One year after its launch, the Juncker Plan has reached 26 of the EU’s 28 member states. But most of the projects are taking place in Western Europe. EurActiv France reports.
The Juncker Plan, the European Commission’s strategy to relaunch investment and economic growth in the EU, is now up and running in almost every member state, with the exception of Malta and Cyprus.
Adopted in the wake of Jean-Claude Juncker’s nomination as the head of the Commission in 2015, this plan is designed to generate €315 billion of investment in projects linked to the environment, infrastructure, innovation and SMEs across Europe by 2018, by leveraging an investment fund of €21 billion.
After one year in action, 249 projects have been approved for a total of €13 billion. These projects should mobilise €100 billion of investment, or around one third of the total objective.
“The estimates are made project by project and based on actual results. The leverage effect can be highly variable from one project to another. But I have great confidence in the fact that we will reach the objective of fifteen-fold leverage,” Ambroise Fayolle, the vice-president of the European Investment Bank (EIB), told journalists in Paris.
The European Commission presented a 315 billion euro plan on Wednesday (26 November) to boost Europe’s stagnant economy, but some doubted private investors would provide the funding, 15 times the EU contribution, needed to make it work.
This multiplier effect is indispensable if the Juncker Plan is to reach its objective of mobilising €315 billion of investment in Europe. The EU provided €8 billion to the European Fund for Strategic Investments (EFSI), to act as a foundation from which the €315 billion would be raised. With the quality of the EU’s credit rating, this €8 billion capital investment is worth €16 billion in guarantees.
A further €5 billion were added by the EIB to bring the EFSI’s total value to €21 billion.
“The European Investment Bank is financing projects it would not have been able to support had it not been for the Juncker Plan,” said Fayolle.
In a departure from its usually conservative investment policy, the EIB’s investment council is now actively seeking riskier projects to finance.
After a strenuous negotiating process, on Wednesday (24 June) MEPs validated the European Fund for Strategic Investments, taking the EU one step closer to the launch of the Juncker Investment Plan. EurActiv France reports.
Yet in certain countries, the risk is too high even for the Juncker Plan. “In Greece we have put in place resources to identify projects. But the risk level is very high,” said Fayolle.
Difficulties in the East
Another central factor in the choice of projects is their “capacity to attract private investors”. “This criteria causes more difficulty in Eastern Europe, where the private sector is less developped,” the EIB vice-president said.
A further restriction on projects in the East is that “in some cases, projects are only viable if they are partly subsidised”, said Fayolle.
To facilitate the access of the Eastern member states to EIB investment, the executive has given permission for the Juncker Plan to be combined with European structural funds. “This allows us to cover more projects in Eastern Europe,” Fayolle added.
On top of its difficulty in gaining a foothold in the East, the investment plan is dominated by the EU’s big Western economies. The United Kingdom, Spain, Italy and France are the biggest beneficiaries of the Juncker Plan.
In its first year, the Juncker Plan was mainly utilised by the EU’s big economies, notably France, Italy and Spain. EurActiv France reports.
“In Europe, investment is still 15% below its pre-2008 crisis levels. And this is not a trend we see affecting our main commercial partners like the United States, Japan or the big emerging countries,” Fayolle said.
It is still too early to tell whether the Juncker Plan will succeed in relaunching investment in the long term in the EU.
On 25 November 2014, the Commission revealed the details of its €315 billion investment plan.
In a gesture of solidarity, the money from this plan was largely to be used in the South of Europe, in the countries worst affected by the crisis.
The EU created 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 the so-called “budget margin”, or unused funds, worth €2 billion.
The resulting EFSI fund totalling €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.