The European Commission has proposed a new strategic investment fund for the EU in order to channel funding to key infrastructure projects that can help stimulate economic growth and create jobs. The European Fund for Strategic Investments (EFSI) would provide funding for broadband and energy networks as well as transport infrastructure in industrial centres; education, research and innovation; renewable energy; and in SMEs and mid-cap companies.
It would be built on a guarantee of EUR 16 billion from the EU budget and EUR 5 billion committed by the EIB. The EC said a "prudent" estimate is the fund will have a multiplier effect of 1:15, so for every EUR 1 of public money spent, another EUR 15 will be invested by the private sector that otherwise would not have happened.Pending approval by the Council and Parliament, the EC aims to have the EFSI operational by mid-2015. Including the expected private sector investment, the fund could create a total EUR 315 billion investment in the EU, adding EUR 330-415 billion to GDP over the next three years and creating up to 1.3 million new jobs.
The EC said it has been working since September already with member states to identify projects for the new funding.The priority will go to projects that support EU objectives, provide high socio-economic returns and can start within the next three years. In addition, the projects should be able leverage other sources of funding. The Commission and the EIB will also launch a programme of technical assistance to identify projects and help make them more attractive for private investors.
The EC also pledged to reduce regulatory barriers to investment. To improve the business environment and financing conditions, it will focus on measures in the financial sector, for example the creation of a Capital Markets Union, to provide an enhanced supply of capital to SMEs and long-term projects. Priority will be given to removing barriers across all important infrastructure sectors, including energy, telecoms, digital and transport, as well as barriers in services and product markets. A priority list of initiatives specifically linked to the investment plan will be announced in December.
