Juncker Investment Plan for Europe

As the effects of the economic crisis continue to plague the economies of EU Member States, new measures are deemed urgent in order to consolidate their financial systems. For this reason, the European Commission President Jean-Claude Juncker proposed a plan on how to attract investments, in November of 2014. In order for this plan to be successful, cooperation of all Member States is thought to be crucial.

This project, which is expected to have a significant effect on the economy causing consolidation through creation of jobs, long-term growth and competitiveness, focuses on three axes, which could be called “Virtuous Triangle Economy”. These axes are fiscal balance, reforms and development and thirdly investments. Through the use of this project a more efficient use of savings is expected, aiming to strengthen investments and the imminent growth in Europe.

In particular, this program consists of three steps. Under the first, 315 bn is expected to be distributed through financing over the next three years in order to enhance public sources and liberalize private investment. At the same time, an equally important goal is judging the needs of the real economy and, thirdly, to create a regulatory framework in order to remove barriers to investment in order to create a more favorable economic climate in Europe. For the first two measures, the European Commission is expected to cooperate with the European Investment Bank (EIB), and for the third, Member States are expected to collaborate with European institutions through the framework of the European semester.

As mentioned above, the main objectives of the program will be implemented through an efficient allocation of 315 bn EUR. This will be achieved through an institution, whose creation was signed in July, entitled “European Fund for Strategic Investments (EFSI)”, which in fact, is expected to establish cooperation between the Commission and the EIB. This institution is expected to have a different profile, aiming at more efficient allocation of resources contributing to existing EU aid programs.

To put into operation this Fund, a guarantee of 21 bn EUR is considered crucial. 16 bn EUR will be funded by the Union budget to support the Fund , while 5 bn EUR is expected by the EIB. At the same time, Member States and private investors are expected to play an important role in funding.

This Fund is expected to focus mainly on strategic infrastructure including digital, transport and energy, while significant emphasis will also be given to small and medium enterprises (SMEs). Particularly, through this Program, the Fund is thought to allocate more than 1 bn EUR to support SMEs, as well as 7.6 bn EUR aiming at boosting investments in the transport sector. Other important sectors that are also meant to be funded are education, research, development and innovation, expansion of renewable energy and resource efficiency.

Partnership can lead the above through to tangible economic results. The aim is to basically give us all a sense of ownership over our investment and policy decisions. Europe’s member states will use these programs in order to attract more investments and this will have significant effects on the economy as a whole. However, the results of all the above are not yet visible, so we cannot say with certainty if all these goals will be achieved. It depends mainly on each country if this program is going to be used properly or not. 

Sources:

Juncker’s plan to boost EU investment, Euronews, 22/7/2015

An Investment Plan for Europe, European Commission

Investment Plan for Europe, European Investment Bank