Xinhua News Agency
26 November 2014 16:00,
BRUSSELS, Nov. 26 (Xinhua) — The European Commission on Wednesday announced a 315 billion euros (about 392.08 billion U.S. dollars) investment plan to stimulate Europe's growth and send more people back to work.
European Commission President Jean-Claude Juncker presented the investment plan to the European Parliament at a plenary session in Strasbourg Wednesday.
According to a press release by the European Commission, the plan is built on three main strands, one among which is the creation of a new European Fund for Strategic Investments (EFSI), guaranteed with public money, to mobilize at least 315 billion euros of additional investment over the next three years from 2015 to 2017.
The new EFSI will be set up in partnership with the European Investment Bank (EIB). It will be built on a guarantee of 16 billion euros from the EU budget, combined with 5 billion euros committed by the EIB.
Based on prudent estimates from historical experience, the multiplier effect of the Fund will be 1:15. So “every public euro that is mobilised through the Fund, 15 euros of total investment, that would not have happened otherwise, is generated,” according to the commission.
The focus of the Fund will be on the investment 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.
Besides, the EU will establish “a credible project pipeline coupled with an assistance program to channel investments where they are most needed.”
Moreover, the bloc will roll out “an ambitious roadmap to make Europe more attractive for investment and remove regulatory bottlenecks.”
According to European Commission estimates, taken as a whole, the proposed measures could add 330 billion euros to 410 billion euros to EU GDP over the next three years and create up to 1.3 million new jobs.
The center-right European People's Party (EPP) group chair Manfred Weber said “mobilising private capital is better than making new debts”, nonetheless stressing that member states should continue structural reforms, because “if legal proceedings last as long as they do in Italy, if the labor markets are too rigid as in France and if planning procedures last months and years as they do in my country(Germany), then it is hardly surprising that there are no investments”.
For the European parliamentary group of the European United Left/Nordic Green Left (GUE/NGL), group member Dimitrios Papadimoulis said that the package Juncker presented “is just empty words.”
Noting the 16 billion euros come from the EU budget and 5 billion euros from the EIB, Papadimoulis said “there is not one Euro of fresh money in there, and you promised that you are going to create some kind of leverage effect multiplying funds by 15. In these times of stagnation and recession in the Eurozone, there is no economist in the world that would believe this.”
Speaking for the Commission at the EU Parliament's plenary session, the Commission Vice-President Jyrki Katainen said that the new fund would maximise impact on real economy, unlock public and private investments in real projects and create real jobs.
Katainen also emphasized that the member states' contributions to the fund will be neutral with respect to the Stability and Growth Pact. The fund should also embody a “new approach at European level – to change the way public money is used”, especially by supporting riskier borrowing.
According to the Commission press release, the European Parliament and the European Council summit in December “are invited to endorse” the Plan. And the joint Commission-EIB Task Force is expected to provide a first list of possible investment projects in the course of December to start building a transparent European pipeline of projects.
All relevant measures should be adopted so that the new EFSI can be set up by mid-2015. By mid-2016, the European Commission and Heads of State and Government will take stock of the progress made and, if necessary, consider further options.(1 euro = 1.25 U.S. dollars) Enditem
Xinhua News Agency