An Investment Plan for Europe
Strasburg, 26.11.2014
The President of the European Commission (EC) Jean-Claude Juncker, together with Vice-President JirkyKatainen and the President of the European Investment Bank (EIB) Werner Hoyer presented today the new EC Investment Plan to re-launch growth and employment in Europe. “Investing in Europe- stated president Juncker - means much more than figures and projects, money and rules. We need to send a message to the people of Europe and to the rest of the world: Europe is back in business. This is not the moment to look back. Investment is about the future”. Taken as a whole, the proposed measures could add €330 - €410 billion to EU GDP over the next three years and create up to 1.3 million new jobs.
The Plan is built on 3 main strands:
1. The creation of aEuropean Fund for Strategic Investments(EFSI), in partnership between the Commission and the EIB, to mobilise at least €315 billion of additional investment over the next three years (2015 - 2017). The role of the Fund is to ensure enhanced risk-bearing capacity and mobilise extra investment, essentially from private sources.
The Fund will be set up within the EIB-Group and capitalized with €8 billion from the margin of flexibility which exists within the EU budget (€2 billion), the Connecting Europe Facility (€ 3 billion) and the Horizon 2020 programme (€ 2.7 billion). This backs up a €16bn guarantee given by the EC to the fund, topped up by another €5bn from the EIB. The EC estimates that the fund could reach an overall multiplier effect of 15x in real investment in the economy. It is expected to use three quarters of the resources of EFSI to support private fund structures such as the European Long-Term Investment Fund (ELTIF), set up by private investors and/or National Promotion Banks (NPBs), leading to investments of approximately €240 bn.
EFSI / Risk Bearing Capacity / Multiplier(averaged) / Investmentin the real economy
Long-term investments / 16 bn (EC) / 15 / 240 bn
SMEs & mid-cap companies / 5 bn (EIB) / 75 bn
Total / 21 bn / 315 bn
All interventions by EFSI will be covered by established state-aid clearance procedures.
Member States, either through their NPBs, similar bodies or directly, will have the opportunity to contribute to the fund in the form of capital. Importantly, in the context of the assessment of public finances under the Stability and Growth Pact, the Commission will take a favourable position towards such capital contributions to the Fund, which won’t be considered as costs in member states balance sheets. Private investors can also join at the fund level in this way.
EFSI will support strategic investments of European significance in infrastructure;this includes:
-Strategic infrastructure (digital and energy investments in line with EU policies)
-Transport infrastructure in industrial centres, education, research and innovation
-Investments boosting employment, in particular through SME funding and measures for youth employment
-Environmentally sustainable projects
-Innovation and Research & Development
There should be no thematic or geographic pre-allocations, in order to guarantee that projects are chosen on their merits and maximise the added value of the fund. The fund will be flexible since different regions have different needs in order to jump-start investments.
2. The establishment of a credibleprojectpipelinecoupled withan assistance programmeto channel investments where they are most needed.
The second strand of the plan is to take targeted initiatives to make sure that the extra investment finance generated meets the needs of the real economy. This means channelling extra public and private money to viable projects with a real added value for the European social market economy.
Thefund will have a dedicatedindependentinvestment committee made up of experts that will have to validate every project from a commercial and societal perspective and based on what added value they can have to the EU as a whole. As pointed out by Juncker “Investing in people –this is what the social market economy is about. In Europe; we spell 'social' with a capital 'S'.”
For investment to happen, there is a strong need for independent and transparent assessments that can confirm whether a project is economically viable and in particular whether it satisfies all relevant regulatory and administrative requirements. Greater transparency and understanding of the risks will help to attract and unlock private investment. A Task Force has been set up by the EC and EIB, together with the Member States to screen potential projects. Based on the first report of the Task Force, which will be published shortly, the work should be stepped up at a EU level to identify and activate key investment projects, as well as inform investors of projects' progress on a regular basis.
The Member States are providing to the Commission-EIB Task Force lists of projects selected according to four key criteria:
-EU value added (projects in support of EU objectives)
-Economic viability and value – prioritising projects with high socio-economicreturns
-Projects that can start at the latest within the next three years, i.e. a reasonable expectation for capital expenditure in the 2015-17 period.
-Potential for leveraging other sources of funding. Projects should also be of reasonable size and scalability (differentiating by sector/sub-sector), even if this can take account of the bundling of smaller investments.
The EIB will ensure that the EFSI's pipeline is transparent and regularly updated. Member States, including regional authorities and National Promotional Banks, European institutions and private investors will be able to contribute to the pipeline by presenting or sponsoring projects. This does not mean that every project in the European pipeline should - or will - be financed in the context of the plan, but the pipeline will offer visibility about investment potential and transparency about the selection criteria.Over time, this work could lead to a system of European certification for viable investment projects that fulfil certain criteria. Such certification could subsequently be used by the EIB and NPBs to attract private investors. This would be useful in order to provide a clear "credibility label" for European investment projects.
Providing support to develop and carry out projects is an important part of the plan. As part of the new approach, expertise from the Commission, the European Investment Bank, National Promotional Banks and the managing authorities of the European Structural and Investment Funds will be made available in an integrated way.An investment advisory 'Hub' will integrate all investment advisory services and direct all questions regarding technical assistance to a single, user-friendly portal, with three audiences in mind: project promoters, investors and public managing authorities. The Hub will provide guidance on the most appropriate advisory support for a specific investor, whether it is delivered by the EIB-Group, NPBs or other international financial institutions. The objective is to strengthen and accelerate investment by providing comprehensive and swift advice on how:
-to prepare and develop quality projects and investments,
-to enhance the effective use and potential leverage of European Structural and Investment Funds (ESIF), the Connecting Europe Facility (CEF), Horizon 2020 and other EU funds, in particular through reinforced and flexible use of financial instruments in response to market needs,
-to improve access to other sources of public and private finance,
-to structure use of public-private partnerships.
"Investing in Europe" workshops will also be organised at national, transnational and regional level to address specific challenges jointly with the EIB. The focus will be on attracting private and public project promoters, as well as private investors, raising awareness about EU financial instruments, the additional risk-bearing capacity of the European Fund for Strategic Investments, and on maximising synergies between national and EU schemes.
3. An ambitiousroadmap to make Europe more attractive for investmentand remove regulatory bottlenecks.
The third strand of the Plan consists in providing greater regulatory predictability, removing barriers to investment across Europe and further reinforcing the Single Market by creating the optimal framework conditions for investment in Europe. The Commission is working on an ambitious roadmap to make Europe more attractive and remove red-tape and regulatory bottlenecks.
Next steps:Establishing the Fund within the existing structure of the EIB-Group will allow it to be set up rapidly in spring 2015.The European Council is invited to endorse the setting up of the European Fund forStrategic Investments, and commit to a more effective use of the European Structural andInvestment Funds, notably through an overall doubling of the use of financial instruments. The legal proposal necessary for the European Fund for Strategic Investments should bedealt with in fast-track procedure by the European Parliament and the Council, as the EUlegislator, to be in force by June 2015.
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