BlogFinancialisation and Europe's investment gapAcross Europe, policymakers are turning to de-risking to finance the continent’s growing investment gap, which Mario Draghi’s 2024 report on European competitiveness identified to be around 800 billion. Why derisking cannot plug the investment gapIt rests on what NEF has called the Private Finance Myth: the assumption that fiscal constraints make outsourcing investment to the private sector the best option. A Finance Watch report found that even with a fully developed Savings and Investment Union, private finance could cover only around a third of the EU’s transition investment needs. Governments need to go beyond incentives and shape marketsUnder the conditions of financialisation, marginal incentives are unlikely to reverse firms’ preference for distributing profits over investment. Taxation of dividends, share buybacks and wealth can help rebalance incentives while also expanding the fiscal space available for public investment.