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.
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.
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.
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.
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]