EU investment package will require 'structural reforms' by member states

Commission president Jean-Claude Juncker has presented his €315bn growth and investment plan to parliament.

By Julie Levy-Abegnoli

26 Nov 2014

Upon his appointment as commission president, Juncker had promised to have an investment package designed to stimulate the European economy ready by the end of the year. Speaking to MEPs in Strasbourg, he said "Christmas has come early - I am here to deliver on my promise".

The Luxembourgish official described his plan as "ambitious yet realistic", adding, "Europe needs a kickstart and today the commission is applying the jump cables".

He stressed that "investing in Europe means much more than figures […], it's mainly about people". Juncker said "we should not forget the sacrifices that many in Europe have made over the past six years" and announced that "Europe is back in business".

The commission president highlighted that his new investment package was designed as a support mechanism in the European recovery process, as "no tree can grow on soil and air alone - the investment plan we are presenting today is the watering can".

Juncker underlined that "public expenditure should be used for what it is best at doing - funding our schools and welfare systems, not servicing our debt".

He explained that "the money we are putting forward today comes on top of what already exists", but warned that "money will not fall from the sky, we don't have a money printing machine".

"No tree can grow on soil and air alone - the investment plan we are presenting today is the watering can" - Jean-Claude Juncker

Promising not to "betray the rules of the growth and stability pact", he outlined plans for a "European fund for strategic investments, guaranteed from money from the European budget and the European investment bank" expected to raise €315bn over the next three years.

The European investment bank (EIB) will contribute €5bn and the European budget will raise €16bn, with intentions for this amount to be multiplied 15-fold in capital. This way, very little public money will be spent on the plan.

Juncker said the investment package will "promote investment in European projects", which will be selected by "specialists who have the necessary experience" and who will make up an "investment committee".

The commission president called on member states to "make their contributions to the fund in order to boost its efficiency", highlighting, "member states are duty bound to do what they can to stimulate growth".

He also said that when assessing member states' budgets, the commission "will not calculate any contributions made to that fund when looking at compliance with the stability and growth criteria".

He assured his audience "the European social model will persevere - there will be no turning back".

"We need to spend the money we have in a smarter better way and we can do that by mobilising private capital" - Manfred Weber

Werner Hoyer, president of the European investment bank, confirmed plans for the institution to contribute €5bn to the fund but promised "this new engagement will not impact EIB engagement outside the EU".

According to the German official, it is imperative for Europe to work on "the identification of the investment gap and the identification of the reasons" behind this gap.

Parliament's reaction

Manfred Weber, chair of parliament's EPP group, said this new plan "sends out a very positive signal", adding, "it is better to mobilise private capital rather than taking on more debt, so we need to spend the money we have in a smarter better way and we can do that by mobilising private capital".

He warned that "there is still work to be done and we need to roll up our sleeves and get down to work […], money alone is not going to solve all our problems".

The German MEP pointed out that "each country has to do its bit when it comes to structural reforms" but stressed that the EPP group "backs Juncker's proposal and today is a very good day for Europe".

Gianni Pittella, chair of parliament's S&D group, praised Juncker for taking "the right step along the right path", but added that "there is a long way to go". He called for "clear priorities - citizens need to know where taxpayers' money is going".

"We need to start by encouraging member states to make their own contributions to this plan" - Gianni Pittella

He urged his colleagues not to "engage in party politics but act together to achieve truly sustainable development".

The Italian deputy added that while the investment plan is a good start, the S&D group "would have liked more capital". He also said "we need to start by encouraging member states to make their own contributions to this plan".

In addition, he made it clear that "parliament will be fully involved - there is no way back".

Syed Kamall, chair of parliament's ECR group, urged Juncker to "give us real details about this investment, tell us why the private sector is not investing at the moment and maybe then we can support your projects".

Guy Verhofstadt, chair of parliament's ALDE group, called for "conditionality on structural reforms", insisting that member states must do more to reshape their labour and pension markets. He also stressed the importance of "opening our markets and unifying them in energy and digital".

The Belgian MEP pointed out that "there is no room for manoeuvre - there is no public money, only public debt, so the guarantee scheme is the right way to do it", and urged the council to make a decision regarding member state's participation in this guarantee scheme during their meeting next month.

Echoing Pittella's statement that the commission and the parliament would be working together on this project, he said the two institutions would act as "brothers in investment".

"We don't need and we don't want to maximise taxpayers' money" - Jyrki Katainen

Dimitrios Papadimoulis, who is a vice-president of the parliament and a member of the GUE/NGL group, dismissed Juncker's package as "business as usual", claiming "there is no economist in the world that would believe that in these conditions of stagnation and recession in the eurozone, that we could have a 15 point multiplier effect".

Philippe Lamberts, co-chair of parliament's Greens/EFA group, said priority should be given to "fighting tax evasion and tax fraud".

Patrick O'Flynn, representing parliament's EFDD group, accused Juncker of "trying to implement a botched solution", describing the euro as "a lemon" and the investment package as "just another EU turkey".

Gerolf Annemans, speaking on behalf of parliament's unaligned members, dismissed the plan as "hocus pocus" and "completely useless".

Creating 'real opportunities' in Europe

Pier Carlo Padoan, Italy's minister of economy and finance and representing the Italian EU council presidency, stressed that Europe needs to "improve the business environment and […] bring in new financial instruments".

He highlighted that "the people of Europe have ever growing expectations so that means there is a risk of them being disappointed", adding "we need to send out signals that will inspire confidence in public opinion nationally and across Europe".

Jyrki Katainen, commission vice-president responsible for economic and monetary affairs and the euro, said the commission is "setting out an investment plan that will change the way public money is used for investment in Europe".

He stressed the need for there to be "long term financing available for projects that contributes towards our common European priorities - energy, digital, transport and innovation".

He promised that this was not a case of simply putting "numbers on a piece of paper or money on the table", but that the goal was rather to ensure "real investment happens in the real economy and that it creates real opportunities in Europe".

Calling on member states to "make courageous decisions", he underlined the need for their cooperation in terms of "structural reforms which create a more favourable investment environment".

Katainen insisted "we don't need and we don't want to maximise taxpayers' money" and that the commission would be using "a relatively small amount of public money to remove the fear factor […], we need just enough to get the motor running after that it will run on its own".

The commission aims to get the investment package underway by June of next year.


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