European Commission president Jean-Claude Juncker’s 315bn-euro  investment plan was welcomed yesterday as a step towards solving the European Union’s economic woes but critics said it would amount to little.

Juncker, who came into office at the start of November, touted the plan during this year’s European election campaign, presenting it as the cornerstone of efforts to achieve a credible economic recovery in Europe and win back the trust of disenchanted voters.

The eurozone currency bloc emerged from recession last year, but growth has been lacklustre, joblessness is stubbornly high and inflation is far below target.

Under Juncker’s proposal, a new fund managed by the European Investment Bank (EIB) will be set up to finance infrastructure projects in areas such as broadband data connections, energy and transport, education, research and innovation.

The aim is to create guarantees out of existing EU funds, to encourage private investors to put their money into projects considered at present to be too risky.

“No tree can grow on soil and air alone,” Juncker said. “The investment plan we are presenting today is the watering can.”

EU lawmakers welcomed the proposal as a first step towards addressing Europe’s economic challenges.

“Money alone won’t solve the problems,” said conservative group leader Manfred Weber. He praised the efforts to mobilise private capital, but stressed that structural reforms are also necessary to make Europe more attractive to investors.

Socialist leader Gianni Pitella welcomed the end of Europe’s “blind austerity dogma”, while calling on member states to show “more courage in terms of public money put on the table”.

But critics have slammed the plan as an “empty box”, with more than 90% of resources coming from bank loans and private investments.

The plan is to use the existing EU budget for a 16bn-euro guarantee, while the EIB will commit 5bn euros. This, in turn, should attract a 15-fold volume in private investments, totalling 315bn euros, according to commission estimates.

In Berlin, German Chancellor Angela Merkel has given her support “in principle” to Juncker’s plan, while stressing that investments must go hand in hand with budget consolidation.

The Federation of German Industry (BDI) has also welcomed the proposed fund as an “important signal of departure to investors and firms in Europe”.

The commission wants the plan, which requires the approval of EU governments and the European Parliament, to come into effect by the middle of next year.

Juncker’s announcment of the plan comes ahead of the crucial meeting of European Union leaders on December 18-19.

The 18-nation eurozone is struggling to pull out of the aftermath of its debt crisis, aggravated by the economic impact of a standoff with Russia over Ukraine.

Inflation and growth are hovering below 1% while unemployment is stuck at 11.5%, and more than double that level in Spain and Greece. Even EU powerhouse Germany has hit a slowdown.

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