Brussels 9 October: A new EU directive aimed at the fund management industry is putting more than a hundred thousand jobs at risk, according to new research.
The Alternative Investment Fund Managers Directive, implemented in July this year, could inflict as many as 107,000 jobs losses in Europe and must be reassessed, according the report.
The study, by Brussels think tank New Direction, says the European Commission has failed to analyse the risks of the directive properly. The authors use the EU’s own economic models to measure employment losses if the industry in Europe loses its competitive advantage.
The Alternative Investment Fund Managers Directive is already controversial, with industry reports showing that nearly three quarters of firms say their business could be harmed by the measure.
The directive is designed to regulate pay and reduce risk in the sector, but imposes costs on business that could force them to move to other jurisdictions. The Real Economic Impactof the EU’s Alternative Investment Fund Managers Directive calls into question the EU’s own analysis of the tax, saying that it does not produce evidence on the macroeconomic impact of the directive.
It argues that the European Commission should reassess the regulation at the end of 2014, basing its conclusion on the real experience of the industry, instead of a planned evaluation in 2017.
“With €15 trillion under management, this sector is an important part of the European economy and one in which Europe enjoys comparative advantages. It supports about half a million jobs across the EU”, said Tom Miers, the think-tank’s director. “At a time of economic weakness we need to be much more careful about imposing red tape on businesses. The Commission should reassess this measure as soon as it can.”
“With €15 trillion under management, this sector is an important part of the European economy and one in which Europe enjoys comparative advantages. It supports about half a million jobs across the EU”, said Tom Miers, the think-tank’s director. “At a time of economic weakness we need to be much more careful about imposing red tape on businesses. The Commission should reassess this measure as soon as it can.”
Member State
|
Jobs at Risk
|
UK
|
35,000
|
France
|
18,000
|
Germany
|
18,000
|
Italy
|
5,000
|
Netherlands
|
4,000
|
Rest of Europe
|
27,000
|
Total
|
107,000
|
Report in brief:
- The Directive on Alternative Investment Fund Managers (AIFMD) has been approved and will be in place across the whole of the European Union by the end of July 2014.
- Hedge funds, private equity funds, commodity funds, real estate funds and infrastructure funds (among others) will be covered by the AIFMD.
- The AIFMD addresses a number of issues, including remuneration practices in financial institutions to tackle “incentives for excessive risk-taking.”
- The economic impact assessments produced by the European Commission are notable for their lack of empirical evidence on the impacts of the AIFMD.
- Deloitte published a survey of UK based asset managers which found that nearly three quarters of respondents viewed the AIFMD as a threat to their business and more than two thirds suggested that the AIFMD will reduce the competitiveness of the industry in Europe and the AIFMD will lead to fewer non-EU managers operating in the EU.
- The overall asset management industry has an annual impact of €102.6 billion (GVA) and 510,000 jobs across Europe.
- If Europe lost its competitive advantage in fund management because of the AIFMD, around €21.5 billion and 107,100 jobs would be at risk from the regulation.
- The European Commission should bring forward a new impact assessment to be completed by the end of 2014 assessing the real costs incurred on the industry by the AIFMD.
