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09/12/2016

Regions warn Juncker plan could eat cohesion funds

Regional Policy

Regions warn Juncker plan could eat cohesion funds

Fan of Euro notes on scales

[Flickr/TaxRebate.org.uk]

SPECIAL REPORT: Political representatives of Europe’s regions warned yesterday (4 December) that Juncker’s €315 billion investment plan could divert money away from the EU’s existing cohesion funds.

At a plenary session held in the European Parliament, the Committee of the Regions (CoR) endorsed the Commission’s decision to exempt public investments projects from deficit calculations under the Stability and Growth Pact.

But CoR members called for the move to be extended across all cohesion and structural funds, as they fear the national co-financing money from these instruments will leach to the new Juncker plan.

Under Juncker’s plan, member states have been offered the opportunity to top-up amounts into the European Fund for Strategic Investments (EFSI) – which will act as the investment vehicle of the plan. The money they provide is discounted from the calculations of national deficits within the so-called European Semester, a scheme that gives the Commission the power to review drafts of national budgets and provide recommendations that governments have to follow.

Commission sources have told EurActiv that Slovakia, Finland and Spain have already expressed an interest in making such ‘top-up’ payments.

The CoR resolution called for the deficit discount to be spread across all cohesion funding.

Hands off our structural funds

“The Committee of the Regions’ demand that national co-financing of the European Structural and Investment Funds be exempted from deficit calculations of the Stability and Growth Pact and asks therefore the European Commission to assess the feasibility of this demand,” the resolution – unanimously adopted by the regional body – said.

The CoR underlined that any overlaps between EFSI and the European Structural and Investment Funds “must be avoided” and called on the EU executive to “clarify the complementarity needed between these investment funds.”

Member states currently commit their own resources to elicit existing EU structural funds – worth €350 billion during the current multi-annual financial framework, which runs from this year until 2020.

“The regions fear that faced with limited resources for allotting funds within the member states, the attraction of investing in a fund offering a deficit discount procedure might draw resources away from the existing projects,” a CoR spokesman told EurActiv.

“What we don’t want is for this [Juncker plan] to lead to substitutional activity. We want that activity already there through structural funds, ESIF and other existing funds to remain, and for the Juncker initiative to add to that,” said Sir Albert Bore, the vice-president of the socialist group in the CoR and the leader of Birmingham council.

Background

The European Commission unveiled the mechanism for its much-heralded €315 billion investment plan on 25 November.

Details on the new fund reveal that the cash will be funnelled towards Europe’s crisis-ravaged south, away from the wealthier north in an effort to boost solidarity.

>> Read: Juncker's €315bn investment plan unveiled: fifteenfold leverage and solidarity for the south

The idea is to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank and an €8 billion guarantee from existing EU funds designed to secure a contribution of €16 billion in total from the institutions.

The €8 billion guarantee will come over a three-year period from the Connecting Europe Facility (€3.3 billion); Europe’s research programme Horizon 2020 (€2.7 billion) and so-called “budget margin”, or unused funds, worth €2 billion.

The resulting EFSI fund totaling €21 billion is expected to generate €240 billion for long-term investments and €75 billion for SMEs and mid-cap firms over the period 2015-2017.

The plan drew questions over the lack of new cash, with some Members of the European Parliament calling it "recycling and re-labelling" of existing programmes.

>> Read: Juncker investment plan draws questions over lack of new cash

Timeline

  • 18-19 Dec.: EU heads of states to debate Juncker investment plan at European Council meeting in Brussels

Further Reading