"Juncker Plan" to be extended beyond 2018: European Commission

The European Fund for Strategic Investments (EFSI), the core of "the investment plan for Europe" which was scheduled to end in 2018, was going to be extended after a successful first year of operation, European Commission President Jean-Claude Juncker said Wednesday.

The European Commission held a press conference on Wednesday to demonstrate the state of play of its flagship "Juncker plan."

The so-called "Juncker Plan," the bloc's response to the investment deficit affecting Europe since the beginning of the financial crisis in 2008, was approved in June 2015. The EFSI was launched immediately after.

"The Investment Plan is working and defying the pessimists. The European Fund for Strategic Investments is creating jobs and triggering investments in the real economy every day. That is why we propose to extend it beyond 2018. Let's be ambitious in getting Europe investing again," Juncker said.

The European Commission said it would present a proposal in autumn. However, it did not specify for how long it would seek an extension from the EU member states and the European Parliament.

According to details about the progress of the Juncker Plan published at the press conference, so far, EFSI has approved 12.8 billion euros worth (14.31 billion U.S. dollars) of projects.

Specifically, the European Investment Bank (EIB) has approved 64 projects for financing under the EFSI which represent a volume of financing of 9.3 billion euros.

The European Investment Fund (EIF) has approved 185 SME financing agreements, with total financing under the EFSI at 3.5 billion euros. It is said that some 141,800 SMEs and Midcaps are expected to benefit.

The European Commission estimated that the above EFSI financing would trigger more than 100 billion euros investment, 80 percent of which would be from private capital.

"Together with the EIB we have achieved a lot in the past 12 months. We have supported innovative energy projects, healthcare centres, urban development and high-speed broadband," Vice-President of the European Commission Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness said.

"But there is more to do: we must continue to deepen the single market - the EU's unique selling point - and Member States must work on removing barriers to investment," he added.

However, a Bruegel report published in May said the pace of the investment plan needed to be accelerated if Juncker's targets were to be met.

"The Juncker Plan has been relatively slow to take off considering that it foresees the EIB disbursing 60 billion euros in three years, or 20 billion euros a year," Bruegel researchers Gregory Claeys and Alvaro Leandro said in the report.

Given the opportunity costs arising from taking money from the EU's main research and innovation and transport infrastructure programs, using EU budget resources is justified only if it leads to "additional" investment, the report said.

However, through evaluating the similarity with past EIB projects (non-EFSI EIB projects), the two researchers found that, out of the 55 EFSI projects for which details were available, 42 of them were very similar to non-EFSI EIB projects.

Therefore, the report said EFSI should only be used for really innovative and risky projects that cannot find funding.

At the same time, the European Commission officially launched another element of the Investment Plan at the press conference, the European Investment Project Portal (EIPP), an online platform bringing together European project promoters and investors from the EU and beyond.

The Portal was expected to increase the visibility of projects to invest across Europe. "This is something that investors asked for, and the Commission delivered," it said in a statement.

Since the global economic and financial crisis, the EU has been suffering from low levels of investment. This fall in investment has been a significant drag on growth and employment, and it will also hold back Europe's growth potential in the long-term.

The investment plan aiming to bring investments back in line with historical trends was initiated by Juncker in November 2014.

The main feature is to use a fraction of the EU budget as a guarantee for EIB projects that would be riskier and more innovative than the usual ones. European Commission predicted that these projects would generate a total of 315 billion euros of investment in three years through leverage and co-financing. Endit