What is InvestEU?
The InvestEU Fund, presented on the 6 of June 2018 in Brussels, follows the EFSI - European Fund for Strategic Investments (otherwise known as Junker-Plan) and re-designs the investment guarantee system for the multiannual financial framework 2021-2027 (MFF, in other words, the budget of the EU). It combines under one roof several EU financial instruments currently available and expands the Juncker Plan.
The InvestEU Fund can provide complementary financing via a dedicated “social investment and skills” policy window to help unlock projects which require long-term investments, specifically with regard to social infrastructure, provided the investment logic is in line with EU social policy objectives and the principles enshrined in the Pillar of Social Rights.
How does it work?
According to the Commission, the most important differences between EFSI and InvestEU are a deeper focus on EU policy goals and the establishment of financial partnership to national promotional banks and international financial institutions in InvestEU. The InvestEU Fund will be a single programme with one single set of rules, which will apply throughout the financing chain to beneficiaries and financial intermediaries.
Through an overall sum of 47,5 billion euro in guarantees, the InvestEU initiative aims at provoking an estimated 650 billion Euro in additional investment to address the problem of the “sizable investment gap”, as the Commission defined it.
Based on guarantees rather than direct investment, the InvestEU follows the EFSI model, allegedly “doing more with less” to give enterprises access to credits to market pricing by limiting the risk for private investors through the guarantee. This means that the credits made available for enterprises are given under the same conditions (interest) as the market pricing would suggest, but due to the guarantee they are made available at all. The additional fall-back mechanism provided by the guarantee through InvestEU will lead to less risk for investors and thus lead to making more credit available in the first place.
The new Fund will combine current financing programs under one roof, with “just one set of rules and procedures and one point of contact for advice” and it will merge the European Fund for Strategic Investment (EFSI) with smaller programs:
- European Fund for strategic Investments
- Innovfin Equity
- EaSI Capacity Building Investments
- CEF Debt Instruments
- Innofvin SME guarantee
- EaSi Microfinance and Social Enterprise Guarantees
- CEF Equity Instruments
- InnovFin Loan Services for R&I Facility
- Student Loan Guarantee Facility
- Loan Guarantee Facility under COSME
- Private Finance for Energy Efficiency Instrument
- Cultural and creative sectors Guarantee Facility
- Equity facility for Growth under COSME
- Natural Capital Financing Facility
Where do we stand now?
After the InvestEU Commission’s proposal in early June 2018, the European Parliament has appointed two rapporteurs (José Manuel Fernandes, EPP and Roberto Gualtieri, S&D). The text was voted in the Parliamentary Committee on Economic and Monetary Affairs and the Budget one and is foreseen to be debate in the Strasbourg plenary session in January. For the moment, the vote in the Plenary is scheduled in February 2019.
In the eyes of the rapporteurs, InvestEU will be an excellent tool for creating jobs and strengthening the competitiveness of the European Union. It aims at fostering inclusive growth and strengthens investment in the social dimension. They further stated that the text approved by the Committees is a good text that marks a decisive step towards creating jobs and mobilising investments to support growth and enhance cohesion.
InvestEU can continue and improve the positive change brought about by the European Fund for Strategic Investment but investment in sustainable infrastructure, research and innovation is still inadequate. It can help to bring strategic and long-term benefits to key areas that are underfunded and thereby improve the EU’s competitiveness and socio-economic convergence. The rapporteurs insisted on the fact that the InvestEU Fund would support social infrastructure and programmes, along with projects that are technically and economically viable. The programme is meant to continue to facilitate access to finance for SMEs.
The negotiations with the Council will start after the vote in Plenary. There is uncertainty whether an agreement between the two institutions will be reached before the European elections in May 2019. As far as social economy is concerned, the current EaSI investments, will fall under the InvestEU programme. There will be 4 policy windows (and one of them is social economy and skills).
The social investment skills that will be considered under InvestEU are composed as follows:
1) microfinance and social enterprises (today under EaSI)
2) social infrastructure