In the continuing stagnation of European economies the persistence of inadequate demand is playing a crucial role that deserves greater attention. First, we are in a context of slower international growth where world trade is growing slower than world GDP; exports are not in the position to be the driver of renewed growth for Europe. Private consumption has suffered from stagnating growth and from the rise in inequality that has compressed lower incomes. Public expenditure has been reduced or contained by the austerity measures required by current European policies lowering its expansionary potential for the economy. Investment – that is by definition pro-cyclical – has failed to return to growth. This worrying situation – that extends well beyond Europe - has been aptly summarised by the title of the last IMF World Economic Outlook of October 2016:  “Subdued demand. Symptoms and remedies”.

The focus of this article is on the lack of investment and on the important role that a public investment plan at the European scale could play in ending the long European stagnation.