A study by the consultancy Ernst & Young, which was published on Monday 14 November, stresses the merits of the Juncker plan which is designed to draw down €315 billion in additional investments by 2018, whilst flagging up the gaps in this key initiative of the European Commission.
The consultants, who looked at the data available as of 30 June 2016, feel that the attributes of the European Fund for Strategic Investments (EFSI), the financial arm of the Juncker plan, are relevant. It has allowed the European Investment Bank (EIB), which is responsible for selecting the projects to be granted a public guarantee under the EFSI, to increase its capacity to take more financial risks, particularly by creating specific new instruments. Furthermore, the investment plan has got off the ground fastest in its 'SME' window.
Even so, Ernst & Young notes that concern has been expressed regarding the additional nature of the projects, in other words the ability of the investment plan to back projects that would not have seen the light of day without it. "The market, in particular National Promotion Banks and beneficiaries, is still in doubt as to whether the additionality criterion (regarding projects) is always met. Overall, there is a need to better clarify and define the concept of additionality, which is understood differently by the various stakeholders", the report states.
Additionally, the distribution of projects is a serious issue identified by the Ernst & Young consultants, echoing the observation previously made by the EIB itself (see EUROPE 11640). Whilst there is no location criterion or sectorial preference in the EU legislation, in order to avoid a politicisation of the project selection process, 91% of the EFSI's actions have been in the 15 oldest member states of the EU and 9% in the countries of Central and Eastern Europe. The sectors that have benefitted the most from its support are research and development (45%), energy (21%) and information technology (17%).
The study, which was published three days after the lukewarm opinion returned by the European Court of Auditors (see EUROPE 11466), was immediately interpreted by the Commission as a sign in favour of doubling the fire-power and duration of the Juncker plan, currently being negotiated at European level. This report "endorses the direction of travel in which we are taking the Investment Plan", said the European Commissioner for Growth and Investment, Jyrki Katainen, who pledged to take the recommendations on board. In reaction to the opinion of the European Court of Auditors, the Commission argues that the Juncker plan has changed the way the EIB works, as it has undertaken to increase its high-risk operations from €4 billion to €11 billion a year under its 'specific activities'.
In mid-September, the Commission proposed doubling the duration and capacity of the Juncker investment plan to €630 billion up to 2022 (see EUROPE 11624). The October European Council asked the European finance ministers to agree on this proposal by December. (Original version in French by Mathieu Bion)