“I promised to present an ambitious Investment Plan before Christmas. One month later and Christmas has come early – I am here to deliver on my promise”, Commission President Jean-Claude Juncker told MEPs, presenting his €315 billion investment plan.
Juncker presented his €315 billion investment plan, which has indeed put together in record times. He pledged to present such a plan on 15 July, when MEPs confirmed him as next Commission President, but had time to work on it only after his team took office on 1 November.
As EURACTIV already wrote, the plan is based on a fifteenfold leverage of a limited €21 billion of initial public money. As Juncker explained, the fund will be called European Fund for Strategic Investments (EFSI), guaranteed with public money from the EU budget and the European Investment Bank (EIB). The Fund will be able to mobilise €315 billion over the next three years.
For the EFSI, the Commission has put up €8 billion from the EU budget. This backs up a €16 billion guarantee given to the Fund. Topped up by another €5 billion from the EIB, the sum totals €21 billion.
In addition, the European Investment Bank (EIB) can give out loans of €63 billion. But private investors will be pitching in the remaining €252 billion.
The money taken from the EU budget comes from the Horizon 2020 and Connecting Europe budget lines, but Juncker said this didn’t mean the money is lost.
“Every euro from these programmes paid into the Fund creates €15 euros for those very same research and infrastructure projects. We are not just moving money around. We are maximising its input,” he said.
Juncker also said that if member states step up to the plate and contribute to EFSI, then the knock-on effect of this significant amount will be even bigger. The €315 billion of total expected investment is not a ceiling, and if the plan is successful, its ceiling could be even higher, he said.
The projects to receive investment from the fund for the funds should be attractive to investors. Those who will choose them will not be politicians but technicians who have the experience and know-how to do so. A special Investment Committee made up of experts will validate every project from a commercial and societal perspective and based on what value-added they can have to the EU as a whole.
Public deficits will not be aggravated
As the Socialists and Democrats group had asked, Juncker said that the member states’ contributions to EFSI would be deducted from the calculation of public deficit and public debt under the Growth and Stability Pact.
Juncker warned about national wish-lists, and basically said there was no guarantee how much they would profit from the fund, if they contribute to it.
“Geographical silos will not serve anyone. France growing is good for Italy. Southern Europe growing is good for Germany. We are all in this together. Our fates are linked. We should stand shoulder to shoulder”, Juncker said.
Changing the paradigm
Commission Vice President Jyki Katainen, responsible for Jobs, Growth, Investment and Competitiveness said EFSI would increase the firepower of the EU budget by shifting the priority from grants and loans to investment support and investment guarantee.
EFSI will focus on long-term investments with higher risk profiles, he said. All projects will be moved into a single hub which will provide information and help in financing the projects for promoters., he said.
Katainen also called on member states to contribute to EFSI by providing capital, by using the structural funds allocated to them in the new financial instrument.
“Currently, 92% of structural funds go to grant schemes. This has to change. Once that money is granted, it is gone. We need to make better use of this financing so that it goes further and has a real effect on the economy,” Katainen said.
He also said that a Taskforce led by the Commission and the EIB, with member states, is currently identifying over 1000 projects which are ready to be assessed. “We want to give a European label for the most viable ones,” Katainen said.
This Plan is not a magic wand, Katainen said, adding however that if it is implemented, it would change the European investment landscape permanently and for the better.
EIB President Werner Hoyer, who was present alongside Juncker and Katainen in front of the MEPs, was asked about journalists if the fifteenfold multiplier for raising private money was a realistic one.
He said that the fifteenfold multiplier was in fact a conservative figure, and that liquidity was abundantly available in the EU. It is not used because of the lack of risk-bearing capacity, he said.
Hoyer said that the “horrifying story” was that Europe has been lagging behind on investment levels compared to the pre-crisis period by an average of 20%.
The centre-right EPP, the Socialists and Democrats and the liberal ALDE political groups made statements, largely supportive of the Juncker plan. Anti-EU political groups called the plan “Monopoly money”, “Hocus-Pocus” and “Abracadabra” (see Positions). Parliament President Martin Schulz called the Juncker plan a “a turning point”, adding that he was looking forward for its “big success”.