Brussels/Strasbourg, 25/11/2014 (Agence Europe) - The investment plan to be unveiled by the Juncker Commission in Strasbourg on Wednesday 26 November attempts to reconcile the concerns expressed by the various European stakeholders, but does not bring in any 'fresh', or mainly public, money.
The “Juncker plan” provides the creation of a European Fund for Strategic Investment (EFSI) within the EIB. The EU budget will guarantee financing of €16 billion and the EIB will allocate a further €5 billion from its capacity to support higher-risk operations. This envelope will be used to protect credit for new EIB activities which could take more risks - a demand made by France in particular - without compromising its AAA rating, to which it is deeply committed.
The EFSI will give the EIB group partial protection from the risk (first tranche loss). On the basis of a multiplying effect of 1 to 3, it is expected that the EIB will be able to raise €60 billion. This will allow private investors to invest five euros in the higher, safer tranches. Aiming for a cumulative multiplying effect of between 1and 15 on average, the Commission anticipates that the total envelope of funding could be as high as €315 billion. Depending on the specific nature of each project, the multiplying effect could be higher or lower. Within the European institution, it is noted that the estimation of this multiplier errs on the side of caution and is based from the lessons learned from EU and EIB programmes.
According to the Commission's estimates, the investment plan could add between €330 and €410 billion to EU GDP and create up to 1.3 million jobs over the next three years. Unlike in the United States, investments in Europe have continued to fall since the crisis (15% less than in 2007) and have not bounced back since then. The Commission's strategy aims to bring private funds back to Europe. There is no concern, at this stage, that the market will not be receptive.
The EU guarantee will be built up gradually to reach €16 billion (over three years) and will be flanked by a provision of €8 billion. This envelope will come directly from the EU budget (€2 billion), the Connecting Europe Facility (€3.3 billion) and the Horizon 2020 research programme (€2.7 billion). The structural funds will also feed in.
Member states will be able to contribute capital to the EFSI, either directly or through their national development banks. By express request of the Investment Commissioner, Jyrki Katainen, any national contribution to the EFSI will not be counted in the calculation of the public deficit, a provision which does not currently exist for national co-funding alongside the use of structural funds. This will provide an incentive for the states to invest in European projects. According to one European source, however, no interest has been expressed by the states.
Consequently, therefore, the plan will make public money available to stimulate recovery without creating further debt, as called for by the Christian Democrat (EPP) and Liberal (ALDE) leaders. It also aims to change the role of the European budget, giving it a certain level of financial capacity, a minor revolution in how the budget is conceived, according to a Commission source.
Project selection. The EIB will play the lead role in selecting projects, together with the Commission. Neither the EP nor the Council will have a say on this issue. The projects funded will theoretically come from the list of the annexes to the Connecting Europe Facility (EUROPE 10966). The sectors in question include energy, transport, digital, education, research and innovation. Within the Commission, it is felt that the budgetary principle of 'fair return' has no place in this operation.
Timetable. No changes to the multi-annual financial framework 2014-2020 will be needed. However, in order to create the EFSI fund and define its financing terms, the adoption of a regulation will be required. The aim is to allow the EFSI to be up and running by mid-2015. In the meantime, the EIB will be responsible for the pre-financing of the activities of the future fund. (EL/MD)