Remarks by Commissioner Gentiloni at the press conference on an enhanced InvestEU Programme and its new Strategic Investment Facility
"Check against delivery"
Investment was the first victim of the fiscal consolidation that accompanied the sovereign debt crisis a decade ago.
Such was the drop in investment needs in Europe following that crisis that they had barely reached pre-crisis a decade later.
And COVID-19 risks now to provoke a further terrible blow to investment in Europe.
Our services and Thierry and I have worked closely together over the past few weeks to assess the size of the gaps that have emerged in private and public investment – as well in the equity of companies, a problem to which we are responding with the Solvency Support Instrument just presented by Margrethe..
It was a substantial part of the assessment of recovery needs and this assessment was a substantial part of our recovery plan.
The estimates are consistent with our Spring 2020 Forecast and draw also on firm- and sector-specific information.
Concerning private and public investment, the analysis distinguishes between three different investment needs:
First, basic investment gaps due to the crisis impact. Projections reveals a cumulative drop in investment that is estimated at €846bn in 2020 and 2021 taken together, of which €831bn – so almost 90% - is accounted for by lower private investment.
Second, additional investment to correct vulnerabilities exposed by the Covid-19 crisis. Our tentative estimate in this case is of €20 billion per year in the short run.
And third, and this not connected with Covid-19 crisis, the investment needs for delivering the green transition and digital transformation. These are estimated to amount to at least €595 billion per year.
So Europe's estimated investment gap in the short term amounts to well over one trillion euros per year, a huge challenge to which demands a ambitious response. Part of that response has been the activation of the General Escape clause and of the Temporary Framework of State aid.
But relying on Member States and their divergent fiscal firepower bears a risk of fragmentation. So EU tools are needed.
The Recovery and Resilience Facility is based on financing investments, especially on our green and digital transition.
Other instruments are there, from Cohesion to Horizon Europe.
InvestEU that we are now presenting in its renewed frame is part of this response.
The experience of the Juncker Plan, InvestEU's predecessor, demonstrated this, exceeding its target of mobilising €315 billion in investments in the first three years of its existence.
Under the single hat of InvestEU, our previous proposal envisaged four thematic windows, which have already been agreed by the co-legislators:
- Sustainable Infrastructure;
- Research, Innovation and Digitisation;
- and Social Infrastructure and Skills.
We propose now to almost double the InvestEU guarantee from the previous €38bn to now €75bn with the fifth window. With €38bn, we were estimating to mobilise €650bn. With €75bn of guarantees, our estimate is around €1 trillion. As you can see, it is a more conservative estimate, with a more cautious multiplier and I think you can well understand the reasons why the multiplier is more conservative than the previous one.
We are notably proposing among other things to double the funding for the sustainable infrastructure window, a key tool for the achievement of the Green Deal investment objectives. This doubling will for instance support a Renovation Wave focussed on creating jobs in construction, renovation and energy efficiency of buildings and these are labour-intensive sectors.
The InvestEU increase will enhance the risk-taking capacity of the European Investment Bank Group and National Promotional Banks in support of economic recovery, mobilising significant private investment.
To boost our strategic autonomy in vital supply chains at the European level, we are also proposing the creation of a Strategic Investment Facility as an additional, crucial fifth window under InvestEU.
This window would provide an EU budget guarantee of €31.5 billion.
I will leave it to Thierry to tell you more about this new strategic window we are opening.
As we work to build the recovery, we must avoid repeating the mistakes made a decade ago. We must equip ourselves with the tools to support private investment, of which InvestEU will be one of the most important. This is now in the hands of the co-legislators.
And we must also avoid short-sighted fiscal policies that would see public investment fall victim once again to spending cuts that would only further undermine our potential to grow and create jobs. And we will be very concentrated on this in analysing all the resilience and recovery plans.
Thierry, à toi la parole.
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