Enticements paraded for €315bn investment plan
The European Commission on Tuesday (13 January) fleshed out how it proposes to deliver the huge investment plan to revive growth that was promised last year by Jean-Claude Juncker, the president of the Commission. At its core is a commitment to relax the eurozone’s budget rules for any member state that agreed either to pay into or to invest alongside the fund at the heart of the plan.
The Commission hopes that member states will use the additional flexibility to add their own money to the €21 billion already committed by the Commission and the European Investment Bank (EIB). The Commission says it will leverage the promised €21 billion to create a fund of €315bn. Under the Commission’s proposal, the fund will be able to invest in riskier assets than the EIB, including making unsecured loans and taking equity in companies or projects.
MEPs and member states have already started to examine the legislative proposal for the plan, presented by Jyrki Katainen, the European commissioner for jobs, growth, investment and competitiveness.
Gianni Pittella, the leader of the European Parliament’s Socialists and Democrats group, welcomed the move away from “blind austerity” and urged member states to contribute to the fund. Guy Verhofstadt, the leader of the Liberal group in the Parliament, said “the Juncker plan should become the Tusk Plan, the Renzi Plan, the Merkel Plan”, in reference to the European Council president and the leaders of Italy and Germany, and the refusal by EU leaders in December to commit themselves to contributing to the fund.
“If we are to exit this crisis, we need much more commitment and a more united Europe,” said Verhofstadt.
However MEPs on the centre-right are expected to question any relaxation of the eurozone budget rules. They are wary of easing the pressure on France and Italy to cut public spending and reform their economies in line with the eurozone’s rules. Last year they criticised the Commission for delaying an infringement decision against the two countries, after Pierre Moscovici, the commissioner for economic affairs, judged they were breaching the rules.
The Juncker proposal responds to a perceived lack of investment across the European Union, blamed partly on national austerity policies as governments try to bring spending under control, and partly on low business confidence. Katainen said yesterday that the fund should lead to investments “taking off in countries and sectors where job creation and growth are most needed”.
A steering board, which will be dominated by the Commission and the EIB, who will both able to veto decisions, will decide on investment guidelines and allocate funds. The actual investment decisions will be taken by a panel of six independent market experts led by a managing director proposed by the Commission and the EIB.
Member states will first discuss the plan at a meeting on Monday (19 January). Katainen will also present it to a meeting of finance ministers on 27 January, and the Council plans to agree a general approach by April. The timeframe for MEPs is less certain. When EU national leaders in December called for the investment plan to be adopted by June.
Martin Schulz, the president of the European Parliament, publicly doubted whether it would be possible, describing the process as “unpredictable”.
The plans to relax the eurozone budget rules were presented by Valdis Dombrovskis, the European commissioner for the euro and social dialogue.
He confirmed that the Commission would not count contributions to the investment fund when calculating member states’ deficits, which are capped by eurozone rules. But he added that member states could also exceed those caps if investing in projects of EU interest, including those sponsored by the fund. Italy has spearheaded calls for eurozone rules to be more flexible on investments.
Dombrovskis also said that the Commission would give greater credit to member states undertaking structural reforms.
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