Back in July, Jean-Claude Juncker had promised in front of theParliament an investment plan of 300 billion euros. Today, he presented his plan, earlier than foreseen, and one daybefore the symbolic motion of confidence on his Commission.
Juncker announced a 315-billion euro investment plan to boost the bloc's flagging economy, with some 21 billion euros in seed money coming from EU institutions.
"The Commission has put up €8 billion from the EU budget”, he detailed. "This backs up a €16 billion guarantee given to the Fund. Topped up by another €5 billion from the EIB. That makes €21 billion.With a €21 billion reserve, the EIB can give out loans of €63 billion. That's €63 billion of fresh financing we've just injected into the economy. But the EIB will not be acting alone. The EIB will be financing the riskier parts of projects worth 315 billion, meaning private investors will be pitching in the remaining €252 billion."
Juncker’s plan is built on three main strands:
-- thecreation of a European Fund for Strategic Investments(EFSI), guaranteed with public money, to mobilise at least € 315 billion of additional investment over the next three years (2015 - 2017);
-- the establishment of acredible project pipelinecoupled with an assistance programme to channel investments where they are most needed;
-- a roadmap to make Europe more attractive for investment andremove regulatory bottlenecks.
Juncture said that the plan will be based on EU guarantees that should entice private investors to fund projects benefiting education, transport, the digital economy and the environment.
Junckersaid the European Investment Bank will be the "prime mover" in delivering seed money for those investments over the next three years.Junckerestimated that every euro invested could generate investment of about 15 euros.
Brushing aside allscepticism, Junckersaid a message needs to go out to the people of Europe and the rest of the world: "Europe is back in business."
The plan will now be discussed by the 28 EU leaders at the Dec. 18-19 summit. After years of focusing primarily on cutting debt, the move toward investment is seen as an important message to lift the continent out of its economic quagmire.
"We are offering hope to millions of Europeans disillusioned after years of stagnation,"Junckertold the European Parliament in Strasbourg, France.
Juncker acknowledged criticism of his plan for lacking a major component of new public spending. But, insisting that the EU was not just "moving money around", he said that adding to public debt would not help: "We don't have a money-printing machine. We need to attract money to make it work for us."
Juncture said he believed Europe was in an "investment trap", where private investors were hesitating to commit funds despite being awash with liquidity, some of it provided by the European Central Bank as it tries to stave off deflation.
By providing guarantees to absorb the initial risks of key projects that could improve Europe's infrastructure, Juncker said the EU could draw in more private investment.
After Juncker spoke, the president of the European Investment Bank, Werner Hoyer, told MEPs his institution was ready to work quickly to get money flowing. Hoyer acknowledged that "this is not the silver bullet" for Europe's economic woes, but it was a useful part of EU strategy.
In his turn, the Commissioner for Economic and Monetary AffairsJyrki Katainenwas very upbeat:"There is plenty of liquidity on the private market, but there is a lack of well structured projects.”
Investment levels in the EU are down some 370 billion euros compared with when the financial crisis hit Europe half a decade ago. And while investment is back on the rise in the United States, Europe is lagging behind. "Why? Because investors lack confidence, credibility and trust,"Junckersaid.
He insisted the plan would not rely on creating more debt, which already stands at some 90 percent of gross domestic product in the EU. Juncker did not explain, though, how the national governments will be made to contribute to his fund.
http://www.neurope.eu/article/juncker%E2%80%99s-investment-plan-%E2%80%9Chope-after-years-stagnation