Brussels, 14/11/2014 (Agence Europe) - The Euro2030 group, which brings together young European affairs professionals working in the European institutions and national chancelleries, is proposing to set up a European Investment Fund (EIF) as part of the ongoing reflection on the level of investment that the European Commission will propose before Christmas.
This EIF, which could be based on the EIB's fund of the same name while increasing its capacities, is expected at least to involve the eurozone countries but remain open to the involvement of countries outside the eurozone. It would have various sources of finance, coming in particular from the participation of public investment banks and from the EIB through a new increase of its capital, as well as a reallocation of the EU's budget. In this way, nearly €100 billion could be available from 2015.
“Whether they come from the EIB, the public investment banks or direct contributions, the national envelopes invested in the EIF should not be counted in the public deficit calculation for incentive purposes, also because they do not constitute recurrent spending”, says the Euro2030 group in a reflection note of which EUROPE has obtained a copy.
The informal reflection group also suggests the idea of attracting, over the medium-term, 1% of current private savings, evaluated at €15 trillion, through the creation of a European savings account. This could have a bank savings account (interest rate, tax incentive) but it would have a “credible European” deposit protection, perhaps through the European Stability Mechanism (ESM).
It should be noted that the EIF could even be equipped to borrow on the markets, and in the long term be able to have its own resources which would come from “a tax on financial activity” from “a European tax on companies”.
Involving the ESM. The reflection group is of the opinion that the eurozone bailout funds could be used as a financial backstop for the EIF “so as to limit its exposure to risks (…) and guarantee it a good financial rating”. The ESM would not invest directly in the EIF capital. This issue divides Germany and France, with Germany reiterating that the ESM is a bailout fund only to be used in emergencies for financial stability, and France arguing that part of the ESM capital could also be used for investment purposes.
Using the various sources of finance, the EIF could facilitate investment in large infrastructure projects through various means - debt instruments, direct equity participation and support for capital-investment. (MB)