Sunday

22nd Jan 2017

Polish minister calls for €700 billion EU investment fund

  • The EIB should be put in charge of a €700 billion EU investment programme, Poland's finance minister Mateuesz Szczurek has said. (Photo: EIB)

The EU should establish a temporary investment fund capable of paying for infrastructure projects worth €700 billion, Poland's finance minister has said.

In a speech at the Bruegel think-tank on Thursday (4 September), Polish finance minister Mateusz Szczurek called for EU leaders to task the European Investment Bank with creating a special investment fund aimed at directing private savings and pension funds towards pan-European infrastructure projects related to energy, transportation and ICT.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

He added that Europe needed to make public investments worth €700 billion, over the next five years, equivalent to over 5 percent of its economic output.

"To start operating, the new vehicle would require a gradual injection of paid-in capital and guarantees by all EU member states, in a similar way and on the similar scale as was done for the European Stability Mechanism (ESM)," he stated.

The ESM, which serves as the eurozone's permanent bailout fund, has €80 billion of paid-in capital from governments, allowing it to, theoretically, raise up to €500 billion from the financial markets.

Allowing the European investment Bank to operate in a similar way would keep the extra spending off government balance sheets, making it easier for them to comply with the EU's budget deficit rules.

"The capital of the fund would be leveraged by borrowing in the financial market and directly invested in the selected infrastructure projects because Europe needs actual capital expenditures, not merely extra funding," Szczurek said.

Szczurek is one of the first ministers to offer a plan on how to beef up investment in Europe to boost the bloc's stagnating economy.

For his part, incoming European Commission President Jean-Claude Juncker has promised to set out €300 billion investment package when his new team takes office later this autumn.

Meanwhile, at a hearing on Thursday (4 September) with MEPs on the economic affairs committee, Dutch finance minister Jeroen Dijsselbloem, who chairs the group of eurozone finance ministers, said ministers would compare respective plans to cut labour taxes when they meet in Milan next week.

Ministers have agreed to reduce the so-called 'tax wedge' - the difference between the wage costs of a worker to their employer and the amount of 'take-home-pay' when taxes and social security contributions have been deducted.

The average real tax rate faced by European workers currently stands at 45 percent, far higher than the OECD average of around 35 percent.

Research by the European Commission claims that shifting taxation from labour to consumption by the 18 euro area countries could add €65 billion to output and create 1.4 million jobs over the next decade.

On Thursday, ECB president Mario Draghi said that prohibitive tax rates would hurt the eurozone economies regardless of how much credit was available to businesses.

"We can provide as much monetary stimulus as we want, but if the person who plans to use this credit for a new business has to wait eight months before he or she can open this new business, and then.. has to pay lots of taxes, this person will not apply for credit," Draghi told a press conference following a meeting of the ECB's governing council.

The eurozone's economic recovery had become "very fragile and uneven", Dijsselbloem noted, adding that the "fundamental challenges faced by the euro area are unchanged".

Trump pledges US-first foreign policy

Economic protectionism and war on Islamist terrorism will form the heart of US foreign policy, Trump has said. He did not rubbish Nato, but indicated interest in a new Russia alliance.

GMO opt-out plan remains in waiting room

The commission wants to give the power to member states to reject EU-approved genetically modified organisms, but the Maltese presidency is unlikely to approach the issue any time soon.

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey