EU finance ministers agreed on Tuesday (10 March) to roll out Juncker’s flagship investment plan, in order to revive the continent’s timid economic recovery.
Ministers approved the regulation for the European Investment Plan Fund, as Italy pledged €8.0 billion to the programme, matching similar commitments from Germany, France and Spain.
“By reaching an agreement on the Regulation for a European Fund for Strategic Investments (EFSI) in less than two months, Member States deliver on the commitment they have taken at the European Councils in October and December last year,” European Commission Vice-President Jyrki Katainen told a news conference after ministers met in Brussels.
The Juncker Plan is supposed to unlock €315 billion to finance projects aimed at rejuvenating the EU’s moribund economy.
“The plan is the answer we need to confront the main handicap of the European economy: the lack of investment,” said Pierre Moscovici, Commissioner for Economic and Financial Affairs, adding that investment had fallen by 15 to 20 percent since 2008.
“We need to make long-term financing available for projects that contribute towards our common priorities for Europe: energy, digital, transport and innovation; as well as supporting the backbone of our economy: SMEs and mid-cap companies,” continued Katainen.
The plan is intended to spur growth in Europe through an elaborate scheme involving a total of €21 billion from the European Investment Bank and funds from the EU’s budget, which is supposed to unlock billions of private investors’ money.
The commitment from Italy and the other EU states is a bittersweet success for the Commission, which had originally hoped governments would contribute directly to the fund.
Instead, the contributions will be made only via national investment banks — thereby guaranteeing that the funds will go towards domestic projects. — in a blow to the Juncker Plan’s original EU-wide spirit.
Italy is now the fourth country to announce a contribution through its National Promotional Bank: Cassa Depositi e Prestiti. Germany announced in February that it would contribute €8 billion to the Investment Plan through KfW. Also in February, Spain announced a €1.5 billion contribution through Instituto de Crédito Oficial (ICO), and France last Friday announced a €8 billion pledge through Caisse des Dépôts (CDC) and Bpifrance (BPI).
As agreed by the European Council, the Fund should be up and running as quickly as possible to ensure that financing starts flowing to projects this summer, added Katainen.
The plan will run for four years but will be reviewed after three years to see if it is working.
A steering board made up by the European Commission and the European Investment Bank will oversee the fund, while an eight-member investment committee will choose the projects.
The list submitted in December, which EU officials stress is not definitive, includes plans for housing regeneration in the Netherlands, a new port in Ireland, and a 4.5 billion euro fast rail connection between Estonia, Latvia, Lithuania and Poland.
Other ideas involve refuelling stations for hydrogen fuel cell vehicles in Germany, expanding broadband networks in Spain, and making public buildings in France more energy-efficient.
MEPs give green light to other investment funds
Meanwhile in Strasbourg, MEPs have adopted the rules for European Long-Term Investment Funds (ELTIFs). ELTIFs are designed to boost non-bank investment in the real economy across Europe.
They will help pension funds, insurance companies, professional and even retail investors willing to invest at least €10,000 over the long term in one or more ELTIFs, to put money into projects in their own countries or elsewhere, provided these projects benefit the EU economy, be it infrastructure, machinery or equipment, education, research or fostering the growth of small and medium-sized enterprises (SMEs).
Greeting the vote, MEP Alain Lamassoure, leading the file, said the new tool will not only give a major boost to financing long-term investment, as supported by the Juncker Plan, but will also help build the Capital Markets Union.
“The investment gap and financial crisis present us with the challenge of solving the tricky equation of maximising economic growth, increasing financial stability, removing barriers to cross-border investment, ensuring consumer protection, and enhancing competition all at the same time,” Lamassoure added.