On 8 December, the political agreement on the InvestEU Regulation has been reached between the European Parliament and EU Member States in the Council.
The political agreement, pending the final approval of the legal texts by the European Parliament Plenary and the Council, lays the ground for a successful and sustainable recovery of the European economy from the coronavirus pandemic in the long run.
InvestEU is the EU's proposed flagship investment programme to kick-start the European economy. It is well-placed to provide long-term funding and to support Union policies in the recovery from a deep economic and social crisis. The InvestEU Programme builds on the success of the Investment Plan for Europe and the European Fund for Strategic Investments (EFSI).
The Covid-19 pandemic is a major shock to the global and Union economy with a major social and economic impact across Member States and regions. Due to the necessary containment measures, economic activity in the EU dropped significantly. The contraction in EU GDP in 2020 is expected to be around 7.4%, far deeper than during the financial crisis in 2009.
In order to achieve the Union's policy objectives and to support a swift, sustainable, inclusive, lasting, and healthy economic recovery, the InvestEU for the period 2021-27 is necessary to:
1. address market failures and sub-optimal investment situations;
2. reduce the investment gap in targeted sectors.
Over-reliance on non-diversified external supply sources and a lack of critical infrastructure
need to be addressed, in particular for SMEs, including micro-enterprises, by diversifying and strengthening strategic value chains, to improve the Union’s emergency response as well as the resilience of the entire economy, while maintaining its openness to competition and trade in line with its rules.
More importantly, the current investment levels and forecasts do not cover the Union’s needs for structural investment to restart and sustain long-term growth in the face of technological change and global competitiveness, including for innovation, skills, infrastructure, small and medium-sized enterprises (SMEs) and the need to address key societal challenges such as sustainability or population ageing.
The InvestEU Fund will be a single fund to avoid overlaps in the scope as happened with the variety of financial instruments delivered under the 2014-2020 MFF. Built on the experience of the European Fund for Strategic Investments (EFSI) set up under the Investment Plan for Europe, the InvestEU should provide more efficiently functioning support to final recipients by integrating and simplifying the financing offered under a single budgetary guarantee scheme.
It should exploit and reinforce synergies between mutually reinforcing strategies (e.g. European Green Deal) through providing support to investment and access to financing.
InvestEU Fund - Overall Objectives
The InvestEU Fund should contribute to improving the competitiveness and socio-economic convergence and cohesion of the Union, including in the fields of:
- innovation and digitization
- efficient use of resources in accordance with the circular economy
- sustainability and inclusiveness of the Union’s economic growth
- social resilience and integration of the Union capital markets.
It should be demand-driven, while at the same time it should focus on providing strategic, long- term benefits in relation to key areas of Union policy.
Support under the InvestEU Fund should facilitate access to financing of projects composed of partner entities in multiple regions across the EU, including projects that foster the development of networks, clusters and digital innovation hubs;
InvestEU Fund – Policy Windows
The InvestEU Fund should operate through four policy windows (specific objectives) that mirror the key Union policy priorities, namely: Sustainable Infrastructure; Research, Innovation and Digitisation; SMEs; Social Investment and Skills.
1. Sustainable Infrastructure
The principles of sustainable development should feature prominently in the design of the InvestEU Fund.
- The InvestEU Programme should contribute to building a sustainable finance system in the Union which supports the reorientation of private capital towards sustainable investments.
- Actions are expected to contribute at least 30 % of the overall financial envelope of the InvestEU Programme to climate objectives.
- The contribution of the InvestEU Fund to the achievement of the climate target will be tracked through a Union climate tracking system.
- Environmental protection and the prevention and management of related risks should be integrated in the preparation and implementation of investments.
- Investment projects that receive substantial Union support should be screened by the implementing partner to determine whether they have an environmental, climate or social impact (including the principle of do no significant harm).
- Support should target investments into transport, energy, including energy efficiency and renewable energy sources.
- Support in the development of projects and enterprises in the area of the blue economy.
Support under the InvestEU Fund should facilitate access to finance for SMEs and organisations from the cultural and creative sectors and investments in tangible and intangible assets, including in cultural heritage.
The InvestEU Programme should contribute to strengthening the recovery, long-term competitiveness and sustainability of tourism sector (including hospitality industry), and its value chains, by supporting operations promoting sustainable, innovative and digital tourism, including innovative measures to reduce the climate and environment footprint of the sector.
2. Research, Innovation and Digitisation
The InvestEU Fund should contribute to reaching the overall target of investing at least 3% of the Union GDP in research and innovation and provide financial products to cover
- different stages of the innovation cycle
- a wide range of stakeholders
to allow the upscaling of and deployment of solutions at a commercial scale in the Union in order to make such solutions competitive on world markets.
SMEs represent over 99% of businesses in the Union and their economic value is significant. However, they face difficulties when accessing finance because of their perceived high risk and lack of sufficient collateral. They have been particularly badly hit by the COVID-19 crisis. InvestEU Fund should therefore build on successful Union programmes such as the Programme for the Competitiveness of enterprises and SMEs (COSME), and should provide support to digital start-ups and innovative SMEs to enable them to better compete and scale up through the provision of:
- working capital
- investment throughout the life cycle of a company
- financing for leasing transactions
- opportunity to focus on specific, more targeted financial products.
It should also maximise the firepower of public/private fund vehicles, such as the SME IPO (Initial Public Offering) Fund, seeking to support SMEs through channelling both more private and public equity.
4. Social Investment and Skills
The InvestEU Fund should be used to support investment in education and training, Including the re-skilling and upskilling of workers, inter alia in regions depending on a carbon intensive economy and affected by the structural transition to a low-carbon economy.
It should be used to support projects that generate positive social impacts and enhance social inclusion by helping to:
- increase employment across all regions, among the unskilled and long-term unemployed;
- improve the situation with regard to
- gender equality
- equal opportunities
- intergenerational solidarity
- the health and social services sector
- social housing
- digital inclusiveness
- community development
- the role and place of young people in society as well as vulnerable people, including third country nationals.
InvestEU Fund - Compartments
Each of the policy windows should be composed of two compartments:
- EU compartment which should address Union-wide or MS market failures or suboptimal investment situations in a proportionate manner.
- Member State compartment should give MS as well as regional authorities the possibility of contributing a share of their resources from the funds under shared management to the provisioning for the EU guarantee and of using the EU guarantee for financing or investment operations in order to address specific market failures or sub-optimal investment situations in their own territories.
InvestEU Fund - Additional investments of around €400 billion
The EU guarantee of around EUR 26.2 billion (current prices) is expected to mobilise €400 billion in additional investment across the European Union and will be allotted to the following policy objectives:
- Sustainable Infrastructure window: EUR 9.9 billion (37,8%)
- Research, Innovation and Digitisation window: EUR 6.6 billion (25,1%)
- SME window: EUR 6.9 billion (26,4%)
- Social Investment and Skills window: EUR 2.8 billion (10,6%)
Moreover, the European investment Fund (EIF), which will contribute to the implementation of the InvestEU programme, will get an additional EUR375 million.
InvestEU Advisory Hub
The InvestEU Advisory Hub should support the development of a robust pipeline of investment projects in each policy window through advisory initiatives that are implemented by the EIB Group or other advisory partners, or are implemented directly by the Commission. The InvestEU Advisory Hub should promote geographic diversification with a view to contributing to the Union objectives of economic, social, and territorial cohesion and reducing regional disparities. The Commission, the EIB Group and the other advisory partners should cooperate closely with a view to ensuring efficiency, synergies and effective geographic coverage of support across the Union, taking into account the expertise and local capacity of local implementing partners.
In order to ensure a wide geographic outreach of the advisory services, a local presence of the InvestEU Advisory Hub should be ensured, where needed, taking into account existing support schemes and the presence of local partners, with a view to provide tangible, proactive, tailor-made assistance on the ground.
An effort should also be made to support the capacity building of potential project promoters, in particular local organisations and authorities.
The InvestEU Portal should be established to provide for an easily accessible and user-friendly project database to promote visibility of investment projects searching for financing with enhanced focus on the provision of a possible pipeline of investment projects, compatible with Union law and policies, to the implementing partners.