Investment in Europe: Making the Best of the Juncker Plan

Weak investment in Europe is a major source of concern. Six years after the start of the crisis, investment is still 12% below 2007 levels in the EU and more than 15% below 2007 levels in the euro area, which means that Europe suffers from an investment gap equivalent to around 200-300 billion/year. Among experts and policymakers, there is general agreement that this investment gap constitutes a significant drag on growth and holds back Europe’s growth potential in the long-term. To close this investment gap, the new European Commission launched a reflection with the member states that culminated in 2015 with the adoption of a major Investment Plan for Europe, the so-called "Juncker Plan". Composed of three pillars, the centrepiece of the Plan is the European Fund for Strategic Investments (EFSI), a program backed by a 21billion-euro guarantee (16 billion coming from the EU budget and 5 billion from the EIB’s own capital), which has to allow the EIB mobilize up to € 315 billion of additional private investment in Europe.When first announced in November 2014, the Juncker Plan was met with a cold reception. Many experts were disappointed by its size and ambition, and criticized in particular the tiny amount of public funding involved in the Plan. They deplored the Commission and member states’ lack of appetite for a massive public investment plan and questioned the capacity of the Plan to make a significant impact on growth and jobs. More than one year later, the Juncker Plan has become a tangible reality. EFSI is already functioning and the European Commission is adopting some of the initiatives foreseen in the third pillar of the Plan. It is time to ask ourselves what we can expect from this Plan and how to ensure that it delivers the best possible results.