EUROPEAN COMMISSION PLANS FOR “INVEST EU” FUND

The European Commission put forward a proposal at the beginning of June to bring all of the EU’s existing investment instruments under the banner of a new fund called “InvestEU” which will formally succeed the Juncker Plan. Under the InvestEU banner, the EU executive will pull together up to 14 existing financial instruments under a single rule book and 13 assistance services will merge into a sole Advisory Hub.

The Commission will maintain the InvestEU portal to help European projects gain global visibility and attract potential investors. It wants the InvestEU fund to provide a €38 billion guarantee to support investments across the EU. The guarantee will be provisioned at 40%, meaning €15.2 billion of the next long-term EU budget will be set aside in case calls are made on it.

The EU executive says this guarantee will mobilise €650 billion in additional investment across the EU over the 7-year period. InvestEU will be managed by the Commission with the support of financial partners for its delivery. The European Investment Bank Group will remain the main one but national and regional banks or other institutions may become partners too.

Another novelty is that the instrument will focus on 4 policy areas which are key priorities for the EU. Up to €11.5 billion will be allocated to invest in sustainable infrastructure; €11.25 billion to research, innovation and digitisation and the same sum for small and medium-sized businesses. Finally, €4 billion will be provided for social investment.

Moreover, the initiative offers member states the possibility to channel up to 5% of Cohesion funds by policy area to the EU guarantee. The Juncker Plan faced criticism because of its alleged lack of a regional dimension, and the Commission believes that including new financial partners – national or regional banks – should make it easier to serve local needs.

Furthermore, the executive expects to contribute to the regional dimension of the project by providing assistance in capacity building and development through the Advisory Hub to potential recipients.

 

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