Martin Borowiecki
OECD Economic Surveys: Slovenia 2026
Abstract
Low business investment weighs on long-term growth, reflecting a largely bank-based financial system that poorly channels high household savings into productive investment. Investment is further constrained by strong incumbent positions, often of state-owned enterprises, and high entry barriers, especially in services sectors. In addition, weak regulatory coordination creates delays, uncertainty, and additional cost for businesses. Boosting investment requires a shift towards more capital market-based financing, including broadening the retail and institutional investor base, advancing stock market listing of state-owned enterprises, and closer alignment of regulations with European peers. Streamlining regulation and strengthening competition would help attract domestic and foreign investment.
Investment as a share of GDP fell below that of the EU and other central European peers after the financial crisis due to corporate debt overhang and deleveraging, alongside weak external demand (OECD, 2025[1]) (Figure 4.1, Panel B). Before the crisis, firms relied heavily on debt to finance expansion, leaving them over-leveraged when conditions deteriorated. At the same time, undercapitalised, mostly state-owned banks restricted lending as non-performing loans increased. Business investment became less responsive to demand as firms prioritised balance sheet repair. Public investment remained strong, supported by improved absorption of EU funds, but did not fully offset weak private investment (Panel C). The investment rate has recently recovered to the EU average, but the prolonged business investment weakness has weighed on economic activity, with capital stock per worker making a negative contribution to GDP growth until 2022 (Panel E).
This legacy of underinvestment continues to weigh on productivity and long-term growth, as banks have directed capital towards safe assets such as housing rather than productive business investment (IMAD, 2025[2]). Even though residential investment as a share of GDP is relatively low overall, private investment remains skewed towards housing, leaving insufficient capital for firms to expand and modernise (Figure 4.1, Panel D). This reflects that banks prioritise safer, more profitable mortgage lending and larger firms, often exporters, while smaller firms face higher collateral requirements (Bank of Slovenia, 2024[3]). As in many OECD economies, this reflects a banking-based financial system that poorly channels finance to productive and intangible-intensive firms, sustaining low-productivity businesses while constraining productivity-enhancing investment (Figure 4.2). Enhancing productivity requires a shift towards a more capital market-based financial system to improve financing for innovative, high-growth firms.
Investment is supported by a highly educated workforce, modern infrastructure, and strong integration in European and global value chains. Nonetheless, administrative burdens, high labour taxation and state involvement in the economy remain barriers to investment. Easing regulatory burdens and strengthening competition would help attract more domestic and foreign investment. Product market regulation is less stringent than the OECD average following post-financial crisis reforms, but progress has stalled while regional peers advanced. Investors continue to face barriers from dominant (mostly state-owned) incumbents and high entry costs, especially in services. The high level of state ownership affects competition, innovation, investment incentives, and productivity across the economy (Box 4.1). In addition, weak coordination among regulators leads to lengthy procedures, regulatory uncertainty, and higher costs for businesses.
As in other European economies, low labour productivity and high energy prices have weakened competitiveness. More competitive markets can help adjust to these shocks and lower transition costs by accelerating reallocation and supporting innovation. By contrast, supporting less competitive incumbents, such as energy-intensive industries, risks slowing adjustment and locking resources into low-productivity activities. The government’s planned support for start-ups (0.5% of GDP) for 2026-2028 is modest compared with industrial policy support for established energy-intensive sectors (2.1% of GDP). Promoting competition and encouraging reallocation will be key to sustain industry and investment rather than preserving non-competitive segments of the economy.
This chapter discusses key structural policies to boost private investment, focusing on deepening capital markets and enhancing access to equity financing. It also analyses policies to strengthen competition and ease the regulatory burden to support capital allocation towards more productive firms, investment in new technologies, and stronger long-term growth. Other structural policies to improve investment including labour taxation and trade are discussed in Chapters 1 and 2.
Note: CEE (Central and Eastern European) refers to the unweighted average of Czechia, Hungary, the Slovak Republic and Poland. Panels A, B, C and D, data refer to real gross fixed capital formation, chain-linked volumes 2015. Panel C, the public sector does not include public corporations. Panel D, the business sector includes public corporations.
Source: OECD National Accounts database; OECD Economic Outlook: Statistics and Projections database; and OECD calculations.
Note: Panel B, data refer to the economic sector "industry, construction and market services (except public administration and defence; compulsory social security; activities of membership organisations)".
Source: OECD Labour Productivity database; OECD Structural Business Statistics by size class database; Eurostat, Enterprise statistics by size class database; OECD (2025), OECD Compendium of Productivity Indicators 2025, OECD Publishing, Paris, https://doi.org/10.1787/b024d9e1-en; and OECD calculations.
Slovenia’s state presence remains significantly higher than in peer economies such as the Czech Republic or Poland, particularly in insurance, energy and telecommunications. Unlike many EU peers where the insurance market is dominated by private multinationals, Slovenia's two largest insurers (Zavarovalnica Triglav and Sava Re) remain under substantial state control. In energy and infrastructure, the entire power grid, the Port of Koper (Luka Koper), and Slovenian Railways are strictly classified as strategic assets. The state remains the majority owner of Telekom Slovenije, despite multiple attempts at privatisation over the last decade. Unlike other OECD economies, state-ownership in tourism is also high.
Slovenia’s financial-sector privatisation was driven by restructuring after the 2013 banking crisis and related state-aid commitments to the European Commission. Key privatised banks included Nova KBM, NLB, where the state retained 25% plus one share, and Abanka, sold to Nova KBM. The Abanka transaction was completed in 2020, marking the final stage of banking-sector consolidation in Slovenia.
Today, the direct role of the state in commercial banking is limited mainly to its strategic stake in NLB. The state also fully owns SID Banka, which is a national development and export bank. In the insurance sector, the state remains a shareholder, notably in Zavarovalnica Triglav, where two state-owned funds, the Pension and Disability Insurance Institute of Slovenia (ZPIZ) and the Slovenian Sovereign Holding (SSH), together hold around 62.6%, and in Sava Re, where the Republic of Slovenia and SSH together hold around 31.6% of shares, excluding smaller state-related holdings.
Slovenia consolidated SOE ownership and corporate governance under the Slovenian Sovereign Holding (SSH), established in 2014 after assuming the responsibilities of the former Slovenian Compensation Company. SSH centrally manages state capital assets to separate the state’s ownership role from its regulatory and policy-making functions. Its portfolio equals roughly 19% of GDP and is divided into strategic investments requiring majority state ownership, important investments with state holdings above 25%, and portfolio investments eligible for full privatisation. These categories are not explicitly tied to economic, security, or financial criteria. Every year, the government adopts an Annual Asset Management Plan (the 2026 plan was approved in February) which sets performance targets (ROE, dividends) for the companies under management.
The framework for state asset management has recently been updated. A new State Assets Management Strategy was adopted in March 2025. It updates the classification of state assets and places greater emphasis on corporate governance, sustainable development, risk control, productivity growth and the strategic role of selected state-owned companies.
Business investment fell sharply after the global financial crisis due to weak demand and banking and corporate deleveraging. Although business investment has partly recovered since 2014, it remains low relative to GDP and is mainly concentrated in tangible assets such as machinery (IMAD, 2025[2]). Investment in productivity-enhancing intangibles, such as data and software, is limited, accounting for less than one third of total business investment (Figure 4.3, Panel A). This reflects the economy’s specialisation in medium-tech manufacturing and firms’ strong reliance on bank financing. Limited access to non-bank finance increases dependence on internal funding, with around two thirds of investment self-financed (Panels B and C) (EIB, 2025[6]). As a result, startups, particularly innovative ones with limited internal capital, are at a disadvantage, while the general population of firms does not report access to finance as a major investment barrier (Bank of Slovenia, 2026[7]). Underdeveloped capital markets further constrain financing for intangible-intensive firms with little collateral that are less suited to bank lending. A shift towards more capital market-based financing would help to boost investment, particularly in intangibles.
As in other central and eastern European economies, the capital market remains underdeveloped, as reflected in a low market capitalisation and few listed firms (Figure 4.4). A concern is the almost non-existent new issuance of corporate shares at the Ljubljana Stock Exchange, with bonds, largely government bonds, accounting for about 75% of the total market capitalisation (IMAD, 2025[2]). The underdeveloped capital market reflects households’ reliance on real estate investment and low trust in financial markets following the financial crisis and a legacy of failed privatisations and initial public offerings, which has contributed to persistent risk aversion, despite high financial literacy and strong household savings (European Commission, 2023[8]). The share of wealth kept in currency and sight deposits is well above the EU average, indicating a preference for safety over returns (see below). Housing is the primary vehicle for long-term wealth accumulation, with a homeownership rate of 75% in 2024, compared to 68% in the EU, and real estate accounting for 76% of household wealth in 2021 (compared to 65% in the euro area), although savings are concentrated among older people and the richest 25% of households (Eurostat, 2026[9]; European Central Bank, 2023[10]; Bank of Slovenia, 2026[7]). Additionally, the Ljubljana Stock Exchange is small and illiquid, and high state ownership in key sectors reduces free-floating shares and limits retail investor participation (see below).
Note: Panel A, intangible assets comprise R&D, software, data, IT and website activities, employee training and business processes. Data come from the EIB Investment Survey 2025, based on telephone interviews with 12 033 firms across the European Union conducted between April and July 2025. Panel B and C, “Bond and shares” include unlisted shares. “Other” covers internal and within-group funding (including currency, deposits and other equity), plus insurance, pensions and standardised guarantees, financial derivatives, employee stock options and other accounts payable.
Source: European Investment Bank (EIB), Investment Survey 2025; Eurostat Financial Balance Sheets database; OECD Financial Statistics database; and OECD calculations.
There has been notable progress with the 2023 Capital Market Strategy (Ministry of Finance, 2023[11]). Initiatives include promoting regional market integration, aligning capital taxation and expanding retail participation through retail government bonds. However, deeper reforms are needed. In the short term, reforms should prioritise deepening capital markets through stronger competition and privatisation. Competition in the bank-dominated financial sector could increase by reducing preferential treatment of proprietary funds by banks and expanding access to third-party investment products. Raising market capitalisation and liquidity in the Ljubljana Stock Exchange could potentially be achieved through the privatisation and listing of free-floating shares of state-owned enterprises. This would help attract international investors and support Slovenia’s upgrade from Frontier to Emerging Market status. Major stock index providers classify countries by capital market development as frontier, emerging, or developed. An upgrade from Frontier to Emerging Market status reflects stronger liquidity, raising visibility among international investors. In the medium term, reforms are also needed to mobilise household and pension savings through auto-enrolment or employer matching contributions. Recent reforms go into this direction and include tax-advantaged individual investment accounts and reforms to investment regulations for pension funds that aim to channel more pension savings towards long-term capital market investment. Over the longer term, reducing the tax bias towards property investment and strengthening regional integration would further support capital market development.
There has also been progress on financial literacy. Slovenia performs relatively well in financial literacy, with results above EU averages, particularly among youth (European Commission, 2023[8]). However, as in many European economies, theoretical knowledge does not always translate into prudent financial behaviour. To address this gap, the government adopted the National Financial Literacy Programme (NPFO) in January 2025 as the main framework for improving financial literacy. The programme promotes awareness, financial education and prudent financial decision making for all population groups. A key measure is the inclusion of financial literacy in primary and secondary education, with at least 35 hours of instruction annually at each level.
Market capitalisation of listed domestic companies, as % of GDP
Note: CEE (Central and Eastern European) refers to the unweighted average of Czechia, Hungary, the Slovak Republic and Poland.
Source: European Capital Markets Institute (ECMI).
4.2.1. Strengthening competition for financial products
Competition in retail investment products is limited, reducing pressure to lower fees and discouraging households from investing in stocks and bonds. Three investment funds dominate (accounting for 93% of the market share in 2025), limiting competitive pressures on fees (NLB Group, 2025[12]; Sava Infond, 2025[13]). Management fees of 1-2% and entry costs of 1.5-3% in 2025 remain well above the EU averages of 0.9-1.5% and 0.4-0.6%, respectively (NLB Skladi, 2025[14]; Financna Hisa, 2025[15]; ESMA, 2025[16]). High costs discourage investment in bonds and shares, leaving most savings in low-yield bank deposits instead of financing businesses (Figure 4.5). This limits firms’ access to equity and constrains productive investment.
Competition may increase with a new foreign online bank entering the market in 2026 offering zero transaction fees. Strengthening competition and cost transparency would help reduce fees, for instance, through full, plain-language disclosure of all distribution fees, returns on investment and how they compare with other providers (ESMA, 2025[17]). This could encourage households to shift savings towards capital market investment, improving returns and channelling more funds to firms, supporting stronger business investment.
Retail investors can access low-cost exchange-traded funds (ETFs) and index funds worldwide through European brokers, but banks remain dominant in the domestic market by combining banking, asset-management and distribution, limiting incentives to offer competitors’ products (NLB Skladi, 2025[18]). To strengthen competition, the government introduced tax-favoured, portable savings and investment accounts in 2026, treating bonds, shares and funds equally, including ETF and index funds (see below). Banks should be encouraged to offer third-party products and justify exclusions under supervision of the Securities Market Agency and the Bank of Slovenia. To reduce the dominance of bank-based distribution, for instance, the Netherlands and the United Kingdom banned inducements, or commissions paid by investment funds to banks for selling specific funds, separating advice from sales and encouraging bank advisors to recommend cheaper third-party products, such as ETFs, over high-commission active funds. At the same time, banks and other providers should also document value-for-money tests when recommending active funds over lower-cost index funds and ETFs, as foreseen under the EU’s Retail Investment Strategy, while the competition authority reviews preferential treatment of proprietary funds.
Financial assets of households, by asset type, as % of total financial assets, 2025 or latest available year
Source: Eurostat Financial Balance Sheets database; OECD Financial Statistics database; and OECD calculations.
Financial innovation lags behind peers such as the Baltic countries, with limited FinTech market entry and slow progress in reducing regulatory barriers, as noted in previous Surveys (OECD, 2022[19]; OECD, 2024[20]). The Bank of Slovenia’s Innovation Hub has had limited impact, reflected in the relatively small number of FinTech start-ups (European Commission, 2026[21]), while countries such as Lithuania have encouraged stronger growth through simplified licensing and lower capital requirements. Introducing a regulatory sandbox could further ease market entry and stimulate innovation, as seen in other OECD countries (OECD, 2023[22]; OECD, 2025[23]). Stronger regional integration and closer alignment of FinTech regulations with Central European peers would also support innovation. Some progress has been made in regional financial market integration as discussed below, but deeper capital market integration would further support FinTech development as recommended in previous Surveys (OECD, 2022[19]). The Baltic region provides a successful example of integrated regional capital markets fostering financial innovation.
4.2.2. Harmonising capital income taxation
Investment income and capital gains are taxed at a flat 25% rate, with capital gains exempt after assets are held for at least 15 years. Recent reforms further aligned capital taxation. In 2022, a 25% flat tax on gains from derivative financial instruments further harmonised rates across different types of investment income. In 2026, new laws promoted employee ownership and profit-sharing, taxing dividends paid via cooperatives and equity-based employee payments at 25%, aligning them with investment income and capital gains tax rates. However, the tax system favours owner-occupied residential property (Figure 4.6). Primary residences are exempt from capital gains tax and imputed rent is untaxed, resulting in lower marginal effective tax rates than on bonds or shares (OECD, 2018[24]).
To encourage retail investment, tax-favoured individual investment accounts were introduced in March 2026. These allow EUR 20 000 to be invested in the first year and EUR 5 000 annually thereafter (or EUR 10 000 if 50% invested in Slovenian securities), with a reduced 15% capital gains tax rate. Capital gains are exempt after 15 years. Similar schemes exist in Estonia, Denmark, Sweden and the United Kingdom, although Slovenia’s relatively low deposit limits of EUR 20 000 in the first year and EUR 5 000 annually thereafter may slow capital accumulation. To better direct savings towards productive investment, capital taxation should be more neutral across asset classes, including housing. This includes reducing tax bias towards housing, for example through further raising recurrent immovable property tax rates as discussed in the last Survey (OECD, 2024[20]).
More generally, as in many OECD countries, corporate interest is tax deductible, encouraging firms to use debt rather than equity for financing. The marginal effective tax rate on equity is 41.5%, far higher than the 25% rate applied to debt instruments such as bank loans or bonds. This rate falls to 33.7% when capital gains are invested through tax-advantaged individual saving and investment accounts. The equity bias stems from double taxation of profits, first at the corporate level through the 22% corporate income tax rate, and again at the individual level through a 25% capital gains tax rate (or 15% if held in an individual investment account). In contrast, interest payments are deductible, lowering companies’ effective corporate tax burden.
To reduce the debt bias, the government introduced an interest limitation rule under the EU’s Anti-Tax Avoidance Directive in 2024. Net interest costs are tax deductible up to EUR 1 million, later raised to EUR 3 million or 30% of tax-adjusted EBITDA in 2025, in line with EU rules. This raised debt costs for larger firms, encouraging equity financing, while smaller firms remain unaffected because they often do not exceed EUR 3 million in net interest costs. Further reducing the limit of interest deductibility would support a shift towards equity-based financing.
Tax reforms need to be accompanied by measures to develop equity markets and private venture capital so that the reduction of the pro-debt bias in the tax code is matched by an increase in equity financing for firms. Measures include reforming minimum guaranteed returns that govern pension funds and limit their exposure to long-term, higher risk investment, and crowding in private venture capital investment by allowing buyouts of government stakes in public venture funds as discussed below.
Marginal effective tax rates, %, 2026
Note: Non-inflation adjusted values shown. The marginal effective tax rate falls with holding duration: 20% after 5 years, 15% after 10 years, and 0% after 15 years. For individuals, the marginal effective tax rate is 0% on bank deposits under EUR 1 000 and on corporate bonds, shares, and investment funds under EUR 5 000 held in a tax-favoured savings and investment account after 15 years.
Source: OECD (2018) Taxation of Household Savings; OECD calculations.
4.2.3. Expanding the institutional investor base
Private funded pensions could provide more long-term capital for productive investment, but participation remains low despite generous tax incentives (Figure 4.7, Panel A). As a result, private pension savings remain limited, and these schemes contribute only moderately to total pension income (Panel B and C). Strengthening private funded pensions would both bolster retirement incomes and broaden the retail and institutional investor base. Recent reforms require all employers with more than 10 employees who do not yet offer a second pillar pension plan to start formal negotiations with social partners to implement one from 2026, which is welcome. International experience shows effective approaches. Denmark and Sweden expanded coverage in occupational pension plans in the 1990s through tax-favoured matching contributions by employers (Box 4.2). These plans also give savers access to a wide range of investment options worldwide, including low-cost ETFs and index funds. Similar reforms would help develop a stronger private funded pension sector and channel more long-term savings into capital markets. These include promoting a wider uptake of occupational pensions and ensuring access to diversified, low-cost investment products (OECD, 2022[25]). Uptake of occupational pension schemes could be strengthened through employer matching or mandatory auto-enrolment to boost long-term pension savings. Such a reform needs to be accompanied by a concerted broad-based shift in taxation to lower the overall tax burden on labour as discussed in Chapter 1 and in past Surveys (Figure 4.8).
Source: Eurostat Financial Balance Sheets database; OECD Financial Statistics database; OECD National Accounts database; OECD (2025), Pension Markets in Focus 2025, OECD Publishing, Paris, https://doi.org/10.1787/b095d0a0-en; OECD (2025), Pensions at a Glance 2025: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e40274c1-en; and OECD calculations.
Denmark and Sweden illustrate how tax incentives and employer matching contributions can drive a strong uptake of private pension savings. Their private funded pension systems, established in the 1990s, operate mainly through occupational pension plans negotiated in collective agreements, with employers making matching contributions that are fully tax-deductible.
As in most OECD countries, pension contributions are tax-exempt, while investment returns are taxed at a relatively low flat rate, 15.3% in Denmark and 15% in Sweden. This is well below taxation of other capital gains, which face rates of 27% (and 42% above an 8 170 EUR threshold) in Denmark and 30% in Sweden.
Both countries include safeguards to limit early withdrawals. Sweden offers tax relief only if savers avoid retiring before a specified age, while Denmark applies a high 60% tax rate on early withdrawals, although most occupational schemes do not allow them. These features help support stable, long-term retirement savings.
Source: OECD (2018[26]; 2025[27]).
Note: Panel A, labour taxes include income tax plus employee and employer social security contributions, minus cash benefits.
Source: OECD Labour Taxation database; OECD Revenue Statistics database; OECD (2025), Taxing Wages 2025, OECD Publishing, Paris.
The occupational pension market (second pillar) is dominated by a few large state-owned companies with relatively high fees (Slovenian Sovereign Holding, 2025[28]; Kapitalska Druzba, 2025[29]) (Figure 4.9). Some private providers offer lower fees, but the market remains highly concentrated, and insurer-based distribution exposes many retail investors to elevated costs. This weak competitive pressure limits net returns for investors. A new pension reform abolished entry fees and capped annual management fees of pension fund providers from 2026, while the financial market regulator enforces value-for-money tests to raise price transparency, in line with EU rules. If occupational pension savings are to play a stronger role in financing business investment and capital market development, stronger competition will be essential to further lower fees, raise net returns and attract additional savings. More competitive systems exist elsewhere, such as those in Scandinavia. In Sweden, for example, pension funds are among the OECD’s most cost-efficient. Competition is maintained by offering the primary fund as a default option within a list of pre-approved secondary providers selected through public tenders based on fees and fund range. For instance, AP7 serves as the default occupational pension fund, while beneficiaries retain the option to choose alternative providers. Increasing competition in the occupational pension market could lower fees and help attract more long-term pension savings.
Pension fund operating expenses, % of assets under management, 2024 or latest available year
Source: OECD Funded Pensions Indicators.
Common ownership between pension funds and state-owned insurers weakens competition and capital market development. This reflects combined asset-management and distribution, giving little incentive to offer competitors’ products. Slovenia could reduce state-owned insurers’ ownership of pension funds to boost competition, strengthen financial markets, and limit conflicts of interest (Box 4.3). Another factor limiting the role of pension funds in financing long-term, higher risk investment are state-mandated minimum guaranteed returns, linked to average Slovenian government bond yields, forcing pension funds to hold a high share of low-risk government bonds and limiting their role in capital markets compared with other OECD economies. Recent pension reforms effective 1 January 2026 mark a major shift. They remove age-based limits on riskier investments, allowing older participants to retain higher equity and risk exposure if they chose so. Previously, those aged 55+ had to shift savings into guaranteed-return funds, mainly government bonds, to reduce pre-retirement market risk. The reform also facilitates transfers from insurance-style pension accounts into mutual pension funds with broader investment mandates, supporting diversification into equities and alternative assets, while consolidating smaller accounts into larger pooled funds to achieve economies of scale and reduce costs.
To regain households’ trust in capital markets, which has remained low since the financial crisis, rigorous due diligence and acting in the best interests of savers will be key. Redirecting savings into capital markets and domestic investment can spur growth, but it must not compromise the fiduciary duty of pension funds to maximize returns for savers. Restoring confidence will depend on managing risks and ensuring pension funds prioritise savers’ long-term interests, while strengthening consumer safeguards and financial stability.
Until the mid-1990s, Israel’s capital markets were highly concentrated, dominated by large universal banks and significant state involvement. Banks controlled most long-term household savings, while pension funds were owned by the employee organization Histadrut and invested mainly in government bonds. Although pension funds were sold to insurance companies in 2003 and new private funds were allowed, competition remained weak, and banks continued to dominate institutional investment. This led to conflicts of interest, poor investment performance, and excessive cash holdings in bank-owned funds that supported bank liquidity rather than returns.
These shortcomings prompted the 2005 Bachar reform, which prohibited banks from owning or managing mutual funds, limited underwriting conflicts, and expanded pension fund investment into equities and corporate bonds. The reforms significantly increased competition and improved capital allocation. Notably, they fostered the non-bank credit market, reducing banks’ share of credit from 96% in 2004 to 76% in 2010. While management fees initially rose, regulatory fee caps later brought costs back to pre-reform levels.
Source: Avramov, Dressler and Metzker (2021[30]); Goldwasser, Zaks and Shlush (2007[31]); OECD (2011[32]; 2024[33]).
Low investment in equity also reflects the conservative investment strategy of insurance companies – the largest institutional investors, which remain largely state-owned, in contrast with most OECD countries (Figure 4.10). State-owned insurance companies are less active equity investors than private peers as discussed in previous Surveys, and the economic rationale for continued state ownership of insurers is unclear (European Commission, 2019[34]; OECD, 2021[35]; OECD, 2022[19]). State-owned insurers in Slovenia allocated between 9 and 12% of assets to equities versus 16% for private peers in 2025, resulting in lower returns on investment (2.1-2.6% for state-owned insurers versus 3-4% for private insurers) (Triglav, 2026[36]; Sava Insurance Group, 2026[37]; Generali, 2026[38]; EIOPA, 2026[39]). Despite this, state-owned insurers remain highly profitable due to market dominance and bank-led distribution. Their lower equity exposure makes them major buyers of Slovenian government bonds, helping keep borrowing costs low but crowding out investment in the private sector. The conservative approach of the largest institutional investors also limits their exposure to capital markets, contributing to an underdeveloped local venture capital and private equity ecosystem. State ownership also constrains capital market investment through the Takeovers Act, which requires mandatory bids once a company, including state-owned entities, acquire one-third of voting rights in listed firms, potentially expanding state control (Legal Information System of the Republic of Slovenia, 2006[40]).
Moreover, the Ljubljana Stock Exchange is dominated by a few state-owned enterprises, limiting market depth, private financing, and foreign investment. Strengthening capital markets therefore requires adjusting insurers’ investment policies and gradually extending privatisation to allow for more free floating shares on the stock exchange. A law adopted by referendum in 2007 stipulates that the largest insurance company cannot be privatised. Nonetheless, further listing of free floating shares provides the opportunity to raise private investment and management experience. This includes reviewing the extent of public ownership of insurers as discussed in the 2022 Survey (OECD, 2022[19]). Listing minority stakes in state-owned enterprises, as in other European countries, could also attract domestic and foreign investors, deepen capital markets, and improve liquidity (Box 4.4).
Financial institution's ownership of total financial assets, %, 2025 or latest available year
Source: OECD Financial Statistics database; and OECD calculations.
Romania’s stock market capitalisation has grown from around 5% to 12% of GDP over the past two decades. Listings of state-owned enterprises have been key to deepening the Bucharest Stock Exchange. Between 2000 and 2019, 18 IPOs raised a total of EUR 1.3 billion, with five SOE offerings in the utilities and energy sectors accounting for about 90% of proceeds. The listing of larger energy and utility companies provided the scale needed to attract international institutional investors. Increased market size and liquidity was reflected in the exchange’s upgrade from Frontier to Emerging Market status in 2019, enhancing its visibility and attracting more investors.
Source: OECD (2022[41]; 2024[33])
4.2.4. Enhancing regional integration
Low liquidity on the stock exchange makes listing unattractive for many SMEs (OECD, 2022[19]). Listing costs such as compliance costs, underwriting and legal fees, are often high relative to the capital firms can raise, limiting entry and contributing to the decline in listings on the Ljubljana Stock Exchange over the past decade. The government aims to promote regional integration of stock exchanges to improve liquidity and attract more listings. In 2025, Slovenia signed a Memorandum of Understanding with seven Central and Eastern European countries (Bulgaria, Croatia, Hungary, North Macedonia, Poland, Romania, and the Slovak Republic) to promote capital market integration through harmonised rules, a single entry point, and discussions on a common index (Ministry of Finance of the Republic of Croatia, 2025[42]). Although the Ljubljana Stock Exchange is integrated into the Eurosystem for settlements, several regulatory barriers remain. For instance, non-resident investors must obtain a Slovenian tax number before opening accounts or holding securities, delaying entry. Account opening also requires physical paperwork such as notarised documents. The United Kingdom provides an example of a dedicated sub-market for riskier high-growth SMEs with more flexible listing requirements (Box 4.5).
The Alternative Investment Market (AIM) is the London Stock Exchange’s dedicated sub-market for SMEs, launched in 1995 to help fast-growing but riskier firms access capital markets. It offers more flexible listing requirements than the London Stock Exchange Main Market, making it easier for smaller firms to go public (London Stock Exchange, 2026[43]).
AIM is privately regulated by pre-approved investment banks and financial service firms, known as nominated regulators, rather than directly by the financial market regulator. These nominated regulators guide companies through the listing process, determine readiness for flotation, and oversee ongoing compliance with AIM rules. Compared with the Main Market, AIM companies face lighter regulatory oversight. Although AIM-listed firms must follow UK shareholder protection laws, they are not required to comply with the UK Corporate Governance Code (Gutierrez et al., 2025[44]; London Stock Exchange, 2026[43]). Additionally, many AIM shares qualify for Business Relief, allowing inheritance tax exemption after two years, which has channelled substantial private wealth into SME investment.
At the end of 2022, the AIM had over 550 listed companies, including equity and debt issuers, with a total market capitalization of over GBP 80 billion, although the number of listed companies has trended downward from its mid-2000s peak as the exchange prioritises larger, more stable growth firms. Most AIM listed companies are small, with the median company having a market capitalisation of GBP 15 million (London Stock Exchange, 2026[45]).
A closer alignment of financial regulations with other European countries could help reduce fragmentation of capital markets, broaden the investor base and deepen market liquidity. Stronger regional cooperation among regulators, including regulatory harmonisation, may further support this process. In this context, the government participates in a project of the European Bank for Reconstruction and Development on alignment of supervisory practices in the region. The Baltic region offers a successful example, where a pan-Baltic capital market and the MSCI Baltic Index have increased visibility, investor interest and liquidity, while improving prospects for Emerging Market classification and attracting more institutional investors (European Stability Mechanism, 2025[46]) (Box 4.6).
An example of regional integration is the Baltic region, which aims to build scale, broaden investor participation and help overcome the limited size and liquidity that have historically constrained Baltic capital markets. Integration measures between Estonia, Latvia and Lithuania include:
Policy cooperation under a Memorandum of Understanding (signed in 2017) fostering integration.
Harmonised covered bonds frameworks to align legal rules and facilitate cross-border issuance.
Launch of the MSCI Baltic Index in 2023 to create a single equity index for the region, raising visibility, liquidity and attractiveness to international investors.
Harmonised unified disclosure requirements to enable joint listing on Nasdaq Baltic exchanges in 2024, supporting cross-border investment.
Further regulatory harmonisation is under discussion, including harmonising tax treatment of investment savings accounts to increase cross-border investment.
Integration efforts have led to improvements in initial public offering volumes and growing stock market capitalisation. The combined market capitalisation on Nasdaq Baltic more than doubled in the first half of 2025, driven by strong bond issuance and increased trading activity.
Source: European Stability Mechanism (2025[46]); OECD (2022[19]).
4.2.5. Bolstering access to venture capital
Venture capital investment remains low, constraining finance for innovative young firms ill-suited to bank loans (Figure 4.11). Limited private risk capital hampers the transition from startup to growth, reflecting shallow capital markets and weak exit options for venture-backed companies. To address this gap, the government established public venture capital funds backed by the state-owned development bank SID Banka and the European Investment Bank. Between 2017 and 2023, SID Bank mobilised 0.5% of GDP in public funding, crowding in similar amounts (0.4% of GDP) from private investors. For 2026-28, it plans 0.5% of GDP in new commitments, which is modest compared to the announced EUR 1 billion (or 2.09%) of industrial policy support for established industry. The Slovenian Enterprise Fund will also provide early-stage equity financing over 2024-2029, but at a scale that is unlikely to significantly alter the overall funding distribution between young firms and established industry (OECD, 2024[47]). The government’s Startup strategy from March 2026 aims to expand venture capital with public incentives and pension fund investment. It also foresees the introduction of competitive employee stock options, the creation of a start-up visa to attract talent, and the establishment of a new legal organisational form tailored for start-ups (Government of Slovenia, 2026[48]).
Venture capital investments, as % of GDP, 2024
Source: OECD Venture capital investments (market statistics) database; and OECD calculations.
As private actors are best placed to identify promising projects, incentives to crowd in private investments should be strengthened. Israel’s Yozma venture capital initiative illustrates this approach. The government provided up to 40% of funding and allowed private investors to buy out its stake at a guaranteed price within five years. This reduced the public share of venture capital from 50% to almost zero within seven years (OECD, 2022[49]; OECD, 2025[50]). Building on this success, Israel launched Yozma 2.0, allocating about USD 160 million (or 0.03% of GDP) to leverage USD 700 million (or 0.13% of GDP) in institutional investment, again using guaranteed buy-out options and loss-sharing arrangements. The government could crowd in private venture capital investment by allowing buyouts of government stakes in public venture funds.
Participation of domestic institutional investors in venture capital financing is low. Pension funds accounted for only 6% of private equity and venture capital funds raised annually between 2007 and 2023, well below the Baltic states with 19% and Denmark, Finland, and Sweden with 21%, 28% and 30%, respectively (Thomadakis, 2024[51]). This reflects both regulatory constraints and conservative investment strategies. Supervisory rules by the Insurance Supervision Agency prioritise liquidity and rapid exit, discouraging illiquid private assets. In addition, many pension plans guarantee monthly or annual returns of around 40% of average government bond yields, although recent reforms allow savers to choose riskier investment strategies. Consequently, Slovenian pension funds have among the highest allocations to low-risk government bonds, resulting in a relatively weak investment performance compared to the OECD average (OECD, 2024[52]; OECD, 2022[25]). Increasing exposure to alternative asset classes such as private equity, alongside more flexible guarantees as introduced by recent pension reforms, could improve risk-adjusted returns for long-term savers, provided appropriate risk management and governance are maintained. The Netherlands and Scandinavian countries provide successful examples (OECD, 2025[53]; OECD, 2026[54]) (Box 4.7).
Pension funds have supported the development of local equity markets in the Netherlands and Sweden, reflecting flexible investment mandates and low return guarantees. This has enabled significant investment in unlisted equities, including seed and growth financing for start-ups. For instance, the mandate of the Swedish occupational pension schemes AP7 includes investments in unlisted equities, supporting startups. These practices are consistent with the long-term nature of pension liabilities and allow for longer investment horizons, in contrast to short-term return guarantees that rather encourage investment in government bonds.
Early-stage equity investment by pension funds supports firm growth and economic activity, while delivering higher long-term returns for beneficiaries. Evidence from Denmark shows that pension fund equity investment raises firm productivity by 3 to 5% on average, with stronger effects for small and unlisted firms. This is partly explained by the longer investment horizon, which facilitates greater investment in productivity-enhancing activities rather than short-term dividend payouts.
Source: Beetsma et al. (2024[55]) and European Stability Mechanism (2025[46]).
The venture capital sector faces regulatory hurdles, including complex procedures for capital increases and shareholder change, while unattractive taxation of employee stock options hampers talent recruitment and retention. Facilitating start-ups listings would strengthen exit options and help attract venture capital investors. Recent initiatives under the Capital Market Strategy and Securities Market Agency have improved listings and digital access to documentation. Extending the deferral period for taxing employee share ownership up to ten years and increasing annual tax allowances, as introduced in 2025, supports start-up stock-option plans. Since the end of 2025, the Employee Ownership Cooperative Act grants tax relief on profits shared via employee ownership, encouraging owners to sell stakes to employee cooperatives. Dividends paid to employees through cooperatives are taxed at 25%, lower than standard labour income tax. These efforts could be paired with initiatives to streamline existing procedures to obtain residence and work permits for high-skilled non-EU workers (IMAD, 2025[2]).
Bank lending remains the main external source of business financing due weak capital markets and a nearly non-existent venture capital sector. Lending to small- and medium-sized enterprises is limited, as banks focus on larger firms and safer activities such as residential mortgages (see above). This disadvantages startups, particularly those intensive in intangible capital with little internal capital, reflecting a market failure. Banks often underfund intangible assets because of unfamiliarity, asset complexity, and regulatory uncertainty. Policy intervention could help to develop reliable valuation data and lending practices. Japan and the United Kingdom, for instance, have strengthened IP valuation frameworks and collateralisation rules. Expanding loan guarantee schemes could support firms lacking traditional collateral such as real estate or machinery by reducing lender risk for businesses whose value lies in intellectual property or other intangible assets, as seen in Korea. However, guarantees shift risk to the public sector, requiring appropriate fees to contain fiscal costs, while promoting broader access to finance for smaller and innovative businesses (Brassell and Boschmans, 2022[56]; Brassell and Boschmans, 2019[57]).
4.3.1. Reducing the regulatory burden
The government has launched deregulation initiatives to reduce administrative burdens and raise domestic investment (Figure 4.12). The 2022 Debureaucratisation Act enabled e-mail communication and electronic delivery of administrative decisions. In 2025, further measures made building permits and spatial planning more business friendly, including faster procedures. Easing regulatory burdens would also help attract more foreign investment as discussed in Chapter 2 (Figure 4.13).
Product Market Regulation indicator, from 0 to 6 (most restrictive)
Note: The Product Market Regulation (PMR) indicator is a composite index that encompasses a set of indicators that measure the degree to which policies promote or inhibit competition in areas of the product market where competition is viable. Scores range from 0 to 6 and increase with restrictiveness (data refer to 2023).
Source: OECD Product Market Regulation database.
FDI inward positions (stocks), as % of GDP, 2024 or latest available year
Note: 2023 for Germany and the United Kingdom. Ireland, Luxembourg, the Netherlands and Switzerland are not included in the Figure.
Source: OECD FDI by counterpart area and by economic activity database.
Progress has also continued in e-government to address the relatively high administrative burden on start-ups (Figure 4.12). In 2025, legislation was passed to streamline online business registration. A core element is the creation of a corporate digital identity, allowing reliable identification of businesses and supporting domestic and cross-border business operations. Currently, Slovenian firms cannot authenticate themselves to access public services provided in other EU countries. Reducing the regulatory burden on start-ups would raise contestability of markets, competition and investment. Moreover, the country ranked below the OECD average in the 2023 OECD Digital Government Index (OECD, 2024[58]), indicating scope for improvement. Many digital public services for businesses remain voluntary, duplicating traditional services and limiting e-government uptake as discussed in previous Surveys (OECD, 2022[19]).
Despite recent initiatives, lengthy building permitting procedures remain a barrier to investment, mainly due to limited administrative capacity and complex coordination among authorities (OECD, 2024[20]; OECD, 2025[59]). Municipalities need the approval of up to 24 different national authorities to get spatial plans approved. Recent spatial reforms, including the silent-is-consent rule in 2025, aim to speed up procedures, although their impact cannot yet be assessed. For example, if the water authority does not respond within 30 days, land is assumed not to be flood-prone, but this requires pre-prepared spatial data that is not yet available in all municipalities. The government also plans to designate special business zones to accelerate permitting. Despite this improvement, the overall process still often takes four to six months (CMS Law, 2025[60]). Allowing municipalities to transfer applications to neighbouring jurisdictions with lighter caseload has helped. Further progress depends on improved spatial data, harmonised local spatial plans, and rollout of a new electronic permitting system following best practices (Box 4.8). Higher land-use tax rates on commercial property or income tax revenue sharing could incentivise faster municipal permitting by increasing permit returns and rewarding municipalities for attracting workers.
Estonia, Latvia, and Lithuania lead the EU in digitising building permits. As of January 2026, all three countries operate fully paperless online systems.
Building permit procedures in Estonia are the fastest, using the State Register of Construction Works as a single online portal for all procedures and communication with authorities, from design to occupancy permit, with a statutory 30-day limit for obtaining a building permit.
Latvia introduced its Construction Information System in 2026, centralising all communication online. Consent is presumed if authorities or utilities do not respond within 30 days, although a mandatory public notification period for neighbours adds around 30 days.
Lithuania operates the Infostatyba online portal, with a 45-days statutory limit for standard residential permits. Authorities face daily financial penalties if decisions exceed 65 days, creating strong incentives for speed. Since 2025, large investment projects and those in Free Economic Zones can begin construction without a permit, submitting only a Notice of Commencement with technical documentation.
Source: City of Tallinn (2026[61]); (Government of the Republic of Lithuania (2026[62]); Land and Spatial Development Board of the Republic of Estonia (2026[63]); Noewe (2025[64]); State Construction Control Bureau of the Republic of Lithuania (2026[65]).
Regulatory analysis remains weak in practice, with limited use of cost-benefit analysis (Figure 4.14) (OECD, 2025[66]). Ex-ante regulatory impact assessments (RIAs) are mandatory for primary and secondary legislation, including the “SME Test”, which assesses regulatory impacts on SMEs’ costs of doing business. Online portals support analysis by lawmakers and feedback from the public. The SME Test could potentially address the issues of poor co-ordination arising from new measures often involving several regulators. However, full RIAs have rarely been done in practice. In-depth cost-benefit analyses are conducted for only a few key regulations each year due to the high volume of new legislation. As a result, regulators are generally not required to assess baseline or “do nothing” scenarios, alternative non-regulatory options, or quantify compliance effects, limiting the effectiveness of the SME Test for reducing administrative burdens.
Regulatory impact assessment, Indicators of Regulatory Policy and Governance (iREG), from 0 to 4 (best performance), 2024
Note: The more regulatory practices as advocated in the OECD Recommendation on Regulatory Policy and Governance a country has implemented, the higher its iREG score. The indicator on regulatory impact assessment for primary laws only cover those initiated by the executive (83% of all primary laws in Slovenia).
Source: Indicators of Regulatory Policy and Governance Surveys 2021 and 2024.
Recent efforts include the system for electronic legislative drafting supporting lawmakers (MOPED). The planned introduction of MOPED in 2026 offers an opportunity to better integrate rigorous economic impact assessments early in the regulatory process and make RIAs obligatory for new regulation. The public will be able to use the same tool for impact assessments online, which aims to raise transparency about regulatory costs. Initially, such analysis should focus on key legislation, before gradually expanding to cover all legislation, not only new primary laws.
Ex post evaluation is not widely used (Figure 4.15). The online Stop Bureaucracy portal allows citizens and businesses to propose measures to reduce regulatory burdens. Since 2013, around 765 measures have been proposed, of which 440 have been approved and 396 implemented by the end of 2025, and about 170 evaluated using standard cost methodology, generating roughly EUR 565 million in compliance cost savings (Republic of Slovenia, 2026[67]). However, ex post evaluations are generally not mandatory, except for laws adopted under emergency procedures, and few are conducted in practice. Responsibility lies with drafting ministries, leading to uneven quality and mostly qualitative assessments. Using ex post evaluations systematically would help ensure regulation achieves intended outcomes and is cost-effective. Evaluations of existing laws would be particularly useful when considering amendments. Assigning responsibility to a single authority to coordinate evaluation and provide methodological support and training would improve policy coherence and regulatory efficiency.
Ex-post evaluation, Indicators of Regulatory Policy and Governance (iREG), from 0 to 4 (best performance), 2024
Note: The more regulatory practices as advocated in the OECD Recommendation on Regulatory Policy and Governance a country has implemented, the higher its iREG score.
Source: Indicators of Regulatory Policy and Governance Surveys 2021 and 2024.
Limited use of the RIA framework in policy design creates regulatory uncertainty through unclear decision-making and frequent changes, undermining business investment. Oversight of RIA is fragmented and lacks effective quality control or blocking power, with no central authority ensuring consistent and complete analysis, as noted in previous OECD Surveys (OECD, 2017[5]). Centralising oversight in a single body with powers to enforce quality, review stakeholder input, and reject inadequately assessed proposals would strengthen the regulatory framework. Setting time limits for consultations and involving stakeholders early in drafting would further improve regulatory outcomes.
In terms of reviewing regulations, the Competition Protection Authority (CPA) is mandated to identify regulatory restrictions on competition and issue published opinions to the responsible authorities on measures to remove them. It may also comment on draft laws or regulations affecting competition, either on its own initiative or at the request of public authorities. In practice, however, the CPA is rarely involved directly when new regulations are being developed or formally consulted on legislative proposals, including major initiatives such as the national action plan to deregulate professions. Instead, the Ministry of Economy most often seeks the CPA’s views on matters within the agency’s remit, resulting in around five to ten largely informal opinions each year. The CPA has also produced only a limited number of market studies, typically one or two a year, such as in the retail sector, that address regulatory barriers to competition (Competition Protection Authority, 2025[68]). These market studies are important tools for identifying competition concerns and strengthening the CPA’s analytical capacity and institutional profile.
The regulatory advocacy framework could be strengthened by requiring public authorities to publicly respond to CPA concerns and by systematically applying competition assessment methodologies, such as the OECD Competition Assessment Toolkit (OECD, 2019[69]). The CPA should actively publish its opinions and ensure competition assessments are integrated in all legislative action affecting competition, including the deregulation of professions.
4.3.2. Strengthening competition enforcement
Limited competition enforcement may hold back investment by protecting incumbents, weakening their incentives to invest in new technologies and business processes, and deterring entry as discussed in previous Surveys (OECD, 2017[5]; OECD, 2022[19]). With a budget of around EUR 2 million and 23 competition staff in 2024, the Competition Protection Authority (CPA) is well-resourced compared to European peers, but its effectiveness is undermined by a lack of financial autonomy (OECD, 2025[70]). Its budget is determined by the Ministry of Economy, Tourism and Sport, which also oversees its operations, although it may not access individual case files or influence decisions. Limited financial independence restricts the CPA’s ability to move funds across different working areas to respond to shifting operational needs or priorities, as all expenditures require ministerial approval. This inability to freely direct its own resources may limit the agency’s capacity to enforce competition. To align with standard OECD practices, the CPA’s operational independence to manage, allocate, and transfer its own funds without requiring constant ministerial approval should be strengthened, as recommended in previous Surveys (OECD, 2017[5]). However, this would require a general overhaul of the budgetary rules and procedures in the public sector.
The level of competition enforcement is low. Between 2015 and 2024, the CPA issued on average three cartel decisions and one abuse of dominance decision a year. They conducted preliminary investigations below the European average of five cartel and two abuse of dominance infringement decisions (OECD, 2025[70]). Enforcement success has also been limited. Since 2015, nine fines have been imposed for anti-competitive conduct, but most were overturned by the courts, mainly on procedural grounds. Six of these cases were resolved through settlements with relatively low fines averaging EUR 185 000, although one EUR 1 million settlement skews the figure. The fact that most of the cases were settled may indicate a preference to avoid judicial scrutiny, which limits precedents. It also results in lower fines and reduced judiciary oversight and may result in a reduction of damage claims for potential infringements. This weak enforcement record has reduced deterrence, reflected in the absence of leniency applications since 2021. Competition enforcement should be strengthened by increasing infringement procedures against anti-competitive conduct and reducing reliance on settlements.
Judicial control also faces significant procedural challenges. Since 2023, cases are handled through a single administrative proceeding to establish an infringement order for the conduct to cease, accept commitments from the parties and impose sanctions. This is an improvement over the previous complex dual-track system, although the new system’s impact on decisions remains to be seen. There is a concern about the limited judicial expertise in competition law. The small number of cases a year reduces judges’ incentives for training. Stronger competition enforcement by the agency, fewer use of settlements, and increasing the capacity of courts that control the decisions of the competition authority through targeted training in competition law and economics could help increasing the system’s quality. This could be done, for example, through greater participation of the competition agency and judges in trainings and incorporating specific competition courses prepared by the competition agency into Judicial Training Centre programmes.
4.3.3. Promoting competition in public procurement
The near doubling of procurement’s share of GDP from 8% to 14% over the past decade underscores the importance of an efficient public procurement system (OECD, 2025[71]). However, strong demand growth has not been matched by supply, reflecting a small market that attracts few foreign bidders. In addition, around 3 000 small local contracting authorities rarely publish tenders and have limited procurement capacity, increasing the risk of collusion in a small economy with few potential bidders. As a result, competition issues persist, with bid-rigging and single bids common. In 2024, 44% of tenders received only one bid, especially in IT and maintenance, above the EU average of 41%. Some progress is notable. The use of negotiated procedures without prior publication fell from 26% in 2020 to 8% in 2024, although still above EU average (Figure 4.16) (European Commission, 2026[72]).
Source: European Commission, Single Market Scoreboard.
Progress has also been made in e-procurement systems and training as discussed in Chapter 1. In 2024, the government established a Public Procurement Academy to train officers in bid design and the detection of bid rigging (OECD, 2025[73]). The competition authority contributes to training activities, although its involvement could be expanded, notably in the field of bid rigging, and the training of procurement officials, public sector auditors, the financial police, the anticorruption authority and in general law enforcers so that they recognise competition red flags when they see them, as recommended by the OECD (OECD, 2025[74]). To strengthen bid-rigging detection, performance-related pay could be introduced at the competition authority and for procurement officers, allowing retention of 10% of fines following successful enforcement action as recommended in previous Surveys (OECD, 2017[5]).
An online portal collects information on tender publication, and another online portal collects information on bid submissions. The two e-systems are accessible to the competition authority, strengthening its capacity to combat bid rigging. However, the portal on bid submissions offers only limited search functionality requiring exact formats, no partial search, and inconsistent data entry. Bulk export is unavailable, forcing time-consuming manual retrieval. Critical data, such as information on unsuccessful bidders, their bid prices, and subcontractors, exists only in non-machine-readable PDFs, requiring conversion. This makes data access cumbersome and limits the competition authority to cases with existing suspicions. Detecting bid rigging could be further improved by providing structured, machine-readable data on all bidders, their bid prices, and subcontractors, enabling the competition authority to access and analyse information efficiently.
4.3.4. Fostering competition in services
High regulatory burdens, particularly in professional services, continue to create barriers to entry, holding back investment in these sectors and raising investment costs in downstream industries that use these services (Figure 4.17). Slovenia also remains among the most restrictive EU countries for trade in services as discussed in Chapter 2. Despite rising service export market shares, significant potential remains untapped in fast-growing, knowledge-intensive services, notably IT and professional services (IMAD, 2024[75]). Barriers include limits on the duration of stay of service suppliers and lengthy recognition of foreign qualifications (OECD, 2025[76]).
Note: The Product Market Regulation (PMR) indicator is a composite index that encompasses a set of indicators that measure the degree to which policies promote or inhibit competition in areas of the product market where competition is viable. Scores range from 0 to 6 and increase with restrictiveness (data refer to 2023). The Stringency of insolvency score is an average of the three main sub-categories (treatment of failed entrepreneurs, prevention and streamlining, and restructuring tools), each one scaled from zero to one, with lower scores indicating more favourable frameworks (data refer to 2022).
Source: OECD Product Market Regulation database; André, C. and L. Demmou (2022), “Enhancing insolvency frameworks to support economic renewal”, OECD Economics Department Working Papers, No. 1738, OECD Publishing, Paris, https://doi.org/10.1787/8ef45b50-en.
A noticeable example of heavy services regulation is the high number of regulated professions, with business services accounting for around one third of the total. Overall, 284 professions are regulated, the fourth highest number in the EU and far above the EU median of 28 (European Commission, 2025[77]). A deregulation process launched 2012 reduced the number from 323 but progress has largely stalled in recent years. High entry barriers arise from extensive occupational licensing requirements, lengthy mandatory training, compulsory chamber membership, and restrictive concession systems. These restrictions in legal and engineering services raise prices in downstream sectors that rely on professional service inputs, weaken investment incentives and slow value-chain upgrading. Further deregulation would support investment in professional services and, more importantly, across downstream industries via spillovers. For instance, OECD estimates suggest that moving regulatory stringency in professional services to the average of the top 3 least regulated OECD countries could raise economy-wide labour productivity in the long-run by 2% (Andrews and Égert, 2026[78]).
The government should reduce the number of regulated professions, for instance in legal and engineering services, as in leading OECD countries such as the Baltics and Sweden and recommended in previous Surveys (European Commission, 2025[77]; OECD, 2017[5]). Regulations unrelated to consumer protection, such as nationality requirements, could be removed. Lighter regulation could shorten required professional experience, replace mandatory with voluntary professional registration in professional bodies, or focus on protecting professional titles rather than reserving activities. The competition authority could be involved to identify unnecessary restrictions, using, for instance, the OECD Competition Assessment Toolkit, to ensure more competitive professional services.
Overly complex insolvency procedures delay the exit of unproductive businesses, weakening efficient reallocation of capital to more productive firms and limiting productivity growth (Figure 4.18). Court involvement in insolvency procedures is higher than in many other OECD countries, increasing litigation costs for debtors and creditors, despite progress in this area over the past decade (Andrews, Adalet McGowan and Millot, 2017[79]). More efficient bankruptcy and restructuring processes would speed up market exits and reallocate resources to more productive firms. Promoting timely out-of-court settlements would help. This could be supported by reducing creditor approval threshold from two-thirds to one-half, as in the Netherlands and the United Kingdom, to limit minority holdouts. Additional measures include facilitating new financing for distressed firms and adopting tailored procedures for SME debt restructuring (André and Demmou, 2022[80]).
Note: Panels A and B show the average within-country–industry cumulative changes in firm entry/exit rates for Slovenia and across countries. Estimates are derived from year coefficients of within-country–industry regressions covering 12 countries (AUT, BEL, DEU, ESP, FIN, FRA, GBR, HUN, ITA, PRT, SVN, TUR) over the period 2003–2023 (unbalanced panel). Each point represents the cumulative change in percentage points relative to 2003. Regressions are weighted by each industry’s annual share of number of units, within countries. The Panels cover manufacturing and non-financial market services (ISIC Rev. 4, sections C and G–N, excluding K). Panel C shows the contribution of firm exit to within-industry productivity growth according to the Melitz and Polanec decomposition of within-industry productivity growth over time. Measures are computed at the SNA-A38 industry level and aggregated to the country-year level using industries’ employment shares as weights. The median includes the following countries and periods: Canada (2004-2022), Croatia (2004-2019), Estonia (2004-2022), Finland (2004-2022), France (2004-2022), Hungary (2004-2023), Italy (2006-2019), Portugal (2004-2022), Slovenia (2004-2023), Spain (2004-2023), and the United Kingdom (2004-2022).
Source: OECD DynEmp database, March 2026.
4.3.5. Towards a more competitive electricity market
The conflict in the Middle East has exposed the dependence of the economy on fossil fuel imports, as in other peer economies. Competition in electricity markets is crucial to boost private investment and enhance security of energy supply (OECD, 2022[19]). Competition in the electricity markets is low due to the dominance of state-owned enterprises, deterring private entry and investment because of implicit state guarantees and preferential access to finance. Over the past five years, household electricity prices have been around one third below the EU average (Figure 4.19, Panel A). Low prices reflect government-imposed price caps during the energy crisis rather than competitive market outcomes. Between 2022 and early 2025, electricity prices for households and small businesses were capped, forcing state-owned enterprises to sell below market cost. These measures supported affordability, but they generated losses that ultimately had to be covered by taxpayers. Between 2022 and early 2025, the government had compensated electricity suppliers by about 0.6% of GDP for the gap between market and capped prices (S.Novice, 2025[81]; Government of the Republic of Slovenia, 2024[82]). Funds originally earmarked for renewable and nuclear investment were diverted, weakening long-term energy investment and electricity producers’ investment capacity. Reliance on taxpayer-funded compensation underscores the need for a more competitive electricity market.
Electricity prices, EUR per kilowatt-hour
Source: Eurostat Electricity prices for household and non-household consumers database.
Wholesale and industrial electricity prices closely track regional peers due to strong market integration (Figure 4.19, Panel B). Participation in regional coupling markets, high cross-border capacity, and compliance with EU cross-border interconnection requirements have boosted competitive pressure on domestic prices (ACER, 2024[83]). However, extensive state ownership weakens these benefits. State-owned firms dominate generation and retail, limiting competition and discouraging private entry, while vertical integration across generation, transmission, and retail entrenches market power. In Norway and Sweden, for instance, reforms in the 1990s promoted independent entry in retail, raising competition and lowering prices, while structural unbundling limited cross-subsidies and ensured clearer regulatory oversight across generation, transmission, and retail (OECD, 2023[84]). Strengthening competition would require structural separation, divestment of vertically integrated firms, privatisation, and a robust regulatory framework ensuring non-discriminatory network access as recommended in previous Surveys (OECD, 2017[5]). Pro-competitive reforms would support investment in energy and downstream industries (Andrews et al., 2025[85]).
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