Brussels, 20/11/2014 (Agence Europe) - On Thursday 20 November, the Social Democrat group at the European Parliament proposed the creation of a European investment instrument (EII) capable of mobilising €400 billion from a public contribution of €100 billion.
The investment plan the European Commission is to present to the EP “next week” constitutes the “main conquest of the S&D group” in negotiations on the creation of the Juncker Commission, said its President, Italy's Gianni Pittella. Following on from the ALDE group yesterday (EUROPE 11200), the Social Democrats have pre-empted this presentation by announcing “ambitious” ideas for the public debate to be held ahead of the European Council of December.
The instrument, which would be funded to a level of €100 billion by the member states, would be capable of raising €300 billion on the market and attracting €100 billion in private funding (leverage effect of x 1.25). On top of the EII, there would be a guarantee mechanism of €75 billion granted by the European Stability Mechanism, the bailout fund of the eurozone, which would help to draw a further €150 billion in private investment (leverage effect of x 2). Furthermore, the mobilisation of €38 billion in revenue and dividends generated by the EIB would help to attract €114 billion in additional private investment, with the aim of funding riskier projects (leverage effect of x 4). This would mean that the investment plan would generate a total investment capacity of €800 billion.
Pittella said that the public funds mobilised through the plan would benefit from the maximum “flexibility” laid down in the Stability and Growth Pact and would not be included in the calculation of public deficit. Adopting an idea close to the heart of the Italian Presidency of the Council, he also argued for national co-funding for projects supported by structural funds to enjoy the same treatment.
Unlike the rumours surrounding the “Juncker” plan, “we have been conservative about the leverage effect” which could be generated by our initiative, “so as to remain credible”, said Portugal's Maria João Rodrigues. She went on to say that the cash exists, but the lack of confidence at the moment is such that it will have to be kickstarted by public investments, which will act as a trigger.
At his hearing before the EP, the then candidate Commissioner for Economic and Financial Affairs, French Socialist Pierre Moscovici, argued in favour of the mobilisation of as much public money as necessary and as much private money as possible. His words have been adopted by the Commissioner for Investment, Jyrki Katainen, who is heading up preparations for the Juncker plan (EUROPE 11168).
Whatever the political colour of the proposals put forward, there is relative consensus as regards the question of the nature of the projects to be funded. Belgium's Kathleen Van Brempt stressed the importance of “targeting” investments to “sustainable growth” to fund the energy transition (new infrastructure, energy efficiency) and “intelligence” (research/innovation, training). (MB)