Europe fears a stagnating economy and is looking for solutions to maintain the economical growth in the long term with a new plan based in infrastructures and increasing money’s ability to reach investment opportunities across the continent.
According to European Commission estimates, 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.
In detail, the new Investment Plan will be built on three strands:
1. Mobilising additional finance for investment
A new European Fund for Strategic Investments (EFSI) will be set up in partnership with the European Investment Bank (EIB). It will be built on a guarantee of € 16 billion from the EU budget, combined with € 5 billion committed by the EIB. Based on prudent estimates from historical experience, the multiplier effect of the Fund will be 1:15. In other words, for every public euro that is mobilised through the Fund, € 15 of total investment, that would not have happened otherwise, is generated.
The focus of the Fund should be to invest in infrastructure, notably broadband and energy networks as well as transport infrastructure in industrial centres; education, research and innovation; and renewable energy and in SMEs and middle capitalisation companies.
|EFSI||Risk Bearing Capacity||Multiplier
in the real economy
|Long-term investments||16 bn||15
|SMEs & mid-cap companies||5 bn||75 bn|
|Total||21 bn||315 bn|
2. A credible project pipeline coupled with technical assistance to channel the money where it is needed
Member States are already providing the joint Commission-EIB Task Force established in September 2014 with lists of projects selected according to three key criteria:
- EU value-added projects in support of EU objectives
- Economic viability and value – prioritising projects with high socio-economic returns
- Projects that can start at latest within the next three years, i.e. a reasonable expectation for capital expenditure in the 2015-17 period.
In addition, listed projects should have the potential to leverage other sources of funding. They should also be of reasonable size and scalability (differentiating by sector/sub-sector).
3. A Road Map to tackle barriers to investment
The Investment Plan will contain a Road Map to remove sector specific regulations that hamper investment.
To improve the business environment and financing conditions, the plan will focus on measures in the financial sector, for example the creation of a Capital Markets Union, to provide an enhanced supply of capital to SMEs and long term projects.
Priority will be given to removing the significant regulatory and non-regulatory barriers which remain across all the important infrastructure sectors, including energy, telecoms, digital and transport, as well as barriers in services and product markets. The Commission will, in December, propose in its 2015 Work Programme a priority list of initiatives specifically linked to the Investment Plan.