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28/09/2016

Juncker to announce €200 billion extra funds in ‘State of the Union’ speech

Digital

Juncker to announce €200 billion extra funds in ‘State of the Union’ speech

Jean-Claude Juncker, President of the European Commission (centre) at the weekly meeting of the College of Commissioners, on 7 September 2016. Sitting next to him is Alexander Italianer, Secretary-General of the EC (left) and Martin Selmayr, Head of Cabinet (right).

[© European Union , 2016]

Energy and digital infrastructure projects are expected to receive a further €200 billion funding boost under plans to be announced today (14 September) by the President of the European Commission in his State of the Union address.

Jean-Claude Juncker will announce the extra funding as part of a drive to reunite Europe in the aftermath of Britain’s shock decision to leave the European Union in a referendum last June.

The €200 billion will come on top of the €315 billion already made available under the European Fund for Strategic Investment (EFSI), also dubbed the “Juncker Plan”.

Juncker will take the floor in the European Parliament in Strasbourg for his State of the Union address at 09.00 am local time. There, he will call on EU member countries and institutions to progress on areas “where we can reunite,” an EU official told EurActiv.com.

To that end, he is expected to announce a €200 billion increase for the existing €315 billion investment plan and two additional years for the disbursements, until 2020.

>> Follow EurActiv’s live video streaming of the speech here

Brexit: A wake up call but not decisive 

Although Juncker’s “positive agenda” to reunite Europe comes in response to the Brexit referendum, the Commission President is not expected to speak about Britain’s departure from the EU in his hour-long speech in Parliament.

Senior EU officials tried to play down the importance of Brexit, saying it is not such a “decisive playing factor”, although they admitted it was a “wake-up call”.

The same official sources also doubted that the UK’s exit from the bloc would happen under this Commission, whose mandate expires in November 2019.

It will be a “long, cumbersome process”, the officials said on condition of anonymity.

Energy and digital

Various sources consulted on the eve of the speech explained that the additional money announced today will aim to support energy and digital sectors, which were identified as priority areas by the Juncker team.

The transition towards a greener energy system has become a flagship goal after the UN climate change conference (COP21), held in Paris last December, reached an agreement to limit global warming to 2C.

To help achieve this goal, the Commission will use an existing financial instrument under the European Investment Bank (EIB) to pour additional money as a guarantee to increase the funding for energy projects.

The current EFSI scheme relies on €16 billion in guarantees backed by EU funds to mobilise  €315 billion mainly from private sector investors until 2018.

The fresh funding that will be announced today intends to support infrastructures and interconnection projects, energy efficiency, and renewable energy (the so-called energy transition).

According to one official, the reinforced Juncker Plan intends to implement the COP21 agreement, to complete the energy transition.

Digital priority

But another EU source noted that projects related to the digital field would also be key over the next four years.

In this regard, another senior EU official commented that Juncker would highlight the importance of progressing toward the completion of the Digital Single Market (DSM), one of the flagship projects of the current Commission.

In this context, Juncker will highlight the need to invest in fiber networks, roll out the next generation of internet mobile networks (5G), and modernise EU copyright legislation. More detailed plans regarding the reform of telecoms rules will be announced later in the day by the two EU Commissioners in charge of digital matters, Günther Oettinger and Andrus Ansip.

New telecoms rules: bringing Europe's internet up to speed?

The European Commission is proposing changes to laws governing telecoms service this month that will affect how people use the internet and phones around the EU. There’s a lot at stake for consumers, former state-owned monopolies and emerging service providers: the new rules will shake up internet quality, competition between firms, user rights and the powers …

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Meanwhile, the executive will also announce a new European External Investment Plan to support investment in Africa and neighbouring countries.

This new instrument will mobilise up to €44 billion of investments, thanks to the support of the EU budget and the European Development Fund (EDF). The EU executive expects that, if national governments and other partners match these contributions, the total amount could reach €88 billion.

More efforts on defence

Another priority area is defence. With the terrorist threat at an all-time high and growing tensions in the Eastern European neighbourhood, Juncker will propose a series of initiatives to forge a European defense system independent from the transatlantic treaty alliance, NATO.

Accordingly, the Commission President is expected to call for a unified command for joint EU operations and the deployment of EU battlegroups. Juncker will also call for joint purchases of military equipment and vehicles. According to initial estimates, member states could save between €25 billion and €100 billion per year thanks to joint procurements.

The defence proposals are all broadly in line with a Franco-German plan to relaunch the EU in the aftermath of the Brexit vote.

Germany and France seek stronger EU defence after Brexit

Germany and France have outlined plans to deepen European military cooperation, a document showed on Monday (12 September), as Britain’s exit from the European Union removes one of the biggest obstacles to stronger EU defence in tandem with NATO.

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Eurozone integration delayed

But Juncker’s plea to deepen the economic and monetary union will hardly find traction in Berlin.

As foreseen in the EU’s roadmap for economic and fiscal integration―the so-called Five Presidents’ report―the Commission will present next spring a white paper on far-reaching reforms to complete Europe’s economic integration.

Chief among them is the idea of creating a “fiscal capacity” ―or separate budget― to cope with unexpected economic shocks in the Eurozone. The Eurozone budget could also be used as a fiscal stimulus either to support investment projects or to reinforce national unemployment schemes in times of major recession.

Although the idea is appealing to most, negotiations on a Eurozone budget are not expected to come through until after the French and German election.

Marathon negotiations on the eurozone budget continue

European lawmakers are trying to push ahead with plans for a eurozone budget. A consensus in the European Parliament could finally unblock the political debate. EurActiv France reports.

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