The current College of European Commissioners took office in November 2014, at a time when the first signs of economic recovery from the financial crisis were just being registered. Many of the EU Member States had been through a 2-3 year period which had seen their economies shrink, unemployment rates rise to double figures, especially for those under 25, and citizens across Europe became familiar with scenes of huge and sometimes violent protests against the many austerity measures which had to be imposed by various governments in order to try to stave off further damage to their finances.
With the new Commission came a strong commitment towards bringing Europe back in business as soon as possible and, in order to do so, it was clear that Europe's banks needed to start playing their part. The mantra of ‘Growth and Jobs’ would only work as long as banks were willing to become active players and resume their primary roles of offering liquidity to governments and individuals alike to be able to pursue their projects, and thus inject much-needed life into otherwise largely stagnant infrastructural and business sectors.
1st June marks the first anniversary of the now well-known Investment Plan launched by European Commission President Juncker with the objective of removing obstacles to investment, providing visibility and technical assistance to investment projects and making smarter use of new and existing financial resources. To achieve these goals, the plan is active in three areas:
- Mobilising investments of at least €315 billion in three years
- Supporting investment in the real economy
- Creating an investment friendly environment
How does it work?
One of the three pillars and the main driver of the Investment Plan is the European Fund for Strategic Investments (EFSI), and this aims to attract public and private sector projects which would otherwise be considered too risky to be financed by commercial banks. The fund has €315 billion worth of financing, out of which the Commission provides €16 billion as a guarantee for projects which are otherwise financed through loans from other sources. The European Investment Bank (EIB), whilst adding another €5 billion in guarantee funds, is the focal point for the receipt and assessment of projects to be financed.
Applications for financing are directly submitted to the EIB without any additional scrutiny by national or European Commission authorities. Typically, each project should have a minimum cost of €10 million with no upper limit, although the EIB appears to be flexible on this minimum threshold. Submitted projects should aim at sectors of key importance where the EIB Group has proven expertise and the capacity to deliver a positive impact on the European economy, including:
- Strategic infrastructure including digital, transport and energy
- Education, research, development and innovation
- Expansion of renewable energy and resource efficiency
- Support for smaller businesses and midcap companies
EFSI is demand-driven and will provide support for projects everywhere in the EU, including cross-border projects. There are no geographic or sector quotas and projects will be considered based on their individual merits.
The Maltese administration is already examining a number of potential large projects which could otherwise not be solely financed out of national or EU funding for submission under EFSI. Apart from that, the Ministry of European Affairs and Implementation of the Electoral Manifesto is also the focal point in Malta for the purposes of information for the private sector. The European Commission Representation in Valletta may be contacted for additional details on how the opportunities offered by EFSI can be tapped into, even by the typically small-and-medium sized entrepreneurs in Malta.
According to European Commission forecasts, the Investment Plan has the potential to add €330-€410 billion to the EU's GDP and create 1-1.3 million new jobs in the coming years.
