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International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 13:33

EU’s strategic investments for additional growth and jobs in the states

Eugene Eteris, LZA senior advisor, BC International Editor, Copenhagen, 28.10.2019.Print version
Commission’s “investment plan for Europe” since 2015 played a key role in boosting jobs and growth in the EU member states. Investments by the European Investment Bank (EIB) Group backed by the EU’s Fund for Strategic Investments (EFSI) have increased EU’s GDP by about one per cent and added over 1 million jobs.

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:

https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan/investment-plan-results_en

 






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