The investment plan for Europe
An integrated approach to economic policy is built around three main pillars: boosting investment, accelerating structural reforms and pursuing fiscal responsibility. All three must act together for the EU to get back on track for growth. In 2015 the EU made progress on all three fronts.
The investment plan consists of three mutually reinforcing strands, as detailed below.
- Mobilising at least €315 billion in additional investment over the next 3 years, maximising the impact of public resources and unlocking private investment. The main instrument for achieving this objective is the European Fund for Strategic Investments.
- Making sure this extra investment reaches the real economy. The main instruments for accomplishing this are the European Investment Advisory Hub and the European Investment Project Portal.
- Improving the investment environment, both at EU level and at the level of individual Member States. Work is underway to address barriers with an EU and single market dimension, as well as regulatory and non-regulatory investment challenges at national level.
Commissioner Carlos Moedas, Commission Vice-President Kristalina Georgieva and Commission Vice-President Jyrki Katainen announce the successful conclusion of negotiations on creating a European Fund for Strategic Investments, Brussels, 28 May 2015.
In November 2014 the Commission announced the establishment of a new European Fund for Strategic Investments. The Parliament worked intensively throughout the first months of 2015 to analyse the Commission’s proposals and suggest improvements. In a trilogue meeting at the end of May the Parliament and the Council reached a compromise agreement on the proposed regulation. The trilogue negotiations were concluded in record time, enabling the fund to already start lending money for projects in June.
The European Fund for Strategic Investments provides guarantees in support of projects financed by the European Investment Bank Group. It has two main focuses: infrastructure and innovation (managed by the European Investment Bank) and small and medium-sized enterprises (managed by the European Investment Bank and the European Investment Fund). Loans can also be made to regions. The fund is accompanied by a European Investment Advisory Hub and a European Investment Project Portal. The hub supports the development and financing of investment projects, offering a single point of contact for guidance and advice and providing a platform to exchange know-how. It started its activities to support project promoters in September. The portal is a secure, publicly available web portal where EU-based projects can promote themselves to potential investors. It will be launched in 2016.
During the year Commission Vice-President Jyrki Katainen launched an EU-wide roadshow to promote the investment plan for Europe, explaining the new opportunities open to all key stakeholders (governments, investors, businesses, regional authorities, trade unions and communities).
All 28 Member States endorsed the European Fund for Strategic Investments. In 2015, nine Member States pledged to contribute more than €40 billion to the fund, and China also indicated its intention to contribute.
Investment backed by the fund is targeted at developing infrastructure (broadband, energy networks and transport); education, research and innovation; renewable energy and energy efficiency; the environment and resource efficiency; social infrastructure and health; and supporting small businesses.
Werner Hoyer, President of the European Investment Bank, Jean-Claude Juncker, President of the European Commission, and Commission Vice-President Jyrki Katainen at the signing of the European Fund for Strategic Investments agreement, Brussels, 22 July 2015.
As part of the third pillar of the investment plan the Commission has started to address a number of barriers to investment with an EU and single market dimension. This is happening through several work streams: as part of the ongoing work on capital markets union (e.g. the changes in the solvency II directive); the single market strategy (e.g. public procurement); the digital single market; energy union; the better regulation agenda; and other policy initiatives. Addressing regulatory and non-regulatory investment challenges at national level will also be a priority of the 2016 European semester. In the context of the European semester the Commission has started a dialogue with Member States on the identification of bottlenecks and the priority actions to remove them. In order to achieve the ambitious objectives of the third pillar, propose concrete reforms to the Member States and accompany implementation all services of the Commission (including the Structural Reform Support Service) will be involved in working hand in hand with the Member States.
By January 2016 the fund had already enabled €2.8 billion in financing across a total of 21 projects in the infrastructure and innovation category, which is expected to trigger around €13.3 billion in total investment. In the small and medium-sized enterprises category the fund enabled €1.5 billion in financing across a total of 66 projects, which is expected to trigger around €21 billion in total investment.
Jyrki Katainen explains the new EU strategic investment plan.
Economic and fiscal policy
In addition to investments the EU’s economies require sound fiscal management and structural reforms to get back on track.
Economic policy coordination in the EU is organised annually in a cycle known as the European semester. Beginning with the annual growth survey for 2015, published at the end of 2014, the Commission set out policy priorities for the EU and its Member States. The semester followed three mutually reinforcing themes: boosting investment, accelerating structural reforms and pursuing fiscal responsibility. In 2015, enhancements to the European semester economic policy cycle simplified the Commission’s outputs and reduced the reporting requirements for Member States. The enhancements also made the process more open and multilateral. The flexibility within the rules of the Stability and Growth Pact was clarified to strengthen the positive link between structural reforms, investment and fiscal responsibility. Country-specific recommendations for each Member State, as well as for the euro area as a whole, were proposed by the Commission in May and endorsed by the June European Council. In July the Council adopted the final set of country-specific recommendations.
In February, as part of the European semester, the Commission issued in-depth reviews assessing macroeconomic imbalances and excessive imbalances in 16 Member States. Some high risks still remained in certain Member States. The Commission therefore renewed its call to address barriers to growth by stepping up structural reforms and investment in the modernisation and development of infrastructure. These should be coupled with an appropriate mix of policies in the euro area to boost confidence, contribute to rebalancing and put the recovery on a more stable footing.
In 2015, together with the European Central Bank and the International Monetary Fund, the Commission continued to provide support for the Member States that had recently completed financial assistance programmes (Ireland, Spain and Portugal). It conducted post-programme surveillance reviews for all three. These Member States are now growing again and consolidating their economies. In addition the Commission continued its support programme for Cyprus to address the financial, fiscal and structural challenges facing the economy. This will allow Cyprus to return to a sustainable growth path.
The ongoing economic and financial situation in Greece drew worldwide attention for many months in 2015. The EU hosted a series of emergency meetings throughout the summer, during which Greece was on the brink of both default and not being able to continue in the euro area.
(Clockwise from bottom left) François Hollande, President of France, Angela Merkel, Chancellor of Germany, Jeroen Dijsselbloem, President of the Eurogroup, Jean-Claude Juncker, President of the European Commission, Alexis Tsipras, Prime Minister of Greece, Donald Tusk, President of the European Council, Uwe Corsepius, Secretary-General of the Council of the European Union, and Mario Draghi, President of the European Central Bank, discuss the state finances of Greece, Brussels, 19 March 2015.
Agreement was finally reached in August, enabling the Commission, acting on behalf of the European Stability Mechanism, to put in place a third economic adjustment programme for Greece. With the approval of the Eurogroup and the Board of Governors of the European Stability Mechanism the programme helped to stabilise the economic and financial situation in Greece. The Commission’s social impact assessment concluded that, if implemented fully and in a timely manner, the programme will help the Member State return to stability and growth in a financially and socially sustainable way. The agreement paved the way for the mobilisation of up to €86 billion in financial assistance to Greece until 2018. In July the Commission launched a jobs and growth plan for Greece, mobilising up to €35 billion in additional support until 2020.
Alexis Tsipras, Prime Minister of Greece, in discussion with Mario Draghi, President of the European Central Bank, at the Euro Summit, Brussels, 7 July 2015.
The Commission also proposed measures to ensure that cohesion policy funding can be effectively used for investments and that it rapidly reaches beneficiaries. This led to immediate additional funding for Greece of some €500 million and savings for the Greek budget of around €2 billion. An additional €1 billion of pre-financing for the 2014-2020 programmes can be used for the launch of new projects and will ease the strain on Greece’s public budget.
Alexis Tsipras, Prime Minister of Greece, Jean-Claude Juncker, President of the European Commission, François Hollande, President of France, and Charles Michel, Prime Minister of Belgium, at the Euro Summit, Brussels, 12 July 2015.
To keep its competitive edge in a global economy the EU needs a highly skilled and adaptable worforce. This requires continuous investment in education and training, which will fuel its growth and innovation in the long term, boost employment and help prevent social exclusion.
Reforms to improve education and training featured prominently in the European semester and were identified as a high priority in 13 Member States.
The European Social Fund is the main EU instrument for investing in people. By the end of 2015 the Commission had adopted all the operational programmes, worth a total of €86.4 billion. The Commission significantly increased the pre-financing rate for funding from the youth employment initiative, providing around €1 billion to national and regional authorities. This will support up to 650 000 young people not in employment, education or training. For 2014-2020 at least 10 million unemployed people are expected to improve their chances of finding employment and 395 000 small and medium-sized enterprises are expected to receive funding to invest in people. Over 25 % of the money available will be allocated to promoting social inclusion and combating poverty and discrimination.
Erasmus+ is the EU programme for education, training, youth and sport. In 2015 it enabled around 520 000 young people to study, train, volunteer and participate in youth exchanges abroad. It also enabled around 165 000 staff members of educational institutions and youth organisations to improve their competencies by teaching and training abroad.
Given the high levels of long-term unemployment, affecting an estimated 12 million EU citizens of working age, the Commission proposed policy guidance in 2015. This will help increase transitions to employment and ensure that all jobseekers receive a job integration agreement before they reach 18 months of unemployment. The Commission’s recommendation was adopted by the Council in December.
Regional policy in support of jobs, growth and investment
Regional policy targets all regions and cities in the EU. It supports job creation, business competitiveness, economic growth, sustainable development and the improvement of citizens’ quality of life. To reach these goals and address the diverse development needs in all EU regions €351.8 billion — almost a third of the total EU budget — has been set aside for cohesion policy for 2014-2020. Regional policy remains the largest source of EU funds for regions, localities and enterprises.
Commissioner Corina Creţu visits a construction site in Prague, Czech Republic, 31 March 2015.
Regional policy and the Europe 2020 strategy
Regional policy complements EU policies, including those dealing with education, employment, energy, the environment, the single market, research and innovation. In particular, regional policy provides the investment framework to meet the goals of the Europe 2020 strategy. More than €120 billion is to be provided for investment in transport networks, energy and environmental infrastructure. This will benefit small and medium-sized enterprises by improving transport links and addressing environmental sustainability in the wider economy.
As part of the investment plan for Europe the allocations from the European Structural and Investment Funds for 2014-2020 will be double those for the 2007-2013 period. They will reach €23 billion by using financial instruments such as loans, equity and guarantees rather than traditional grants. This will improve access to finance for small and medium-sized enterprises. The money will be used for research, development and innovation, as well as for investments in energy efficiency and renewable energy.
After an intense period of negotiations with Member States nearly all of the 2014-2020 programmes were adopted in 2015. Implementation started for most of them. The 2007-2013 programmes continued to be implemented throughout the year. Overall, Member States received financial allocations amounting to €50.7 billion during the year.
Research and innovation help to tackle challenges like climate change, energy and public health. This is why Horizon 2020, the EU’s biggest ever research and innovation programme, is investing €77 billion in research and innovation. Further private and public investment will also be attracted thanks to the programme. The first results, published in July, showed that Horizon 2020 is on the right track.
Commissioner Carlos Moedas at the launch of the Science Roadshow at the University of Coimbra, Portugal, 5 November 2015.
In October a new Horizon 2020 work programme was adopted, investing almost €16 billion in research and innovation in the next 2 years.
By funding research and innovation on this unprecedented scale Horizon 2020 addresses three challenges: bringing innovations to market (open innovation), making research more participative (open science) and opening science to the world.
The European Fund for Strategic Investments has already started adding firepower to Horizon 2020, in particular its support for innovative small and medium-sized enterprises. The fund has also helped satisfy extraordinary demand for support from InnovFin — EU Finance for Innovators — a joint initiative launched by the Commission and the European Investment Bank under Horizon 2020.
In the space sector the goal of the EU is to foster the internal market for space-based applications and support the development of EU industry. Galileo satellites were successfully launched in March, September and December. Galileo is the EU programme to develop a global satellite navigation system that can be used for products such as in-car navigation devices and mobile phones. A second Copernicus satellite was launched in June, which will help tackle environmental disasters, improve land use for agriculture and forestry and respond to emergency situations.
Commissioner Elżbieta Bieńkowska addresses the press following the successful launch of two Galileo satellites, Brussels, 31 March 2015.
The Connecting Europe Facility is a multiannual funding programme set up to finance improvements in the EU’s transport, energy and digital networks, with an overall budget of over €30 billion covering the three sectors for the 2014-2020 period.
In July the Commission adopted a list of 276 projects, which amount to €13.1 billion in EU funding, leading to additional public and private co-financing of €28.8 billion. The new call for proposals for a total of €7.6 billion was announced in November, with a February 2016 application deadline for Member States.
Investing for a greener future
The European environment: state and outlook 2015 — Synthesis report, published in March by the European Environment Agency, demonstrated that protecting the environment is a solid economic investment. Green industries grew by more than 50 % in the EU between 2000 and 2011, and jobs in environmental goods and services increased from 2.9 to 4.3 million between 2000 and 2012. They even showed continuous growth during the recession years.
In February the Commission and the European Investment Bank launched a new Natural Capital Financing Facility to mobilise public money in order to generate new private investment in nature and climate adaptation.
In December the Commission proposed a comprehensive circular-economy package. The package is intended to encourage EU businesses and consumers to switch to a more circular economic model in which resources are used in a more sustainable way. The proposed actions will ‘close the loop’ of product lifecycles through a focus on ecodesign, better information for consumers, increased recycling and more reuse. The transition will be supported financially by funding from the European Fund for Strategic Investments, €650 million from Horizon 2020, €5.5 billion from Structural Funds for waste management and investments in the circular economy at national level.
Werner Hoyer, President of the European Investment Bank, and Commissioner Karmenu Vella at the European Investment Bank conference on ‘Financing the Circular Economy’, Luxembourg, 10 December 2015.
Unlocking the growth potential of agriculture and oceans
Agriculture, forestry, fisheries and aquaculture, together with the bio-based industries, are integral parts of the EU’s economy and society. These sectors produce and process biological resources to satisfy the demand of consumers and a wide range of industries for food, feed, bio-energy and bio-based products. They enhance the EU’s self-reliance and provide jobs and business opportunities that are essential for rural, coastal and marine areas.
Commissioner Phil Hogan visits the Royal Highland Show, Edinburgh, United Kingdom, 18 June 2015.
The EU’s common agricultural policy supports investment, knowledge and access to finance for agri-food, agri-technologies and infrastructure. During the 2014-2020 period the 118 rural development programmes will contribute around €80 billion to modernise and develop the food and farm sector. Almost €43 billion of this sum will be private-capital injection. Moreover, the rural development programmes are expected to support business development for 66 000 rural small and medium-sized enterprises outside of agriculture. They will fund 3.7 million training places for farmers and other rural entrepreneurs and provide start-up grants for more than 160 000 young farmers. Infrastructure investments will improve access to information and communication technologies, including broadband, for nearly 18 million people in rural areas. At the same time, direct payments and market instruments will provide stability to farm revenues. This is important for the EU’s food sector, its largest employer, which provides 47 million jobs and 7 % of the EU’s gross domestic product.
Commissioner Tibor Navracsics and European Parliament Vice-President Mairead McGuinness visit the Universal Exhibition, Milan, Italy, 8 May 2015.
The Universal Exhibition, Expo 2015, the theme of which was ‘Feeding the planet, energy for life’, was held in Milan, Italy. Over 21 million people visited the Expo from 1 May to 31 October. The EU pavilion was very popular with visitors.
An EU budget focused on results
At a time of increasing pressure on finances it is more important than ever to get the most out of every euro of taxpayers’ money. In September the Commission launched the ‘EU budget focused on results’ initiative to ensure that EU resources are put to good use for the benefit of citizens and that all EU-funded projects demonstrate clear benefits and value for money.
The goal is to invest the EU budget according to the Commission’s policy priorities, such as stimulating growth, jobs and competitiveness and responding swiftly and effectively to emergencies. A database and map of successful projects funded by the EU budget is available on the Commission’s website.