible, low-risk assets rather than into the kind of risk capital that innovation requires. Bank-centric finance, rigid labour markets, and a regulatory environment intolerant of failure all combine to suppress entrepreneurial risk-taking.

How does the SIU differ from the Capital Markets Union?

The SIU, at least in ambition, represents a shift in mindset—from the macro-financial logic of the Capital Markets Union, which sought to remedy fragmentation and cross-border imbalances, to the microeconomic challenge of revitalizing Europe’s capacity to generateand scale innovation. It recognises that the Union’s competitiveness problem cannot be solved by liquidity or prudential reforms alone; it requires mechanisms that mobilise private risk capital, reward success, and tolerate failure.

What, then, should success look like for the SIU?

In that sense, the SIU is less about creating “more” capital or “more” integration and more about changing what capital does: helping Europe move from a safe, bank-financed economy to one capable of sustaining high-risk, high-reward investment.

Can the proposed 28th regime become a genuine driver of integration?

The 28th regime can be a driver of integration only if it overcomes two recurrent European failures: hybrid design and weak commitment, as I have argued elsewhere. A legal form that is a patchwork of EU and member-state corporate law rules, as with the European Company, is doomed to failure because it will not meet the demand for a truly additional or alternative regime. If, by contrast, the regime is fully European—no renvoi to national corporate law and possibly a European body for adjudicating disputes—and embeds meta-rules that privilege contractual freedom, it might become attractive for startups.

What are the main obstacles, and how could they be overcome?

Strong political and technical headwinds must be addressed, as Paul Oudin has rightly highlighted (here). Politically, a self-standing European legal form requires unanimity, which is very hard to obtain; the history of the SE and the failed SPE/SUP shows how codetermination, labour law, and fears of arbitrage can derail such projects. Technically, even such a regime risks fragmentation “in action” as national courts filter EU concepts through domestic lenses. Oudin’s analysis also shifts the focus from slogans to the frictions that matter for startups: red tape such as costly notarisation, limits on private ordering that complicate VC contracting, and the legal due-diligence toll imposed on cross-border investors. These frictions will not disappear with timid, partial harmonisation; they require either a genuinely enabling EU statute or crisp, functional modules that deliver immediate certainty—model charters and shareholder agreements, pan-EU company registers, and a dedicated dispute mechanism.

To these I would add credible pro-contract guardrails, such as proportionality-based limits on curbing party autonomy and safe-harbour model documents recognised across the Union. As a complement, an EU-level internal-affairs rule or mutual-recognition mechanism preventing host states from imposing local corporate law once a firm incorporates elsewhere would ensure that corporate law becomes a factor of entrepreneurial success rather than a burden.

Would such a mutual-recognition system risk a race to the bottom?

A distinction must be made between what companies can do while they are still closely held and what they can do after listing. In the former case, there is no real risk of opportunistic choices, other than perhaps with respect to non-adjusting and tort creditors,vis-à-vis which corporate law offers only limited protections in any event. In the latter case, as I argue in a work in progress with Anne Lafarre, Alessio Pacces, and Titiaan Keijzer, opportunistic reincorporations can indeed take place, and the EU itself should do a better job of preventing them.