Please note that this does not constitute a formal record of the proceedings of the meeting. It is dependent on interpretation and acts as an unofficial summary of the debate.
Jean-Claude Juncker, European Commission President, began by saying that just one month ago, he promised to present his investment plan before Christmas, Christmas has come early as he is now doing it. Today, Europe is turning a page, he said. After years of promoting reform and savings, the third pillar is being applied with an investment plan for Europe. This plan is about people, and especially the unemployed, as the EU needs to send a message that it is back in business. Investment is about the future, he argued. Now is not the time to stop reforming economies, but this is not sufficient for growth. Structural reforms and fiscal responsibility remain important, but now investment must be boosted. For the first time, the Commission is working on all three components. Europe must offer hope for its citizens. The EU is faced with an investment gap. Investors all agree that Europe is an attractive place for them, but the figures tell a different story as investment has fallen far below the pre-crisis norms as investors lack confidence and trust in the EU. On top of this, public resources are stretched, meaning that public expenditure, which represents 50 percent of GDP, needs to be better used. The focus of these reforms must be on the real economy. Now is the time for a major political and social consensus to put Europe back to work. He argued that a fresh start with investment is needed. The EU does not need more debt and there is sufficient liquidity available without betraying the rules of the stability and growth pact. Public money will be used to leverage additional capital. The EU will look carefully at where the new investment should be spent. The money that is being put forward comes on top of the money that is already in place, including on top of the structural funds and what the EIB has been able to do so far. All the existing programmes will be left in place. It will also come on top of what Member States can do themselves.
He then said that he has a vision that the money will be spent on education, health, sustainable transport and energy efficiency. The energy sector needs to interconnect markets. The transport sector needs to improve its infrastructure and far reaching broadband reforms are required. Education and innovation are also on the agenda. The needs faced by the EU are vast and this is a generational challenge.
He explained that money will not fall from the sky. Money will need to be attracted and today a new architecture will be put in place. There are three pillars:
- A fund for strategic investments – the fund will mobilise 315 billion over the next three years – this would be the greatest mobilisation in recent EU history. Redirecting money from Horizon 2020 and the Connecting Europe programmes will not be negative as the funds will be used to raise more.
- A credible project pipeline flanked by an investment package to promote investment in European projects – the projects should be selected by specialists. The fund will have an investment committee made up of experts.
- A roadmap to make Europe more attractive for investors – red tape will be cut to encourage investment. This applies to the entire regulatory level.
The role of the EIB is essential. It is an AAA bank that is not scared to take risks. He welcomed the way in which the EIB has cooperated with the Commission on the drafting of the investment package. Member States will be able to make contributions to the fund to boost its efficiency. Every euro made available to the fund could generate fifteen in investment. When Member States budgets are examined, contributions to the fund will not be calculated when looking at the stability criteria. He explained that growth in one Member State benefits the others, due the intertwined fate of the Member States. If the fund works as expected, he would like to go beyond the 315 billion euro. He then called on the Parliament to adopt the necessary legislation as quickly as possible to have it operational by June next year. The high level members of the fund will be accountable to the European Parliament. He then stressed that the Commission needs the political support of the Parliament and for a politicisation of the fund to be avoided. He also noted that the fund will not be bank as it has to be a flexible mechanism that can develop over the course of time. The mechanism should bring the money to those countries that have suffered the most, but this can only be done at the EU level. If the plan works, it will be taken on board again in 2018. The investment fund will also work to help SMEs.
Completing fiscal resposnbility and structural reform with an investment plan is the way forward to create growth for Europe. The funds will be there as will the rules and projects to be invested in. Europe can become the epicentre of an investment drive and the social model can be protected.
His full speech in English and French can be found here.
Werner Hoyer, President of the EIB, said that the EIB supports the plan and will take the necessary decisions to alter its work programme. The investment gap must be tackled head-on. At the start of 2014, the EIB conducted a study on this and noted that the investment gap and innovation gap has grown in the EU. In terms of innovation, the EU has trailed some of its main competitors in investment for 15 years. Investment opportunities exist in the EU. The question is thus, why are they not being invested in? What are the hurdles to investment? What can be done to resolve this?
Since 2007, the EIB has provided over 500 billion in investment. The issue today is that public sector spending is severely limited leading to under-investment. However, liquidity is no-longer an issue and money is available. However, some investors remain risk adverse and access to finance remains problematic for SMEs. These market failures need to be tackled. The high risk infrastructure projects need to be helped. The EIB will thus provide €5 billion and this can start in early 2015. This new engagement will not impact the global role of the EIB. The proposed initiative could unlock additional investment in Europe. This is not a silver bullet, but a concrete policy that can make a difference.
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