EU investment plan to 'run into vacuum' if no national reforms made

EU commission chief Jean-Claude Juncker later in the day during the launch of the EIB Brussels office also said that the plan is not the "solution to all European problems."

"This plan will be a total failure without budgetary consolidation, structural reforms and cutting red tape," Juncker added.

Hoyer said governments had caved into the "temptation to put projects which will never be funded”.

He said merit-based selection is key for private investors to chip in as well, and warned against attempts to politicise the process.

"If we consider a project viable, others follow. We will reject any proposals that will politicise this," Hoyer said.

The €315bn fund is the flagship project of European commission president Jean-Claude Juncker, and is meant to boost growth and jobs in the EU.

Asked why setting up a new fund was needed, rather than just giving more money to the EIB as such, Hoyer explained that the situation had changed compared to 2012.

Back then, there was no money in banks, companies or private investment funds.

Nowadays, Europe is flush with money, but investors are cautious because of "lack of confidence, bureaucracy and a lack of good projects," he said.

Hoyer said he completely supports the Juncker fund - formally known as the European Fund for Strategic Investments - which will be set up within the EIB and is likely to become operational in September.

The core idea of this fund is to remove the riskiest parts of infrastructure, start-up and energy projects so that risk-averse investors will consider putting money up.

He said extra investments in research, energy, transport and digital infrastructure were key, as there is a "huge gap" between Europe’s targets and what has actually been earmarked in national and EU budgets.

Hoyer spoke of an additional €130bn in R&D, €100bn in energy connectors and €55bn in digital infrastructure needed per year to meet the EU's own goals.

He defended the "leverage" factor which has the EU commission counting on €1 in the fund leading to €15 in investment.

The actual money earmarked for the fund is a €16bn guarantee from the EU budget and €5bn from EIB's own money.

When the EIB got a cash injection of €10 billion from member states (who own the bank), back in 2012, it promised to leverage the money 18-fold and increase lending for infrastructure projects as well as small- and medium-sized businesses.

Hoyer said that not only has the target been achieved, but it will have reached €180 billion in March, nine months earlier than anticipated.

Asked if the EIB was considering increasing its lending to Greece, Hoyer said the bank's exposure to the debt-ridden country was already €16.9 billion, representing 9.4 percent of its GDP.

"This is topped only by Hungary, Slovakia, Portugal and Cyprus," he said, adding that for more EIB investments, good projects are needed in Greece.

The EIB president said he expects another 300-500 staff to be hired to sift through the more “granular and risky” projects up for funding.

The Luxembourg-based bank currently has 2,000 employees, a "lean structure", said Hoyer, compared to the World Bank, which has 18,000.