As a member of the European parliament as well as being an economist, I believe that we have to be very clear about the current economic situation in the European Union. The possibility of deflation is threatening our national economies on a scale we have never experienced.
We now have consensus on the fact that public and private investor needs to have a more active role in creating growth and jobs. I defended this position when I was president of the Committee of Regions, as has the S&D group since the onset of the eurozone crisis. The European commission has also finally taken a similar stance.
"The longer we are not investing in the real economy and in infrastructure, the sooner our economies will totally collapse"
The Juncker plan is a three year programme which foresees an investment of €315bn into the European economy. The plan is supposed to encourage public investment from guarantees and the European public investment bank, both of which constitute the European fund for strategic investment (EFSI), and also encouraging private investors to take more risk.
This month parliament and 12 of its committees will have to amend and modify the proposal for a regulation on the EFSI. As S&D members, we strongly support the initiative but we appeal for the first projects to target profiles which cannot easily gain support from the investment market.
Typically these profiles are social, energy and local infrastructure, which to us appear to be essential for job creation and boosting growth. In order to have a selection of projects which are not just driven by economic interests but take account of the added social value, we need democratic and transparent governance of the EFSI. Since the public investment element will partly come from the EU budget, we have a responsibility as MEPs to control the allocation of funds and keep citizens informed.
Even though actions for growth are needed more than ever, we need to pay attention not to rob Peter to pay Paul. Therefore, funds for use by the EFSI should not be taken from absolutely vital EU funding programmes, such as cohesion policy or Horizon 2020. These funds have been pillars of public investment in member states since the beginning of the crisis.
Indeed, many states have taken drastic measures to reduce their public expenses and therefore have seen investment shrink massively. The development of the EFSI and its financing must therefore be made in tandem with structural funds and in line with the social and territorial cohesion policy.
Europe needs a strong and effective investment tool. The longer we are not investing in the real economy and in infrastructure, the sooner our economies will totally collapse because of the lack of growth. The deflation to come is the product of a decade of financialisation of public governance. This limits of this strategy and the EFSI could be a good tool to create a new economic dynamic in the EU.