Last Wednesday, the Budget Committee (BUDG) and the Committee on Economic and Monetary Affairs (ECON) held a workshop on the “European Fund for Strategic Investments” (EFSI) and its connection to other European investment funds. Representatives of the committees and invited experts of the field discussed the manifold aspects of the field.

EFSI was developed as an instrument for the facilitation of investments across Europe within the framework of the Investment Offensive for Europe and the Juncker Plan respectively. As such, it cooperates with the European Investment Bank (EIB) and aims at granting loans and guarantees for projects, which, due to a high risk assessment, would not be implemented without European safeguarding. Thus, EFSI is thought of supplementing other national subsidies and lending, without, however, replacing them, in order to result in more investments, growth and higher employment. Yet, first and foremost, EFSI was established to trigger additional private investment. An initial evaluation of the programme by the Commission had already taken place last year. At the moment, the Trade and Economic Committee in the European Parliament is debating interim results and necessary improvements regarding the announced expansion of EFSI (EFSI 2.0) and increasing the investment amount.

Overall, the assessment by both experts and MEPs was positive. EFSI had fulfilled – if not over fulfilled – the expectations and quantitative target. Based on the multiplier effect, investments had contributed to a stronger economy and to a graduate closing of the investment gap, without additionally burdening public households. Hence, the cooperation between EFSI, EIB and national guarantee institutions seems to work well.

However, apart from these positive assessments, a number of weak spots and improvement possibilities were also identified; for example, money from other funds has not been fully exhausted. Thus, better coordination and linking the various instruments as well as the cooperation with already existing local actors needs to be strengthened. The European Investment Advisory Hub (EIAH), which was set up within the framework of EFSI and provides advice and information for potential projects, is not used to its full potential. Overall, the visibility of EFSI has to be improved and its awarding criteria need to become more transparent, so to ensure that the fund leads to new investments and is not used for national budget consolidation. Further, the distribution of funds within Europe is not yet satisfactory. Looking at the situation of Europe as a whole, there is plenty of unexploited potential and need for investment.

It is here where the AK's key demand for a Golden Investment Rule sets in: public households have to be enabled to make future-oriented investments. Hence, as recently reiterated by the economists Bibow und Flassbeck in their Study for AK and ÖGB, private households need to be released from the constraints of the Stability Pact. The new version of EFSI cannot change the fact that subsidies should take place with private participation. Hence, it is still questionable whether EFSI provides additional funds or only reallocates already existing ones. Thus, key points of criticism of the AK on EFSI 2.0 remain.

Further information:

AK -Position Paper on EFSI

“Frequently Asked Questions” and answers of the Commission on EFSI

More on the Golden Investment Rule