The European Commission has set up a €315 billion European Fund for Strategic Investments, in which it hopes will revive growth and boost employment across Europe.
According to European Commission estimates, taken as a whole, the proposed measures could add €330 – €410 billion to EU GDP and create up to 1.3 million new jobs over over the next three years.
The Fund represents an Investment plan for Europe, which was unveiled by EU Commission President Jean-Claude Junker in 2014 and is supposed to make billions of euros available for investment projects such as infrastructure, energy, small businesses, education, youth employment, and telecoms throughout the 28-nation bloc.
Commenting on the Plan, European Commission President Jean-Claude Juncker said: “If Europe invests more, Europe will be more prosperous and create more jobs – it’s as simple as that. The Investment Plan we are putting forward today in close partnership with the European Investment Bank is an ambitious and new way of boosting investment without creating new debt. Now is the time to invest in our future, in key strategic areas for Europe, such as energy, transport, broadband, education, research and innovation. I am now counting on the European Parliament and on Member States to pitch in and do their part to get the new European Fund for Strategic Investments up and running as soon as possible. Europe needs a kick-start and today we are supplying the jump cables.”
— European Commission (@EU_Commission) July 22, 2015
Commissioner Pierre Moscovici, responsible for Economic and Financial Affairs, Taxation and Customs, said: ”The synergy between European and national tools will be essential to start rapidly closing the investment gap that our economies face. In order to make this happen, we’re convinced that a well-structured network of national promotional banks can play a key role and complement the European Investment Bank.”
“Investments is what the European Union is missing today, as the level of investments currently is 15 percent lower than in 2007,” European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said in a press release on Wednesday.
The Fund initially possesses €21 billion, of which €16 billion is provided from the EU budget and €5 billion by the European Investment Bank (EIB), according to the European Commission press release. The Fund will also attract contributions from member-states, with further investments in priority projects across the EU. It may also use funds as a guarantee to raise loans for financing its investment activities.
An effective involvement of National Promotional Banks (NPBs) is necessary for the Investment plan’s implementation. To date, nine NPBs (from Bulgaria, France, Germany, Italy, Luxembourg, Poland, Slovakia, Spain and the UK) have committed to provide co-financing to projects and investment platforms. The UK will contribute the largest amount of about €8.5 billion.
“National Promotional Banks have a very important role to play in making the Investment Plan a success. Already nine Member States have come forward with contributions to the Investment Plan via their promotional banks, which have invaluable local expertise and knowledge,” Katainen said.
The European Investment Bank is already working closely with those NPBs, and hopes that many others will also “step up their efforts,” he added.
EU Commission President Jean-Claude Junker first unveiled the Investment plan in November 2014.
The announcement came as growth in the EU has failed to recover after nearly 6 years of recession. The continent then was left with a huge public debt, high unemployment, and on the verge of deflation. The European Central Bank then didn’t conduct any radical monetary policy change to fight the financial crisis and kept the benchmark interest rate unchanged at 0.05 percent.