Countries that have been hit hardest by high unemployment rates have not been sold short by the European Union's bank, one of the lender's vice-presidents has insisted.
In a visit to Edinburgh recently, European investment bank (EIB) vice-president Jonathan Taylor refuted suggestions that countries most in need across the continent had been overlooked.
It follows the international labour organisation's (ILO) call for more consideration to be taken in the allocation of funds as part of the EU's €315bn scheme to bolster private investment in infrastructure projects.
"We lend money according to criteria which are consistent with EU policies"
The ILO, which said that Juncker's European fund for strategic investment could create up to 2.1 million new jobs by 2018 if effectively implemented, pointed to a "high degree of concentration across EU member states" in terms of EIB funding, with France, Germany, Italy and the UK receiving more than 45 per cent.
Financing from the EIB has failed to keep up with the "disproportionate rise in unemployment levels occurring in some countries" over the last few years, the ILO warned, with more invested in Austria, a low unemployment country, than in Portugal.
"We lend money according to criteria which are consistent with EU policies," said Taylor, adding, "every project is approved by the commission, it's also approved by the member states on our board, and they are in pursuit of policy goals which we have.
So I don't recognise the suggestion that in some way lending has been disproportionate in particular areas. Actually, the largest single recipient of lending from us is Spain […] a country with very high unemployment."
Much more has been invested outside the EU than Greece – which currently receives only 2.3 per cent of total EIB funding allocated to EU member states, despite containing 5.1 per cent of all EU unemployed - the ILO analysis found.
"I'm not sure the comparison of Greece with the rest of the world is entirely a sound one," Taylor added. "If 10 per cent of our lending is in the rest of the world, which it is, [and] 90 per cent is in the EU, it's not very surprising that that 10 per cent is bigger than the amount [lent to Greece].
For it not to be, we would have to be doing 10 per cent of our lending to Greece as one country. That's the only way in which you'd avoid that comparison", argued the EIB vice-president.
Taylor also explained that the Juncker plan proposals are "still at a relatively early stage in terms of […] precise development" given that draft legislation had only been put forward a few weeks earlier. "There's a lot of detail which still needs to be worked up on it," he added.
However, there has been scepticism as to whether the €21bn of public money promised – €5bn of which will be provided by the EIB - will be enough to stimulate investment totalling 15 times that over three years.
"to say that there is an excessive obsession with the triple A rating is to overlook the fact that […] at the end of the day we're a bank [and] it is only if we can borrow at the finest possible rates that we can pass on the benefit of those rates to the people that we're lending to"
"Looking at it at this stage, I think that the proposals, as they are, are very sound, will lead to more investment, will lead to significant further involvement, and will bring forward private sector involvement as well," Taylor said, before adding, "but it's early days and we need to do further work on that.
I understand that there is some scepticism about the numbers… but I think it's worth noting that Juncker plan aside, we ourselves had a €10bn increase in our capital three years ago, which was intended, amongst other things, to reinforce what we were doing but also, through the multiplier effect, produce over three years €180bn.
[That was] €20bn each year of more lending from us - €60bn overall - and €180bn overall for which the other two thirds were coming in from outside, of additional investment. And that's happened. So, to the extent that there is a track record which shows these sort of techniques work."
Taylor also responded to criticism from Italy's finance minister Pier Carlo Padoan, who has attacked the EIB for its "very prudent attitude to investment", amid what he claimed were fears for its credit rating.
Taylor said, "to say that there is an excessive obsession with the triple A rating is to overlook the fact that […] at the end of the day we're a bank [and] it is only if we can borrow at the finest possible rates that we can pass on the benefit of those rates to the people that we're lending to.
That's what we're doing. That's what we have an obligation to do. One should not overlook the enormous benefits which arise from that, not just to us but more importantly to the people that we're lending to."