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InvestEU Programme: The EU’s new investment support scheme

InvestEU Programme: The EU’s new investment support scheme
02 March 2021

On December 7th 2020, the European Parliament and Council reached a political agreement on the InvestEU programme. The goal of the programme is to bring together and streamline multiple different funds and programmes of the EU budget to make European investments easier and more accessible.

Background of the Programme

Despite the recent improvement in the overall economic situation, structural reforms by Member States and pan-European initiatives, such as the Juncker Plan, general investment numbers are still lagging behind in the European Union. To resolve this issue, the European Commission put forward the proposal for the InvestEU programme.

Contents of the programme

InvestEU will bring together multiple financial instruments for internal policies which were previously supported by a variety of different funds and programmes of the EU budget. The EU guarantee is set at €26.2 billion and is expected to make at least €372 billion available for investments across the European Union. At the Parliament’s insistence, EIB legacy portfolios will also be consolidated with InvestEU, which should mobilise an extra €35-40 billion in future investments. In other words, InvestEU is designed to create a single EU investment support mechanism for European investments for the 2021-2027 Multiannual Financial Framework. The streamlining of EU financial instruments aims to increase their impact through simplification and economies of scale, building on and expanding the Juncker Plan model.

Under the InvestEU programme, also Next Generation EU (NGEU) was launched. The goal of this financial tool is to tackle the socio-economic consequences of the coronavirus crisis and help member states to recover financially. The NGEU fund goes over the years 2021-2023 and will be tied to the regular MFF (2021-2027). The NGEU deal is unprecedented in the way that it is the first time in history that the EU will issue European Sovereign Bonds to allocate grants and loans to its member states. These can be paid off by generating own resources through direct taxation.

Goals and actions

The goal is to support and encourage financing and investment operations in line with EU objectives, by de-risking projects and crowding in private and public finance whenever the market allocation of financial resources is not optimal.  The programme was partially agreed on in 2019, but the main changes in the 2020 proposal are to extend the scope of InvestEU and to increase investments and budget.

The InvestEU programme is market-driven, just like the Juncker Plan (EFSI) to make funding and investments more accessible and would have the following components:

  • The InvestEU Fund would consist of an EU budget guarantee to back the financial products provided by the implementing partners
  • The InvestEU Advisory Hub would provide technical assistance for project development
  • The InvestEU Portal would offer an easily accessible database to promote projects in search of financing
  • Blending operations would exploit, whenever appropriate, synergies between grant- and market-based financing.

The InvestEU programme is in line with the general EU objectives such as the green and digital transition and to strive for a resilient industry within the European Union. Therefore, it would add a new policy window for strategic investments to the four windows which were originally planned for its operations. The five policy windows would have the following indicative allocations from the EU guarantee:

  • Sustainable Infrastructure - €20,1 billion
  • Research, Innovation and Digitalisation - €10,2 billion
  • Small and Medium Sized Enterprises - €10,2 billion
  • Social Investment and Skills - €3,6 billion
  • Strategic European Investment - €31,2 billion

B2EU Consulting can help private or public actors to gain access to means of financial or legislative support. Our boutique consulting firm is specialized in European funds and can assist industries on positioning itself favorably for financial support and a smooth transaction to a greener future.

Image © European Commission, 2019

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