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Thursday, 28.03.2024, 13:33
EU’s strategic investments for additional growth and jobs in the states
Since the elections to the European Parliament in May 2019,
all EU institutions have been preparing for the new five-year’s integration
cycle. For example, the European Council has already set out its strategic
agenda for 2019-24 and the European Commission President-elect has presented
her political priorities. The preparation process has not been easy so far:
despite some controversies, the EU has already three new presidents: for the
whole Union, for the Commission and for the European Parliament. However, the
Parliament has rejected three designated Commissioners, which has led to a
delay in the new Commission taking up office. At the same time, some pressing
challenges do absorb time and political attention of the EU’s leaders. The
member states urgently need unanimous decisions on key issues and priorities
for Europe and the states in the upcoming years, as well on the new
politico-institutional cycle and the Union’s ability to actually deliver on the
main strategic priorities.
Thus, the momentum depicted by the European Fund for
Strategic Investments (EFSI) should not be stalled and the EU’s priorities to
be financed accordingly.
Introduction to EFSI
So-called “investment plan for Europe” or the “Juncker Plan”
(named after the Commission’s President), was launched at the end of 2014 –with
effect from 2015- to instigate innovative investments. In the Commission’s
initial idea these measures should “downward trend of low-levels of investment
and put Europe on the path to economic recovery”.
The plan has had three main objectives: a) to remove
obstacles to investment, b) to provide visibility and technical assistance to
investment projects, and c) to make smarter use of financial resources. With
this in mind, the EU adopted the European Fund for Strategic Investments, EFSI
as the Union’s budget guarantee to allow the EIB Group to finance often riskier
projects.
On the plan in: https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en
The EFSI’s financing is generally directed towards highly
innovative projects, or start-ups happened to be without a credit history, as
well as some development projects in perspective states’ socio-economic sectors.
The “Juncker plan” allows the EIB Group to finance a greater number of
operations with a higher risk-profile than would have been possible without the
EU budget guarantee's backing, as well as to reach out to new clients: three
out of four receiving Juncker Plan backing are new bank’s partners.
Recently, in April 2019, the European Parliament adopted a successor
to the Juncker Plan for the next Multiannual Financial Framework called “the EU
investment program” together with the EU investment fund. The latter will be
accompanied by the “InvestEU-Advisory Hub” (to support project promoters) and the “InvestEU-Portal”
(as an easily accessible pipeline of mature projects for potential investors). Like
the initial Juncker Plan, InvestEU will be a part of the Commission's economic
policy mix of investment, structural reforms and fiscal responsibility, to
ensure Europe remains an attractive place for businesses to settle and thrive.
More in the Commission’s press release in:
https://europa.eu/rapid/press-release_IP-19-2149_en.htm
The macroeconomic impact assessment of the projects for
perspective EU investments and financial support is developed by both the EIB economics
department and the Commission's Joint Research Centre (JRC). More in: https://www.eib.org/attachments/efs/assessing_the_macroeconomic_impact_of_the_eib_group_en.pdf
Fascinating results
The strategic investment plan has achieved its goal: i.e. to return Europe to solid growth and boost job
creation: according to the Commission, more than one million SMEs are receiving
financial support. Since the plan was adopted in 2015, the European economy has
been booming and the investment plan has had a lasting impact. The projects
financed through EFSI assist SMEs in transition to a low-carbon, circular and
sustainable economy. Besides, another priority has been reached too: the EU
economy managed to mobilize private money for the public good.
It is expected that by 2022, the EFSI will have increased EU
GDP by 1.8% and added 1.7 mln jobs; the figures are according to calculations
made by the Joint Research Centre (JRC) and the Economics Department of the EIB
Group.
Werner Hoyer, European Investment Bank Group President
underlined that the Juncker Plan has
had a sizable impact on the member states’ economies, it has supported
environment quality and climate-friendly projects, as well as other innovative
socio-economic developments.
Besides, the EFSI
has a definite long term macroeconomic impact on the EU states’ economies: up to 2037, the
plan’s financial operations will help in creating additional 1 million jobs and
increasing the states’ GDP by 1.2%. Improved connectivity and increased
productivity resulting from the plan will help boosting European competiveness
and growth in the longer-term.
Financing sustainability
The EU’s EFSI and the European Investment Bank’s subsidiary
for financing small businesses (i.e. the European Investment Fund, EIF), have
approved financing for about 1200 “investment operations”. These financial
institutions are going to provide risk financing for more than one million
start-ups and SMEs across a wide range of sectors and in EU-27.
The plan was aimed
at boosting investment and supporting SMEs: up to the end of 2019, EFSI managed
to activate about € 440 billion in additional investment in the EU
states; about 70% of the expected investment comes from private resources.
Top EU states ranked by the EFSI’s triggered investment (as
a share of GDP) by the end of 2019 are Greece, Estonia, Portugal, Bulgaria and
Poland. The project examples range from pan-European high-speed charging
infrastructure for electric vehicles to a food waste management facility in
Romania to reintegrating former military personnel into the workplace in the
Netherlands (more on the table below).
More on the EFSI’s investment plan and country-by-sectors’ with
a detailed overview in: