DODS, supporting partner of EBS 2015 launches its first key dossier: The European Investment Plan - A new Marshall Plan for the EU?
The European continent is mired in recession, low-or-non-existent growth, low confidence and record levels of unemployment. The combination of an ongoing economic and financial crisis and a failure by European governments to adapt to enhanced global competitiveness has left the EU straggling behind its competitors. The focus on austerity to resolve the crisis has had some success, but comes at a cost to the popularity of the EU, as shown by the results of the European Parliament elections. In response, the new Commission has made jobs and growth its priority, with the show-piece Juncker investment plan at the centre of its actions.
The idea is to use €21bn of EU and European Investment Bank (EIB) funds to leverage private investment in projects that would not otherwise receive funding through an EU guarantee. The Commission hopes this will lead to the mobilisation of €315bn in additional investment between 2015 and 2017, which could help bridge the investment gap - identified as between €230-370bn, increasing EU GDP by €330-410bn over the next three years and creating up to 1.3 million jobs.
The question is 'Will it work?' Stakeholders have raised serious questions, including on the decision to appropriate funds from other successful EU programmes such as the research programme, Horizon 2020 and the Connecting Europe Facility. This is a serious point of contention for the European Parliament and it is difficult to see where a compromise could be reached.
In addition, the selection of projects for investment is also proving difficult. The member states have already made proposals and, these often seem to run contrary to other EU policies, most notably in the energy sector, where some proposed projects seem to undermine the EU's climate ambitions.
Part of the plan revolves around reducing regulation that is deemed to make investment less attractive. The political divide on this remains as wide as ever, with some stakeholders calling for bold action, and others warning that deregulation is not the way forward. The negotiation process is now underway as the member states agreed their position in early March and the Parliament has begun work in earnest. It is clear that the Commission will have its work cut out if it is to build a working consensus.
This will, of course, be only the first step, as the EIB, which has been granted an extensive role in project selection, will to convince investors to buy into the plan if the expected 1:15 leverage ratio is to be met. Whatever the outcome, it is clear that political investment in the plan from the Commission and especially its President will go a long way to determining both the credibility of the Juncker Commission and the future economic direction of the EU as a whole.
This article is an extract from a Dods Monitoring EU whitepaper. View the whole briefing