Europe needs a better economic performance, and without more investment it will not come – the EU has suffered from what might be called ‘investment anorexia’. In response, in July 2014 investment was declared a priority by newly elected Commission President Juncker. Under the Investment Plan, the EU provides €16 billion from its budget, plus €5 billion from the European Investment Bank (EIB). With this seed capital, the European Fund for Strategic Investment (EFSI) hopes to attract almost €300 billion private sector investment.
Given the minimalist Banking Union and the absence of political momentum for a Fiscal Union, the EU Investment Plan is an “in-between” endeavour to overcome the depression through more intensive political coordination of investment activities in the absence of a demand side stimulus.
Since boosting investment through direct action is a new activity for the European Commission, there is no recipe for success. This publication examines how this new approach developed, what are the conditions for its good functioning, and how it can contribute to stronger growth and job-creation – today and tomorrow.
The author argues for more clarity on sectoral, geographical, and institutional issues (notably the roles of the Commission, EIB and EBRD), with a greater ambition in investment in human capital and the “social economy”. He underlines the ILO’s concern for a positive employment policy to generate quality jobs, and avoid a “race to the bottom”. In EU language, this means forging an explicit link between the Investment Plan and the “inclusive growth” pillar of the Europe 2020 strategy.
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László Andor is Mercator Senior Fellow at the Hertie School of Governance (Berlin), Visiting Professor at ULB (Brussels) and former EU Commissioner for Employment, Social Affairs and Inclusion (2010-14)