A decline in capital-intensive production and a rechannelling of investment to countries with lower costs, such as the new EU member states, may have contributed to the low level of investment. Increasingly fragile demographics may be another reason for the subdued propensity to invest.
* * * - One way of addressing both the global imbalances and the low level of investment in the euro area is to boost productivity in the euro area service sector. Poor performance in the service sector is the main reason why euro-area productivity growth has been lagging behind that of the USA. Increasing competition is vital to improving productivity.