Jean-Claude Juncker will unveil a new 315bn plan toresuscitate Europe’s economy that will be built on21bn in EU seed money and rely heavily on financialengineering to mobilise private investment, accordingto EU officials.
The plan, tentatively named the European Fund forStrategic Investment, is the first major initiativefrom Mr Juncker since taking office this month andhas been eagerly anticipated in struggling EUcountries that have seen growth projections slashedin recent weeks amid signs the bloc is stagnatingeconomically.
The EFSI will seek to leverage small amounts of public money to attract large amounts ofprivate capital. That approach has already caused grumbling in the European Parliament andsome weaker EU economies even before the new vehicle has been formally unveiled by the newEuropean Commission president.
Commission officials insist the programme is built on sound principles of public finance. As amodel, some cite the European Investment Bank, which relies on a relatively small capital baseto raise private funds that are, in turn, invested in large infrastructure projects across the EU.
Commission officials insist the programme is built on sound principles of public finance. As amodel, some cite the European Investment Bank, which relies on a relatively small capital baseto raise private funds that are, in turn, invested in large infrastructure projects across the EU.
The seed money will include 16bn from the EU’s existing budget and 5bn from the EIB. It willcome in the form of guarantees and will be used to raise private funding that will be invested inhigher-risk projects worth an estimated 315bn, according to the plans. EU governments will beable to put their own cash into the fund, meaning the headline figure could rise.
Officials cautioned that the plan would not be finalised until the full, 28-member commissionendorses it on Tuesday. The name “EFSI” could also be tweaked, though officials said it remainsthe current working title. It is scheduled to be presented by Mr Juncker to the EuropeanParliament on Wednesday.
The EU budget funds would come from several sources, including the “connecting Europefacility” – a 30bn pot currently used to build infrastructure across national borders – andHorizon 2020, the EU’s 80bn research and development programme. EU budget reserveswould fill out any remaining needs. (www.chinainout.com)
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