The European Commission Chief, Jean-Claude Juncker, has unveiled a €315 billion investment plan that aims to boost the continent’s economy. The plan aims to mobilise additional finance for investment and create a credible project pipeline, coupled with technical assistance to channel the money where it is needed. Furthermore, the European Commission wants to create a road map to reduce sector-specific regulations that hamper investment.
The investment plan aims to unlock public and private investments in the real economy of at least €315 billion over the next three years (2015-2017). The plan foresees a smart mobilisation of public and private sources of finance, in which every euro of public money is used to generate additional private investment, without creating new debt.
In addition, a new European Fund for Strategic Investments (EFSI) is being set up in partnership with the European Investment Bank (EIB). It is built on a guarantee of €16 billion taken from the EU budget, combined with €5 billion committed by the EIB. Based on estimates from historical experience, the multiplying effect of the fund is 1:15. In other words, for every public euro that is mobilised through the fund, €15 of total investment is generated. The focus of the plan is to invest in infrastructure, notably broadband and energy networks, as well as transport infrastructure in the industrial centres (education, research and innovation). The plan will also invest in renewable energy, SMEs and middle capitalisation companies.
Commenting on the plan, European Commission President, Jean-Claude Juncker, has said: “If Europe invests more, Europe might be more prosperous and create more jobs – it’s as simple as that. The investment plan we are putting forward, in close partnership with the European Investment Bank, is an ambitious and new way of boosting investment without creating new debt. Now is the time to invest in our future and key strategic areas for Europe, such as energy, transport, broadband, education, research and innovation.”
This may be done by creating a pipeline that assists the channeling of money where it is needed. The investment plan aims to enable finance to reach the real economy through the transparent pipeline. This pipeline aims to identify viable projects at EU level and provide the necessary technical assistance to support project selection and structuring, as well as the use of more innovative financial instruments.
The Confederation of British Industry (CBI) has responded to Jean-Claude Juncker’s speech. Katja Hall, the CBI Deputy Director-General, said: “The Commission must grow and job creation is at the top of its to-do list, so this package is a step in the right direction. The best way to get more investment is by making the EU as competitive as it can possibly be. That means we need to make progress on the single market and sign more trade deals. Action is needed from national governments to carry out structural reforms and boost government investments.”
We do this by creating a road map to tackle the potential regulations of investment. The plan aims to improve the business environment and financing conditions. Focusing on measures in the financial sector, for example the creation of a Capital Markets Union, to provide an enhanced supply of capital to SMEs and long-term projects.
Also this week, Germany and France aim to come up with joint investment projects focused on the digital economy by the time a European Union summit takes place in mid-December, ministers said at a meeting in Berlin on Tuesday. In a joint statement, the euro zone’s two largest economies welcomed European Commission President Jean-Claude Juncker’s €315 billion plan to boost investment in Europe and said they were “fully committed to its rapid implementation and to make it as strong as possible”. They said they are partnering up to provide digital networks in areas like education, health, transport, energy and public administration, and working to improve the broadband connection along the Franco-German border. They also want to get stakeholders together to look at battery cell technologies.
What benefits might a stronger European Union bring to the UK?