Source: European Union
Thank you very much. Also on my behalf, welcome to the press conference. I am going to present one of the novelties of the MFF proposal, the InvestEU Programme.
First before going to the details of the InvestEU Programme, I would like to explain why we are still looking at additional investments in Europe.
The reality is that thanks to a better economic environment, investments are picking up. This is partially a result of the EFSI, the European Fund of Strategic Investments, but it is not the whole story. The investment environment in Europe has been improving.
But more investments are needed, for instance when looking at areas like artificial intelligence, fighting climate change, and societal changes. We need to invest more in social infrastructure, circular economy, just to mention a few areas where further investments are needed. And the EU has various tools to boost these investments.
For instance, the Connecting Europe Facility, but also Horizon Europe and structural funds provide grants for some of these areas. So, we have many grant facilities which support further investments. And now, with the InvestEU Fund, we are talking about a new way to finance these areas: namely, by using financial instruments. Not all investments need a grant financing but they can rather be supported through financial instruments.
We have plenty of them. Today we propose that we pool together 14 existing financial instruments. 14. And we create one single InvestEU Fund. I will come to the content of this proposal later.
Also as part of our proposal we will pool together 13 different advisory services into one InvestEU Advisory Hub. So, as an end result, our financial instruments are easier to use for the end beneficiary, and if somebody needs to get advice and technical assistance how to improve the quality of the project, there is one address to contact.
So, this is the starting point.
The InvestEU Fund will mobilise public and private investment through an EU budget guarantee of €38 billion.
This guarantee will back the investment projects of financial partners such as the European Investment Bank Group and others and therefore increase their risk-bearing capacity.
The guarantee will be provisioned at 40%, meaning that €15.2 billion of the EU budget is set aside in case calls are made on the guarantee, so if the project being financed makes a loss. So €15.2 billion is so-called hard money which is put aside, which has a budget line, and this will make it possible to provide guarantees worth of €38 billion.
The financial partners are expected to contribute €9.5 billion in risk-bearing capacity, addition to what the EU budget is providing, and we estimate we will trigger around €650 billion in total investment over the financing period. So you may recall that in EFSI we had an original target of €315 billion, then we continued with EFSI and raised the target to €500 billion. Now the InvestEU fund has a target of €650 billion in additional investment. I’m sure you are all experts on how the multiplier effect works by now! With this structure, we expect to reach a multiplier of around 14.
Our main partner will be the EIB Group, which as you know has successfully managed the EFSI since its launch in 2015.
They are the EU’s public bank and they have experience in operating in all Member States. But the Fund will also be open to other institutions like the EBRD and national and regional promotional banks who bring their own expertise on the ground.
Unlike the EFSI which is 100% market-driven, the InvestEU Fund focuses on four main policy areas which are priorities for the EU:
The first is sustainable infrastructure to which we propose to allocate €11.5 billion of the guarantee.
The second is research, innovation and digitisation, to which we propose to allocate €11.25 billion of guarantees.
And if you compare this figure to the existing Horizon 2020 figures, the rise is plus 35 percent.
The third is SMEs and small mid-cap companies also with €11.25 billion. Here, the increase comparing to today’s figures is 25 percent.
And the fourth is social investment and skills with €4 billion of guarantees, which basically means that we double the existing situation.
Benefits of the Fund
So what are the benefits of this new InvestEU Fund?
First, it has a streamlined structure, governance and reporting requirements, it makes life easier for those who are interested, or those who need EU guarantees.
All financing comes under one single strong brand: InvestEU. We have received feedback that intermediaries and promoters often experience confusion when faced with the plethora of financing programmes and their many acronyms, such as COSME LGF, InnovFin equity and EFSI.
The second point is that we can do more with less by using a relatively small amount of the budget in the form of a guarantee. By pooling together the existing instruments we can achieve 15% more investments.
The third point is that the InvestEU Fund is also flexible: we can combine different financing tools more easily than we can today.
And finally, another novelty of the InvestEU Fund is that it will feature a Member State compartment for each policy area, meaning that Member States can add to the EU guarantee by voluntarily channelling up to 5% of their Cohesion Policy Funds to these compartments.
This will help leverage their EU funds even further, increasing their firepower by benefitting from the EU’s triple A rating.
As I already mentioned, we also will create a new InvestEU Advisory Hub, building on the existing structures. We will pool them together, to make it easier for end-users. And we will maintain the InvestEU Portal – I encourage everyone to visit the website – it’s a pool of attractive European investment projects. And once they are in the Portal they will get global visibility. And by doing so, attract private investors all around the world.
Finally, the money is not the only relevant factor when improving the investments in the EU. We have to keep moving on the structural reform side. And here the other parts of MFF proposal will support this idea, namely the new Reform Support Programme, which will provide both technical support but also financial support for reforms, which will improve investment environment in areas such as education, tax system, capital markets and business environment..
So, I’ll stop here. Thank you very much for your attention and I’ll be happy to respond to your questions.