Infrastructure scheme set for go-ahead before EU summit

The temporary scheme would use €230 million of unspent EU money, plus money from the private sector and the European Investment Bank in future infrastructure projects.

The deal would be the first concrete EU growth initiative since Socialist Francois Hollande took over as President of France earlier this month. His election shifted the nature of Europe's economic debate away from its sole focus on austerity measures.

A project bond agreement would also come on the eve of an informal meeting of EU leaders to discuss employment and growth in the economically battered Union.

Although the meeting is happening at a time when the eyes of the world are once more fixed on the eurozone, the discussions - held over dinner - are not expected to deliver any concrete decisions.

In his invitation letter, EU Council President Herman Van Rompuy stressed that as the meeting is informal so that EU leaders can have "as open and frank an exchange as possible."

Among the growth-making measures likely to be discussed are increasing the funds of the European Investment Bank (EIB) and the better use of EU structural fund money.

The funds increase for the EIB is seen by several member states as an easy way of promoting growth as extra money sent to the bank is not counted as part of a member state's deficit. But detractors fear that the bank's top credit rating risks being downgraded if it becomes involved in more, but less worthy, projects.

The EU commission, for its part, is also pushing for "unspent" structural funds to be put to use. But this is also proving to be controversial. What the commission sees as "wasted money," noted one senior EU diplomat, finance ministers see as "saved money."

"We can move things forward so that we can take decisions in June," said Van Rompuy referring to the EU's traditional summer summit.

One reason for the decision-free outcome of Wednesday's meeting are the forthcoming parliamentary elections in France and Greece's second election.

France's parliamentary election means that Hollande will be politically unable to make any compromises on Wednesday.

He has already indicated that he will raise the issue of mutualising eurozone debt - a no-go for Germany - and focussed much of his electoral campaign on a promise to open Berlin's budget-balancing fiscal compact treaty.

Meanwhile, Greece is in caretaker mode ahead of the 17 June election, which some EU leaders have billed as a referendum on the country's continued membership of the single currency after a majority of voters rejected the tough conditions attached to its bail-out.

While the French and Greek votes loom next month, there is also a sense that ideas which have previously been aired and dismissed might be on the table again.

These include eurobonds, changing the role of the European Central Bank to focus more on growth, and allowing the eurozone bail-out fund to directly recapitalise banks

"In light of the new direction coming out of Paris, all of these issues will be getting a new hearing," said the EU diplomat.

For his part, Van Rompuy wrote: "It is not too early to think ahead and to reflect on possible more fundamental changes ... In many ways, the perspective of moving towards a more integrated system would increase confidence in the euro and the European economy."