The introduction of the EU’s Savings and Investment Union (SIU) could mark a defining moment in the evolution of Europe’s retail investment landscape. It signals a clear commitment from policymakers to encourage greater participation in capital markets and to reverse long-standing barriers to retail investing. For investors, brokers and technology innovators alike, this shift presents a significant opportunity. As investment activity across Europe accelerates, firms that position themselves early will be best placed to capture and support this new wave of growth. As a follow-up to the 2025 article on the state of the retail equities market in the UK, in this article GreySpark discusses the state of retail equities trading in the EU.
By GreySpark’s Jennie Brotherston, Senior Specialist and Rachel Lindstrom, Head of Capital Markets Intelligence practice
Equity investment by individuals or retail investors has a long history across Europe, but, today, European investment in shares or exchange-traded funds (ETFs) lags significantly behind the type and volume of activity seen in other parts of the World. In continental Europe, individuals and households tend to hold far more of their wealth in other assets for a wide variety of reasons, which may be detrimental to the European economy and the continent’s global standing.
The European Securities and Markets Association (ESMA) and the European Commission (EC) provide an overarching regulatory framework across the Eurozone, which is made up of 34 member states with separate national regulation and legal frameworks. In reality, the Eurozone is far from homogenous, and when it comes to trading, there is significant variation between those 34 nations. This is no less the case in the retail equities market.
Figure 1 shows the clear European preference for cash deposits over other investments, but it also shows that there is much variation in type of investments between member states. In particular, households in Sweden and the Netherlands prefer pensions over cash, which likely reflects the way in which their state pensions are provided. Sweden includes an individually directed investment component in pension schemes, and the Netherlands provides only a basic flat-rate safety net, with the remainder of retirement income expected to be provided by private pension schemes.
Figure 1: The Distribution of Household Wealth in Most EU Countries (Excluding Real Estate)
Source: Financial Times, Aberdeen Group and GreySpark analysis
(Click to enlarge)
Finland, Belgium and Spain amongst others, however, hold less of their wealth in cash than the average European and own a far greater share in equities as, culturally, they appear to be less risk averse than many other European nations, perhaps nurtured by tax incentives and historically well-performing markets.
Despite differing state legislature, the US has one highly integrated federated market, with unified processing, clearing and settlements. European infrastructure, however, is significantly more complex and fragmented, with a veritable web of systems, borders and regulations, multiple exchanges, clearing houses, custodians and even currencies. While this is not necessarily immediately visible to the retail consumer, the infrastructural complexity creates friction and expense when trading equities in the EU and this is particularly the case when it comes to cross-border trading. The result is a continental system in which, on a country-by-country basis, securities trading is predominantly carried out in domestic markets.
The majority of equity retail investors in many countries across Europe prefer domestic stocks. They often plump for blue-chip ‘household names’ with which they are extremely familiar. The next most popular choices are in US markets (often technology stocks and growth companies). When it comes to investing in stocks, Europeans generally prefer both these categories above other European equities.
For example, direct retail trading in Italy is dominated by Italian stocks, but the exposure of the typical Italian individual investor to foreign equities is predominantly indirect. In other words, foreign exposure comes through the growing level of investment in ETFs, mutual funds and pensions. Nonetheless, these indirect investment channels still tend to favour US stocks, due to their positive performance. In addition, the high familiarity of individuals with US technology globally tends to exacerbate the ‘domestic-plus-US’ portfolio effect.
European Retail Trading Compared with the Rest of the World
As in the UK, but unlike in the Americas and, to some extent, Asia, the largest part of household wealth in the EU is held in housing and real estate. The majority of households in Europe own their own homes. In 2024, the average home ownership rate in the EU was 69% of adults, a significant proportion of whom also owned additional real estate property.
As mentioned earlier, European households hold a large amount of their wealth in cash and cash-like deposits. In fact, in 2025, an estimated EUR 10 trillion was held in bank deposits in the EU. This is a stand-out difference between the EU, the UK and the US. Figure 2 shows how most EU countries hold their wealth, excluding property and real estate, which highlights both this point around cash and the discrepancy between Europe and the Americas. When it comes to investment in Equities and Mutual Funds, although there is some variation between countries, the EU, the UK and Asia lag significantly behind North America.
Figure 2: The Distribution of Household Wealth in Canada, Europe, Japan, the UK and the US
Source: Financial Times, Aberdeen Group and GreySpark analysis
(Click to enlarge)
There are a lot of reasons for these differences. In Europe, state pensions and benefits are the main source of income for older people, accounting for over 70% of household income in most EU countries and as much as 80% in some, according to the OECD. On the other hand, in the US, individuals are more responsible for their own retirement planning via 401(k) investment and other means, which is likely to be responsible for quite a large part of why US equity investment is so high compared to European retail investment.
Similarly, Europeans are generally more risk averse, preferring to preserve wealth (deduced from the high proportion of cash deposits) over growing it, perhaps as a result of historic instability. Significant financial crises in the twentieth century, mainly related to the first and second world wars, had the dual effect of increased personal and cultural caution alongside stronger post-war state-backed safety nets, including state pensions, workers’ rights, unemployment protections and socialised healthcare provision.
In addition, there are cultural and social factors, such as strong consumer protection regulation, which tend to reduce extreme outcomes, including high risk and return investments, and increase general scepticism around ‘get-rich-quick’ mentalities. Ongoing corporate debt-equity bias is encouraged by fiscal policy, which promotes and maintains a predominantly ‘bank-based’ system. Companies often prefer to borrow from banks rather than issue shares. All this contributes to a society in which stability is preferred over growth, and cash is preferred over investment in equities.
Why it Matters
European growth remains slow and this is of concern to EU member state governments and the European Commission. There is a persistent gap between disposable household income in the EU and the US, and the recent Draghi Report on EU competitiveness clearly states that the EU needs to find an extra EUR 750 to 800 billion per year in order to have the capacity to address the current challenges. These challenges, including climate change, technological shifts and geopolitical tensions, all demand significant investment. The extra investment required is estimated to be between 4.4 and 4.7% of EU GDP. This extremely aggressive goal is one that will require concerted and sustained effort if it is to be achieved.
In light of the size of this goal, acknowledging the fragmented European market infrastructure referenced above and the fact that EU individuals and households are sitting on a huge amount of uninvested cash, the EC announced plans for a Savings and Investment Union (SIU) in 2025. This institution plans to revolutionise the capabilities of the financial system by:
- Improving integration and removing friction and barriers;
- Providing more choices for individuals in the EU when it comes to optimising the way they hold their wealth; and
- Allowing businesses in the EU to achieve growth by maximising investment opportunities.
The last point aims to bridge the gap between the needs of households to invest and the needs of businesses, particularly SMEs, which may not currently be able to achieve all they need for investment through traditional bank financing. In short, EU authorities are dedicating significant resource into boosting retail investment, particularly in equities, and they see it as a critical part of their mission for the next five to 10 years.
The Impact and Opportunities
As well as the obvious potential benefits for individual investors and businesses, the SIU promises many opportunities for other participants in the financial services infrastructure.
If successful, it will increase significantly capital markets activity across the EU and more broadly across continental Europe. It will enable more IPOs, securitisation and issuance, as well as encourage far more cross-border activity. All this will provide growth potential for the large banks and asset manager ‘giants’, which already have the infrastructure in place to facilitate the rapid scaling needed once barriers begin to fall. The same applies to pension funds and again, the larger firms will be well placed to react fast.
There are also tangible benefits available to wealth management and brokerage firms if, and when, retail investment ramps up, as well as to others providing financial advice and investment analysis to individuals.
The SIU represents a potential turning point in European retail investment history and demonstrates how serious governments are about turning the tide. It is an exciting time for retail investors and brokers alike, as well as for technology innovators in Europe, which should be positioning themselves to capture and harness the increased investment.
