Europe investing its way out of recession
How will a key part of the Juncker plan, the 315 billion strategic investment fund, roll out and create the jobs it’s promising?
Full name: the European Fund for Strategic Investments. Known name: the Juncker plan - or at least a big part of it. Financial target: 315 billion euros. Political target: to kick-start growth and jobs across the EU over the next three years. Why? Because Europe has been suffering from chronic under-investment since the financial crisis. That’s not a shortage of hard cash, quite the opposite. Banks and corporations have no liquidity problems.
Just an aversion to risk parking it somewhere. EFSI aims to unblock that through a series of public and private investment initiatives in strategic projects. It works like this: The fund is kick-started by an allocation of 21 billion euros. 16 from the EU’s budget, five from the EIB’s reserve, both serving as guarantors. The rest, it’s hoped, comes from a market spurred into action by the guarantees. The European Parliament successfully fought to reduce by a billion euros plans to raid existing programmes, like Horizon 2020 and the Connecting Europe Facility, for the guarantee fund.
It also won a say in selecting the fund’s leadership and ensured more democratic oversight. MEPs rapidly approved EFSI in June, five months after its introduction, arguing it will give a major, urgently needed boost to modernising Europe.
Early contributors included Germany, Spain, France, Italy, Luxembourg, Poland, Slovakia and Bulgaria. What project areas exactly? The emphasis is on big infrastructure and supporting small and medium-sized enterprises: Strategic digital and energy networks, renewables and energy efficiency, innovation and research, supporting education, to name just a few.
If all goes to plan, 1.3 million new jobs could be created. A sizeable reduction in the EU, where in May 2015 just over 23 million people were jobless, 11.1% of the workforce.
The Commission has named the European Investment Bank as it implementer and strategic partner. The programme should be operational in 2015.
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