In his State of the Union address, EU Commission President Jean-Claude Juncker proposes to increase the European Fund for Strategic Investments (EFSI) to EUR 500 billion and to extend it until 2020. However, a closer look shows that the amount may not be as impressive as it appeared at first glance and that once again profits might be privatised and losses socialised.

Due to the austerity policy, Europe has been suffering for years from too few investments, in particular in long-term important sectors, such as infrastructure or research and development. That is why last year the European Commission set up the European Fund for Strategic Investments (EFSI). The concept: Together with the European Investment Bank (EIB) the EU has raised a total amount of EUR 63 billion through its own financing and guarantees respectively. This is supposed to persuade private investors to participate in these projects themselves, which would see a total of EUR 315 billion being invested between 2015 and 2018.

In his State of the Union address on Wednesday, 14 September, EU Commission President Jean-Claude Juncker proposed to extend the EFSI until 2020 and to increase it to a minimum of EUR 500. Apart from that, this “EFSI 2.0” shall support more sustainable climate protection projects, make local applications of the funds easier and strengthen the social dimension – the latter by increasing the funds for social businesses and micro financing of just under 200 million to EUR 1 billion, which would lever it to a total of 3 billion.

The comparison with the US shows: This is not enough.

What is positive is the fact that the Commission deals with the problem of a lack of investments – but whether this plan is the solution remains to be seen. What is most notable, however, is that based on those numbers only 0.75% of the European gross domestic product flow into these investments. By way of comparison: at the height of the financial crisis in 2009 and 2010 the US boosted her economy with about 2.8% of GDP. Meanwhile, the European economy still has not gained momentum and unemployment in the EU remains at an unacceptably high level. The renowned Brussels based think tank Bruegel is “not impressed” by the implementation of the EFSI in its first year. So far, the EFSI only mobilises 4% of all European investments; in addition, one has to ask the question, as Bruegel has done, whether these are indeed additional investments or if they are merely ones which would have been made anyway.

As a matter of principle it is also a necessary to point out the risk that by the concept of private investments with public guarantees profits will be privatised but losses will be borne by the general public. At EUR 3 billion, the planned strengthening of the social dimension also just amounts to 0.6% of the total of the investments; hence, it does not seem sufficient either to alleviate social injustice in the EU, which was rightly criticised by Juncker.

From the AK's point of view, a central demand remains unfulfilled: to establish the “Golden Rule of Investing”, which has been demanded by the AK for quite some time at last. With it Member States could make future-oriented investments themselves without bypass constructions and special bonuses for private investors and without being crushed by the one sided austerity corset of the Stability Pact.

Further information:

AK position paper on EFSI

Summary of the EFSI-2.0 plans of the Commission 2016

“Frequently asked questions” and replies of the Commission on EFSI