in Strasbourg
More than 1,000 potential projects have been identified by the European Commission for inclusion in its €315 billion investment programme, the EU's vice-president for economic affairs Jyrki Katainen said yesterday, as the European Commission unveiled its investment package for Europe.
Announcing the proposal in the European Parliament in Strasbourg on Wednesday, European Commission president Jean-Claude Juncker said that the plan would "breathe new life" into Europe, and called on all the European governments to do their part by participating in the project.
Multiplier effect
The investment package is built around a core fund of €21 billion, comprising €16 billion in EU guarantees and €5 billion from the European Investment Bank, which it is hoped will attract up to 15 times the initial investment from private investors. Underpinning the fund, the commission is providing an €8 billion backstop, drawing from already-existing funds within the EU budget, including from the Connecting Europe Facility, and the Horizon 2020 research programme.
Some €240 billion of the €315 billion package is being earmarked for long-term investment projects, while the remaining €75 billion will be targeted at SME and medium-cap firms. EU leaders are expected to sign off on the investment package at their summit next month in Brussels, with the fund expected to be up and running by the middle of next year.
An independent assessment board will assess application for the fund, though projects will be selected “according to merits”, Mr Katainen said, with infrastructure, broadband, education and energy projects expected to be prioritised.
The former Finnish prime minister is expected to embark on roadshows to meet investors, banks, social partners and other interested parties.
Speaking to reporters in Strasbourg, Mr Katainen said the new fund – the European Fund for Strategic Investments (EFSI) – would differ to the existing European Investment Bank system by its ability to target high-risk investments.
First-loss principle
The European Investment Bank, which has a triple-A rating, has been previously criticised for focusing on low-risk projects. He said the ‘first loss’ principle – whereby the fund will take the first hit in the event of losses would encourage investors. “There is ample liquidity in the market, interest rates are low [and] a real demand for credible investment projects and yet investment is not happening.
Minister for State at the Department of Foreign Affairs Dara Murphy welcomed the move. "Because the level of capital expenditure in Ireland has been restricted in recent years, this is welcome news."
