In late 2014, the EU Commission President, Jean-Claude Juncker, announced a €315 billion investment plan. The plan will combine public and private investment into a fund that will operate over three years, from 2015 until 2017. The International Labour Organization (ILO) recently argued that the plan – if properly implemented – should “complement the monetary measures recently announced by the European Central Bank” and could lead to the creation of more than 2 million jobs.
However, the new fund will only have an initial starting capital of €21 billion (possibly to be topped up by public investment from EU Member States), as Juncker is gambling on a fifteenfold “multiplier effect” from private investment in order to reach the full amount. And, as of last month, only 2 billion euros have been pledged to the fund.
The unemployment rate in the EU currently stands at 10%. Since 2008, the Eurozone has been dipping in and out of recession, and in recent months the spectre of deflation has started to drag on the recovery. Will Juncker’s plan be enough to get Europe out of the doldrums?
We had a comment sent in from Pietro, arguing that what was needed was a complete rejection of austerity policies on a massive scale:
Austerity is plunging the Eurozone into eternal crisis and stagnation. The question is: can this be reversed by SYRIZA’s victory [in Greece]? We should hope so. Otherwise, we can just relax and enjoy creeping poverty and unemployment.
We put Pietro’s comment to Renate Weber, a Romanian MEP who sits with the liberal ALDE group in the European Parliament, and is a member of the Committee on Employment and Social Affairs. How would she respond?
I don’t know if this will be enough, but it will at least be a first step. Because austerity alone cannot bring growth, and we have already been living for more than five years looking at a very powerless sort of European Union. We have had austerity measures, but we have had no growth. We are still trying to cope with this economic crisis which, unfortunately, is not only economic – it has become a social crisis and also an identity crisis. And this is dangerous, and is the explanation of the outcome of [recent elections].
If you look at the European Parliament, for example, you can see that the extreme right, and also to some extent the Communist extreme left, are very present in the European Parliament. So, we need to change something. The measures that have been taken so far have only partly worked. So, let’s hope that Juncker’s plan will at least help us to get through this crisis, and then, of course, we will have to do more.
To get another perspective, we also spoke to Peter Simon, a German social democratic MEP and Vice-Chair of the Committee on Economic and Monetary Affairs in the European Parliament. What would he say to Pietro?
The plan that the European Commission presented [last year] is a first step for greater investment in Europe, and it’s an important and decisive step. But it’s only a first step. If we really want Europe to be re-industrialised, to be a motor of growth, then we need a very good programme and a very good project pipeline to spend this €315 billion.
I think this should be seen as a starting point for economic growth and to encourage more private investment later on. But, whether additional funding comes in future, on top of this €315 billion programme, will depend on the quality of the projects we have with this initial €315 billion. And it will depend on whether investors see that the Member States of the European Union are a good place to invest in.
Concerning the question of whether austerity is killing the economy? I would say that the answer is a clear “Yes”.
Will the ‘Juncker Plan’ kickstart Europe’s sluggish economy? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions!