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The Investment Plan for Europe and SMEs: Italy came out on top

In its first year, the Investment Plan for Europe, IPE – also knowns as the “Juncker Plan” – has worked as a powerful source of investments for Italy. According to the European Investment Bank (EIB) Italy is the first EU beneficiary. So far, 361 transactions have been approved in order to support measures for Small and Medium Enterprises (SMEs), which are the Plan’s main objectives and Italy’s major economic drivers. 

Following the latest economic and financial downturn, Europe has been suffering from low levels of investment. Given that adequate levels of resources are available, the European Union (EU) decided to implement measures in order to put Europe on the path of economic recovery promoting investments. In November 2014, the IPE was presented and became operational in 2015. The Plan is co-sponsored by the EIB Group and the European Commission with the purpose of boosting investments across Europe. The Juncker Plan is composed of five main elements:
1. the European Fund for Strategic Investments (EFSI), which aims at mobilising at least EUR 315 billion in investments in the real economy by mid-2018;
2. the European Structural and Investment Funds (ESI Funds), which can be combined with the EFSI in order to support additional investments;
3. the European Investment Advisory Hub, which delivers technical assistance and advisory service to investors and final beneficiaries;
4. the European Investment Project Portal (EIPP), an online platform bringing together European projects promoters and investors;
5. a number of initiative promoted by the European Commission to facilitate the financing of the economy. 

Latest data show that the IPE has proved to be successful especially for Italy, which was recently declared the first EU beneficiary of the Plan.  Official EIB documents report that, since the launch of the Juncker Plan, the Italian economy has been engaged in 361 transactions for a value of EUR 24, 9 billion, which have activated and mobilised investments for over EUR 138 billion thanks to the so-called “multiplier effect” .  These measures have been of utmost importance for SMEs since they have paved the way for SMEs access to credit through guarantee mechanisms. More specifically, the number of transactions approved for SMEs is 227 for a value of EUR 7,5 billion, which have activated EUR 60 billion in investments. These results could have extremely positive effect on Italy’s economic recovery since they are a remedy for the negative impact of credit crunch and non-performing loans on the real economy. 
It is clear that the IPE is not a solution for all the economic and political problems of Europe, but it undeniable that it has delivered significant results at least for its largest beneficiaries, namely Italy (the first one), France and Germany. There is still room for improvement as for the concrete functioning of the Plan – e.g. guarantee mechanism, matching between projects promoters and investors, SMEs windows – but the intention to believe in it and capitalize on these first results has been recently reiterated both at EU and national level. A proposal for an extension of the Plan – until 2020 – has been presented in order to allocate more funds and mobilise investments for over EUR 500 billion

Against all odds and political relations among Member States, let’s hope the focus will be the willingness to create additional investment opportunities to transform an anemic recovery into real economic development.  

Gianluca Cimini

 

The Investment Plan for Europe and SMEs: Italy came out on top - Gianluca Cimini