EU investment plan helped create 1.1 million jobs

European Commission President Jean-Claude Juncker addresses the plenary of the European Parliament in Strasbourg, France, 22 October 2019. [EPA-EFE/PATRICK SEEGER]

Outgoing European Commission president, Jean-Claude Juncker, announced on Tuesday (22 October) that the investment plan launched at the beginning of his mandate helped create 1.1 million jobs in Europe and boosted the European economy by 0.9%.

The Juncker Commission is nearing its end, so it is time to take stock and cement the legacy. The past five years have been shaken by Brexit, the migration crisis, the third Greek rescue programme and the threat posed by terrorism. 

For that reason, Juncker looked at the investment plan launched at the outset of his term in search of good news. 

In a speech before the European Parliament to review his time in office, Juncker said his initiative, based primarily on private funds, boosted European GDP by 0.9% and added 1.1 million jobs in the EU, when compared to the baseline scenario.

Goodbye Juncker plan, hello InvestEU, Europe's new investment fund

The European Commission put forward a proposal on Wednesday (6 June) to bring all of the EU’s existing investment instruments under the banner of a new fund called “InvestEU” which will formally succeed the Juncker Plan.

The Juncker plan, which will continue during the next term with additional resources, is estimated to add an additional 1.8% to European growth by 2022, while the total sum of jobs created will increase to 1.7 million.

This plan was one of this Commission’s flagship initiatives, announced shortly after Juncker took over in November 2014 to reduce the significant fall in private investment, compared to pre-crisis levels and to relaunch the European economy.

By using financial engineering, the EU executive aimed to mobilise as much private capital as possible with the minimum amount of EU funds. 

The main objective was to attract resources towards SMEs and more risky projects, so that they did not cannibalise already planned investments. 

To this end, the EU offered a part of the financing that served as a guarantee to absorb the first losses, if there were any.

The plan mobilised almost €440 billion in total up to October 2019, of which 70% came from private hands. Since its launch, the plan supported more than 1 million SMEs. 

EIB and Commission defend Juncker plan following auditors' criticism

The European Investment Bank and the European Commission were forced to defend their flagship ‘Juncker’ investment plan, following a report of the European Court of Auditors published on Tuesday (29 January) that questioned its usefulness.

The European Court of Auditors, however, questioned last January if the plan really served to mobilise additional resources over the planned investment.

Sustainability, energy, transport and health were some of the priority fields, helping 10 million households access renewable energy, 20 million Europeans benefit from better health services and 182 million passengers have better transport networks, according to Commission figures.

Ursula von der Leyen will take over at the Commission’s helm at a time when the need for new fiscal stimulus has taken centre stage.

Growing pressure on eurozone economies to launch stimulus

The European Commission and some member states including France followed the ECB in pressing Germany and other countries with fiscal space to invest more to counter the risk of recession.

The EU executive, the ECB and the IMF asked countries with more fiscal space, especially Germany and the Netherlands, to open the portfolio to avoid a new recession.

At the same time, the Commission sent letters on Tuesday to Spain, Italy, France, Belgium and Portugal calling for further adjustments in their draft budgets for 2020 to reduce their high levels of public debt. Finland also received a similar letter last week.

Commission tells member states to adjust their economies further

The European Commission is putting the final touches to a number of letters to various national governments that are at risk of missing their fiscal targets for 2020. Brussels wants more information on how they intend to to balance their public finances.

Juncker’s term, which formally ends on 1 November, will be extended for at least another month, after the European Parliament struck down the candidacies of three commissioners-designate named by von der Leyen.

[Edited by Sam Morgan]

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