The Commissioner for Jobs and Growth, Jyrki Katainen, has claimed that the €315 billion European Strategic Investments Fund will create 1.3 million jobs. Katainen said the projects the Fund invests in in will be in line with EU policies – highlighting developing technologies and the EU’s digital networks programme.
While this all sounds very good, some in business and the media are skeptical that the €315 billion will even be raised. The main concern is that the public seed money for the Fund, which will take the first hit before any private investors, is simply too small to be leveraged by private investment to the magic €315 billion goal. Initial public investment of €21 billion is supposed to achieve a multiplier effect of 15 times to reach the target (PDF). Indeed, it’s hard to not to feel that the Commission’s chart, showing where the money is supposed to come from, is plagued by asterisks and fine print.
The truth is that there is very little money available for the Fund from the public sector in the first place. Germany refuses to put more money into it and the EU’s budget, itself being cut, cannot afford much more. This may be all that’s possible. How the funds will be targeted is still a big issue - despite Katainen's assurances that the decisions will be "non-political", there was a scheme for Member States to "buy" influence with the Fund if they contributed more to it. The Visegrad countries of Poland, Hungary, Slovakia and the Czech Republic are planning to lobby hard for a sizable share of the investment. Will this skew the focus of the Fund away from potentially more economically valuable or job-rich investments?
The Fund is recognised by all as being far from a magic bullet for the continent’s economic woes, but it could provide a much needed, if minor, economic boost. 1.3 million jobs is almost certainly over-optimistic, but until we know what the projects are, it’s hard to gauge how effective it will be - can it reach anywhere near that number?