The UK will benefit almost twice as much as the other large European countries from the €315 billion Juncker investment plan, according to a report by rating agency Standard & Poors.
The agency’s report on Global Infrastructure Investments published last month assessed the multiplier effect that public investments from the Juncker plan might have within several member states.
S&P estimated the benefit to economies over a three-year period (2015-2017) of an increase in public sector spending of 1% of GDP in the first year.
Generally speaking the report found that the resulting multiplier effect was greater in developing economies than in the developed countries, but the UK was a notable exception.
Its figures showed that for every €1.4 spent on the public sector within the eurozone – such as those envisioned by the Juncker plan – an additional €1.4 would be added to GDP over the three year period.
Multiplier effect shows variation across member states
The UK would see multiplication on a scale of 2.5 over the same period, more than twice that of Germany (1.2) and almost double that of France (1.3) and Italy (1.4).
Spain would see a multiplier effect by a factor of 2 however, and figures for the most crisis ravaged countries of the Eurozone – notably Portugal and Greece – were not revealed.
On Monday (23 February) European Investment Bank (EIB) president Werner Hoyer said that the EIB is delivering well ahead of schedule on commitments made to the EU Member States to mobilise €180 billion of additional investment following a capital increase in 2013.
“We will reach our goal of €180 billion of additional investment across Europe during March 2015, around nine months earlier than anticipated,” Hoyer told reporters in Brussels.
In 2012, EU Member States agreed to increase the EIB’s paid-in capital by EUR 10 billion, with the understanding that this would allow the EIB to increase its lending activity by 40% between 2012 and 2013 and maintain that level until 2015.
The bank’s ability to do so will be seen as a crucial test of its capacity to deliver on its central role within the Juncker Plan.
Hoyer defends bank on Greece
At the heart of this initiative lies the European Fund for Strategic Investments (EFSI), which will be set up within the EIB. Its mission is to support and deliver viable projects which provide significant sustainable economic benefits, taking on higher risk where appropriate.
“With the new fund the EU Bank will be able to use its know-how and experience in order to stimulate additional investment, send a strong signal of confidence and improve the competitiveness of the European economy,” Hoyer said.
The EIB chief hit back at suggestion that the EIB has neglected Greece, saying it has “a very strong track record of lending” in the cash-strapped state.
“As of today, outstanding loans (the EIB’s exposure) in Greece amount to over € 16.9bn, equivalent to around 9.4% of Greece’s GDP. The EIB has been and will remain strongly committed to financing projects in Greece,” Hoyer said in a statement.