EU Commission chief Jean-Claude Juncker speaks to unveil an eagerly awaited €315bn investment plan to “kickstart” the economy, at the European Parliament in Strasbourg, eastern France, yesterday. The new European Fund for Strategic Investment must be approved by leaders of the 28-nation EU at a summit in December.
AFP
European Commission chief Jean-Claude Juncker revealed a huge €315bn investment plan yesterday to “kickstart” the stalling economy, saying it would show the world Europe is back in business.
The eagerly-awaited plan, the keystone of Juncker’s five-year mandate, involves the EU setting up a €21bn ($26bn) fund with the aim of drawing in 15 times that amount in private investment.
Juncker hopes the proposal will boost efforts to create desperately needed jobs as well as growth amid concerns that Europe’s failure to recover from the financial crisis is dragging the world economy down with it.
“Europe needs a kickstart and today the commission is providing the jump cable,” Juncker told the European Parliament in Strasbourg, France.
“We need to send a message to Europe and to the rest of the world: Europe is back in business.”
The announcement comes a day after Pope Francis said in an address to the same parliament that Europe had become an “elderly and haggard” grandmother, and urged it to reclaim global leadership.
German Chancellor Angela Merkel — the austerity-pushing leader of the EU’s biggest economy — said she backed the plan “in principle” so long as the funds were invested wisely.
The new European Fund for Strategic Investment must be approved by leaders of the 28-nation EU — which together represents the world’s largest economy with a population of more than 500mn people — at a summit in December.
Juncker took office as head of the European Commission — the EU’s executive branch — on November 1 and immediately vowed to unveil the plan by Christmas so that it could be up and running as soon as possible.
“I promised to present an ambitious investment package by Christmas. Today Christmas has come early,” he told parliament.
The former Luxembourg prime minister said he had a vision of children in the Greek city of Thessaloniki going to a school filled with computers, and French drivers charging their electric cars by the side of a motorway.
There have been criticisms that the fund contains no new money and only re-engineers existing funds, and of the calculation that the seed money will attract 15 times the initial amount.
The 21bn involves €8bn of EU budget funds, backed by €5bn from the Luxembourg-based European Investment Bank and €16bn in guarantees that are also from the EU’s own budget.
But Juncker said the plan would draw vital interest from investors who have stayed out of Europe in recent years, even as they piled into the US.
“I often hear what we need is so called fresh money but what I believe we need is a fresh start and fresh investment,” Juncker said, speaking in a mix of English and German.
He said the plan would not break the EU’s strict budgetary rules, adding that “money will not fall from the sky, we don’t have a money printing machine.”
EU officials explained that the fund, which should be operational by mid-2015, aimed to draw in investors by promising to cover initial losses.
A team of experts will also help investors choose new projects for the plan.
Europe’s main stock markets rose on the announcement, coupled with a signal from the European Central Bank that it could begin purchasing government bonds next year in a further attempt to stimulate the economy.
Reaction to the investment plan in parliament was mixed, however.
Manfred Weber of Juncker’s own centre-right European People’s Party said the plan was “convincing” but called for EU states to make necessary reforms to their own economies.
But Dimitrios Papadimoulis of the European United Left said Juncker’s plan was not enough.
“It’s a drop in the ocean. Your famous package is just business as usual, a Europe dominated by Germany and austerity,” he said.
The run-up to the announcement has been dominated by a controversy over tax breaks offered by Luxembourg to major international firms when Juncker was premier.
Juncker faces a confidence vote in the European Parliament on Thursday after eurosceptic lawmakers filed a motion against him, but he is almost certain to survive.
