Czech Business Today

At the end of November, the European Commission presented its long-awaited investment plan prepared in cooperation with the European Investment Bank (EIB) that should help the EU ́s growth get back on track. 

The main pillar of the plan is the newly established European Fund for Strategic Investment (EFSI) that is expected to raise 315 billion EUR in the next three years. The other two pillars of the plan focus on creating a list of trustworthy projects that should attract even more private investment and removing regulatory barriers to long term investment. The main strength of the EFSI should be its leverage effect. While only 16 billion EUR will be used from the EU budget and 5 billion EUR from the budget of EIB, the Commission expects the multiplier value to be 15, giving the estimated 315 billion EUR for investment. EFSI should focus mainly on infrastructure, broadband, energy, transport, education and research projects. Furthermore, SMEs should be supported from the fund as well. 

European business organizations praise the plan as a first step that should remove investment obstacles in the EU and attract investors from the private sector. It is an important signal that the new Commission aims to reverse negative or very weak growth levels and make the EU a place with favorable business environment. However, announcement of the plan is just the beginning. Although there is a lot of liquidity in the EU and the interest rates are very low, there is a lack of trust in the EU that hampers investment. Therefore, EU needs to focus on better regulation that would create favorable investment environment. One of the crucial things that need to be addressed in order to attract long term investment is the high costs of doing business in the EU, caused especially by high energy prices. In addition, the access to finance remains problematic especially for SMEs. One of the things that could be an important step forward when it comes to attractiveness of the EU would be a strong single market. 

There are still many barriers that need to be addressed, especially in the area of services. As mentioned earlier, the investment plan is a very important step towards making the EU a more attractive investment destination, but one of many. It is not a silver bullet that will suddenly improve the unfavorable situation in the EU, but it is an important gesture that the new Commission is determined to bring growth back to Europe.