The InvestEU Programme will bring together under one roof the multitude of EU financial instruments currently available to support investment in the EU, making funding for investment projects in Europe simpler, more efficient and more flexible.
The InvestEU Programme consists of the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal. It will further boost job creation and support investment and innovation in the EU.
InvestEU will run between 2021 and 2027 and it builds on the success of the Juncker Plan’s European Fund for Strategic Investments (EFSI) by providing an EU budget guarantee to support investment and access to finance in the EU. InvestEU aims to trigger at least €650 billion in additional investment.
The InvestEU Fund will support four policy areas: sustainable infrastructure; research, innovation and digitisation; small and medium-sized businesses; and social investment and skills. InvestEU will also be flexible: it will have the ability to react to market changes and policy priorities that change over time.
The InvestEU Advisory Hub will provide technical support and assistance to help with the preparation, development, structuring and implementation of projects, including capacity building.
The InvestEU Portal will bring together investors and project promoters by providing an easily-accessible and user-friendly database.
Why do we need InvestEU?
The investment conditions in Europe have improved since the Investment Plan for Europe, the Juncker Plan, was launched, thanks to structural reforms carried out by the Member States, a more a favourable economic situation and interventions such as EFSI. To help investment recover further, InvestEU will continue the work of the Juncker Plan to mobilise public and private resources in the EU. It will help to address market failures and investment gaps to foster jobs and growth and to reach EU policy goals such as sustainability, scientific excellence and social inclusion.
How will the InvestEU Fund work?
The InvestEU Fund will mobilise public and private investment through an EU budget guarantee of €38 billion that will back the investment projects of the European Investment Bank (EIB) Group and other financial partners, and increase their risk-bearing capacity. The financial partners are expected to contribute at least €9.5 billion in risk-bearing capacity. The guarantee will be provisioned at 40%, meaning that €15.2 billion of the EU budget is set aside in case calls are made on the guarantee.
The InvestEU Fund will be implemented through financial partners who will invest in projects using the EU guarantee. The main partner will be the EIB Group, which has successfully implemented and managed EFSI since its launch in 2015. In addition to the EIB Group, International Financial Institutions active in Europe – such as the European Bank for Reconstruction and Developments (EBRD), the World Bank and the Council of Europe Development Bank – and National Promotional Banks will have direct access to the EU guarantee.
The InvestEU Fund will also feature a Member State compartment for each policy area, meaning that Member States may add to the EU guarantee’s provisioning by voluntarily channelling some of their Cohesion Policy funds to these compartments. Like this, Member States will benefit from the EU guarantee and its high credit rating, giving national and regional investments more firepower.
What’s the advantage compared to the status quo, especially for the final beneficiaries?
Creating one coherent programme benefits from economies of scale. It achieves greater risk diversification, has a more integrated governance structure, and mainstreams cross-sectorial policies, bringing a multitude of instruments under one single structure. Using a budget guarantee – and not only financial instruments or grants – can help increase the impact of public funds. In this way we can do more with less.
The new approach also helps to reduce uncertainty for final beneficiaries and financial intermediaries about which instrument is the best for them.
Under the InvestEU Fund, there will be a single programme with a strong identity and a single set of coherent requirements (for eligibility, monitoring and reporting), which will apply throughout the financing chain to the benefit of financial intermediaries and final beneficiaries. InvestEU will eliminate overlaps and ensure synergies both for financing and advisory services. The InvestEU Advisory Hub will integrate 13 different advisory services into a one-stop-shop.
Also, when blending grants from other programmes like Horizon Europe, the Single Market Programme or the Connecting Europe Facility with support from InvestEU, InvestEU rules will apply for the entire project. This is a major simplification compared to today.
What will InvestEU finance?
The InvestEU Fund will be market-based and demand-driven. By crowding-in private investors, it will help achieve the EU’s ambitious goals in sustainability, scientific excellence and social inclusion. Investments will come under four policy areas, which represent important policy priorities for the Union and bring high EU added value:
- sustainable infrastructure;
- research, innovation and digitisation;
- small and medium-sized enterprises (SMEs) and small mid-caps;
- social investment and skills.
The budget guarantee is divided between the policy areas as follows:
Sustainable infrastructure: €11.5 billion
Research, innovation and digitisation: €11.25 billion
SMEs: €11.25 billion
Social investment and skills: €4 billion
The Commission can adjust these amounts by up to 15% in each policy window to adapt to evolving policy priorities and market demand.
Who will manage InvestEU?
As in the case of EFSI, a Steering Board will give strategic direction on programme implementation. It will be composed of the Commission (four members), the EIB Group (three members) and other implementing partners (two members – International Financial Institutions such as the European Bank for Reconstruction and Development or National Promotional Banks), as well as a non-voting expert appointed by the European Parliament. The Steering Board will strive to take its decisions by consensus.
An Advisory Board will assist the Steering Board. It is composed of representatives of implementing partners (one member each) and Member States (one member each). The agreement between the European Parliament and the Council extends membership to the Committee of the Regions and the Economic and Social Committee (one member each). The Commission will be able to consult this board when preparing and designing new financial products or to follow market developments and share information. This Advisory Board will be able to issue recommendations to the Steering Board on the implementation and functioning of the InvestEU programme.
An Investment Committee will approve the individual guarantee requests. This Committee is composed of external experts selected in an open process, and remunerated by the EU budget. The Investment Committee will be assisted by a secretariat, which will be staffed by and located in the Commission. The secretariat will provide administrative support for the organisation of meetings, agendas, minutes and interact with the implementing partners as appropriate to ensure the files transmitted to the Investment Committee are complete.
The EIB as the strategic partner may send its guarantee requests directly to the Investment Committee. This will be subject to notification to the secretariat, based in the Commission, which will assume all horizontal tasks and handle the guarantee requests of all other implementing partners.
Who will choose the InvestEU projects?
Just as is the case under EFSI, the Investment Committee will select projects based on compliance with the eligibility criteria set by the Regulation as well as the Investment Guidelines, with a specific focus on additionality.
Members of the Investment Committee will be external experts with expertise from the relevant sectors. The Committee will meet in four different configurations corresponding to the policy windows.
The Committee’s decisions will be made independently, with no political interference.
In practice, Commission services will first verify the consistency of the proposed operations with EU law and policies. Projects passing this initial check will be passed on to the Investment Committee.
The Investment Committee will approve the use of the EU guarantee for financing and investment operations, taking its decision after assessing the project scoreboard presented by the implementing partners. Just as under EFSI, all decisions approving the use of the EU guarantee will be publicly available.
What will be the InvestEU eligibility criteria?
InvestEU projects must:
- address market failures or investment gaps and be economically-viable
- need EU backing in order to get off the ground
- achieve a multiplier effect and where possible crowd-in private investment
- help meet EU policy objectives.
The eligibility criteria are defined in the Financial Regulation.
Why does EFSI cease to exist? Why not just create an EFSI 3.0?
EFSI was launched in July 2015 to boost investment and stimulate economic growth and employment in the EU, at a time when Europe was still recovering from the financial and economic crisis. It was originally foreseen to have a short investment period to maximise the impact, until July 2018. Due to its success, EFSI was expanded in size and extended in duration in December 2017. Its investment period now lasts until end-2020, the end of the current long-term budget, or Multiannual Financial Framework (MFF). No new investments can be undertaken under EFSI after 2020 but – as with most EU financial instruments – the liabilities run for much longer.
The InvestEU Programme builds on the success of EFSI, and will continue to create and support jobs across the EU by following the same model based on an EU budget guarantee.
Is InvestEU taking budget from other financing programmes? What will happen to programmes like COSME and InnovFin?
The InvestEU Fund will bring under one roof the 14 EU financial instruments currently supporting investment in the EU, giving it a single, strong brand. The InvestEU Fund will capture the objectives of existing instruments such as COSME and InnovFin and be able to boost investments even further thanks to the larger scale and efficiencies of the single InvestEU Fund. The four InvestEU Fund policy areas place emphasis on areas of strategic importance for the EU, with €11.25 billion each of the guarantee earmarked for small businesses and a further €11.25 billion earmarked for research, innovation and digitisation.
Can InvestEU financing be blended with EU grants?
Yes. Blending can be necessary in some situations to underpin investments in order to address particular market failures or investment gaps. The InvestEU Fund can be combined with grants or financial instruments, or both, funded by the centrally managed Union budget or by the EU Emissions Trading System (ETS) Innovation Fund. Such combinations can create advantages for project promoters in sectors such as transport, research and digital. When a project uses EU grants and InvestEU, the InvestEU rules will apply for the entire project. This means a single rulebook and a major simplification compared to today.
What will be the risk profile of investments? What type of investments will the InvestEU Fund be targeting compared to today’s financial instruments?
The InvestEU Fund will target economically viable projects in areas where there are market failures or investment gaps. The InvestEU Fund instruments will seek to attract commercial financing to a wide range of operations and beneficiaries and will only support projects where financing could not be obtained at all or not at the required terms without InvestEU Fund support. It will also target higher risk projects in specific areas.
In addition, InvestEU places more emphasis on social investment and skills. The allocation for budgetary guarantees and financial instruments in the social sector under the current long-term EU budget amounts to €2.2 billion whereas InvestEU allocates €4 billion of the EU guarantee to this policy area, almost doubling what is currently available.
What is the expected multiplier effect for InvestEU? How do you expect to reach €650 billion?
Due to InvestEU targeting higher risk innovation projects and SMEs, as well as the greater focus on EU policy objectives, we expect a slightly more conservative multiplier effect than under EFSI: 13.7 rather than 15. That is to say that for every public euro that is mobilised through the Fund, €13.7 of total investment, that would not have happened otherwise, is generated.
The €15.2 billion budget earmarked for InvestEU allows the EU budget to provide a guarantee of €38 billion. In addition, each financial partner will be expected to contribute some resources to ensure alignment of interest, adding an estimated total of €9.5 billion, so the total guarantee will be around €47.5 billion. This in turn will be leveraged by each financial partner. This means they can lend more than the guarantee amount. Finally, each InvestEU-backed project will attract other private and public investors, as we have seen under the Juncker Plan, and we expect this will trigger at least €650 billion in total investment.
Why is the InvestEU Fund open to other financial partners? Why not work exclusively with the EIB Group, like with EFSI?
Given its role as the EU’s public bank, its capacity to operate in all Member States, and its experience in managing EFSI, the European Investment Bank (EIB) Group will remain the Commission’s main financial partner under InvestEU and implement 75% of the €38 billion guarantee. It will also play an important role in the programme governance and implementation. For the remaining 25%, International Financial Institutions and National Promotional Banks, which can offer specific expertise and experience, can become financial partners, subject to conditions.
Opening up the possibility to benefit from the EU guarantee to other institutions is driven by the fact that there are other experienced potential financial partners in the EU, which have specific financial or sectorial expertise, deep knowledge of their local market or greater capacity to share risk with the EU in some areas. This approach will enlarge and diversify the pipeline of projects and increase the potential pool of final beneficiaries.
The Commission wants to ensure that the beneficiaries of InvestEU can get the best possible support and with easiest access. The InvestEU Fund will therefore be open to other institutions, either multilateral or national institutions.
How does an entity become an implementing partner under InvestEU?
The European Investment Bank Group – the EU Bank – will be an implementing partner for 75% of the EU guarantee. For the remaining 25% of the EU guarantee, International Financial Institutions (the European Bank for Reconstruction and Development, the Council of Europe Bank, etc.) or National Promotional Banks and Institutions wishing to become an implementing partner must first undergo a so-called Pillar Assessment. This means that, as a prerequisite, they must meet requirements in areas relating to the internal control system, the accounting system, an independent external audit and rules and procedures for providing financing from EU funds through grants, procurement and financial instruments.
The process to become an implementing partner consists of three main steps. First, the interested entity needs to submit an application to the Commission. Second, Commission services carry out an eligibility check. If the result is positive, the Pillar Assessment can take place. It is usually carried out by external consultants contracted by the interested entity and lasts between six and 18 months. Third, the Commission issues a call for expression of interest and any entity in the process of passing the Pillar Assessment can apply to become an implementing partner. The Commission will discuss the financial products and negotiate a guarantee agreement with institutions that have answered the call. The Pillar Assessment needs to be completed on the day of the signature of the guarantee agreement.
How does a company apply for InvestEU financing?
Project promoters should apply directly to the EIB, to national and regional promotional banks, or to the national offices of International Financial Institutions such as the EBRD, the World Bank, or the Council of Europe Development Bank. At that stage, the financial partners submit a proposal to the Commission to apply for the EU guarantee. SMEs should continue to apply to their local commercial or public banks whose financial products are covered by the EU guarantee in their country or region. The local intermediary will inform them if a particular financing programme is covered by the InvestEU Fund.
How will the InvestEU Programme ensure geographical balance?
The InvestEU Programme was designed to ensure it benefits all Member States, irrespective of their size or the development of their financial market. The access through other financial partners – compared to EFSI – should allow the Fund to better serve local needs and to be complementary to other sources of EU funding under shared management. Technical assistance under the InvestEU Advisory Hub will address the specificities of cohesion countries markets and contribute to build up a project pipeline.
The opening of the guarantee to national and regional promotional banks aims to better address where the financing needs are and how best to serve them. Finally, the InvestEU Advisory Hub will provide comprehensive project development assistance. It will provide capacity building support to develop organisational capacity and facilitate market-making activities and the collaboration of sectoral actors. The aim is to create the conditions to expand the potential number of eligible recipients in nascent market segments, in particular where the small size of individual projects raises considerably the transaction cost at the project level.
What about State aid control?
State aid rules are essential to ensure effective competition, so that consumers and businesses get fair prices and wider choice in the Single Market. At the same time, in order to match our InvestEU objectives to address market failures and mobilise private investment, it has to be easy to link up Member State money – which may entail State aid and be subject to State aid rules – with EU funds managed centrally by the Commission, which do not constitute State aid.
To further streamline the State aid approval process for such joint funding, in June 2018 the Commission proposed an amendment to one of the Council Regulations governing EU State aid control. The Council adopted this amendment in November 2018. This revised Enabling Regulation allows the Commission, subject to certain conditions, to exempt Member State funding channelled through the InvestEU Fund or supported by the InvestEU Fund from the requirement to notify such interventions to the Commission prior to their implementation.
The funding from Member States would be declared compatible with EU State aid rules, as long as certain clear conditions are fulfilled. The Commission proposal thus ensures that State aid rules can help facilitate a seamless deployment of the InvestEU fund. This continues the spirit of the Juncker Commission, which has already made sure that 97% of State aid can be implemented without any involvement of the Commission.
Who will be accountable for the investments made?
The financial partners in InvestEU will be responsible for the financing and investment operations under the InvestEU Fund since their governing bodies take the final decision on the financing.
The Investment Committee, composed of independent external experts, will approve the use of the EU guarantee under the InvestEU Fund to support those operations ahead of the final decision by the financial partner.
What role will the European Parliament and Council play?
The European Parliament and the Council will oversee the implementation of the InvestEU Fund through annual reporting to the budgetary authority and through the discharge procedure.
They will also be present in the governance bodies of the programme – Member States in the Advisory Board, and a non-voting expert appointed by the European Parliament in the Steering Board.
The implementation of the InvestEU Programme will be evaluated through an interim and a retrospective evaluation. The conclusions of the evaluations will be communicated to the European Parliament and Council so that they can feed into the decision-making process in a timely manner.
Ursula von der Leyen presents her vision to MEPs
In a debate with MEPs, Ursula von der Leyen outlined her vision as Commission President. MEPs will vote on her nomination, held by secret paper ballot, at 18.00.
Ursula von der Leyen outlined her political priorities, if elected as Commission President, to MEPs in Strasbourg this morning.
Here is a selection of the topics she mentioned during her speech.
Having identified the collective need for “a healthy planet as our greatest challenge and responsibility”, Ms von der Leyen proposed bolder emissions targets, with a reduction of 50% to 55% by 2030 and committed to submit a plan for a “Green Deal for Europe” and a European Climate Law within her first 100 days in office. She also announced plans for sustainable European investment (also through the partial conversion of EIB funds into a “climate bank”) to provide €1 trillion in investments within a decade.
Ms von der Leyen also stressed that the EU must establish an economy that serves the people. In order for this to happen however, “everyone needs to share the burden” – including those tech giants that conduct their business (and should continue to do so) in Europe, yet do not repay the people of Europe for their access to EU human and social capital.
Reiterating her commitment for a gender-balanced College of Commissioners during her term, she also highlighted that violence against women has to be tackled decisively; she would therefore seek to define violence against women as a crime in the European treaties, in parallel to completing the EU’s accession to the Istanbul Convention.
Ms von der Leyen declared her commitment to rule of law as a European value, announcing that she intends to establish an EU-wide monitoring mechanism in parallel to existing measures. She emphasised that these European values also include a duty to save lives at sea and should translate into a humane border policy. She stated her support for a “new pact on migration & asylum” and Dublin Regulation reform, adding that she intends to ensure that Frontex border guards number 10,000 not by 2027, but by 2024, and that all countries should shoulder their fair share of the burden based on the principle of European solidarity.
On the matter of European democracy, Ms von der Leyen announced a two-year Conference for Europe as of 2020, in which citizens will take a leading and active role. She also emphasised the need for the Spitzenkandidaten system to be strengthened and that transnational lists should be reconsidered in future European elections. She also declared her full support for a right of initiative for the European Parliament, committing to put forward a legislative proposal in response to every resolution that is passed with a majority of Parliament’s constituent members.
Reactions from political groups
Manfred Weber (EPP, DE) confirmed his group’s support for Ms von der Leyen. “We stand for a Europe that is fair, modern and innovative, secure, open-minded and ecological. We will implement these pledges together with her.” He welcomed her proposals for a right of initiative for the EP and to improve the lead candidate process, saying, “Backroom deals must be a thing of the past.”
Iratxe García Pérez (S&D, ES) complained that “European democracy is progressing way too slowly” and underlined that Ms von der Leyen must give further details on how she plans to respond to citizens’ demands, and particularly youth, before the S&D decides whether or not to back her. Support for sustainable growth, stronger action to fight poverty, and a binding strategy for gender equality are essential, García added.
Dacian Cioloș (Renew, RO) said, “We can no longer disappoint the millions of Europeans who said YES to Europe. They expect the EU to defend the rule of law without hesitation”. His group is ready to support her, with one goal: the renewal of Europe. “But, above all, we expect from you real pro-European leadership. Europe is not an administration, but a political ambition”, he said.
Philippe Lamberts (Greens/EFA, BE) said that his group was not ready to hand over the helm of the European Union to Ursula von der Leyen at a time when ‘‘our common house is burning, the climate is deteriorating, there are ever deeper inequalities and a backlash in fundamental freedoms and the rule of law”. However, if elected, his group was ready to provide its support “whenever the proposals would be up to the existential challenges we face”.
Jörg Meuthen (ID, DE) announced that his group will vote against her, stating that she is unfit for the job and that she had no convincing vision for Europe. He criticised her for promising too many different, contradictory things to groups in order to secure support, e.g. regarding the rule of law or migration.
Raffaele Fitto (ECR, IT) asked Ursula von der Leyen to clarify her position on “the mechanism on the rule of law, on which we are at odds” with the policy pursued so far by the Commission. Regarding the fight against climate change, he said he was “happy for proposals such as the transition fund and the bank for sustainable investments, but we discuss increasingly ambitious targets, without saying how to achieve them”.
Martin Schirdewan (GUE/NGL, DE) said that his group will not vote for Ms von der Leyen. Voters expected a lead candidate as Commission President, he claimed, not a Minister of Defence, which is a signal “for the continued militarisation and isolation of the EU.” He called for austerity policies to end and for investment in social security, education, healthcare and fighting climate change.
PES: Progressive commitments needed from the next Commission
The next European Commission must commit to progressive priorities, PES President Sergei Stanishev said today.
At a hearing this morning with S&D MEPs, Sergei Stanishev asked the nominee for Commission President – Ursula von der Leyen – to commit to stronger social rights, more opportunities for young Europeans, and a firm approach to the Rule of Law.
PES President Sergei Stanishev said:“The next European Commission programme must not ignore the millions of Europeans who voted for progressive change. The public did not have an opportunity to scrutinise the current nominee’s ideas, so today we are seeking commitments on our priorities. This means binding rules for the Social Pillar, substantial budget increases for youth, and no watering down of the Rule of Law.”
The PES has been the driving force behind the European Pillar of Social Rights, working to convene the EU Social Summit, also known as the Gothenburg Summit, in 2017. The Pillar was created to strengthen rights and social protections for workers, but during the last mandate major elements of the Pillar were not implemented by member states and binding rules should now be introduced.
Opportunities for young people must also be a priority for the next Commission. The Youth Guarantee was a PES initiative to secure a job, traineeship or education place for all young people after they leave education or become unemployed. More investment is now needed to support the next generation to reach their full potential and enjoy a comfortable life. This means introducing a European Youth Plan, extending the Youth Guarantee so it can benefit more people, and implementing a European Child Guarantee. Erasmus+ must also be strengthened to ensure people from all backgrounds can benefit, and European Culture Cheques should be introduced to support access to culture for young people.
Led by the First Vice-President of the European Commission Frans Timmermans, the PES has a resolute commitment to upholding and strengthening the Rule of Law. Our political family has led the defence of this fundamental value of the EU, a collective duty for all European parties. It is important that a future Commission does not shy away from its obligations in this area. The next Commission President must build on the comprehensive work undertaken in this mandate by the First Vice-President to ensure democracy and the independence of the media and judiciary can flourish in Europe.
Parliament decides on new Commission President
MEPs vote on the candidate for the president of the European Commission on Tuesday 16 July.
German Defence Minister Ursula von der Leyen, who was nominated for the post by the European Council, will outline her programme and discuss it with MEPs from 9.00 CET. MEPs will vote on her candidacy at 18.00 CET.
In order to become Commission President, von der Leyen must secure the support of an absolute majority of MEPs (as of today she must get at least 374 votes). The vote will be a secret paper ballot.
Although she has the backing of EU leaders and is a member of the political party that won most seats in the European elections, von der Leyen was not a lead candidate, a fact criticised by many MEPs.
Political groups have already subjected von der Leyen to tough questioning about her plans for the Commission.
If she fails to win a majority, the European Council would have to put forward another candidate.
Following May’s elections, one of the first tasks of the new, directly-elected European Parliament is the election of the next European Commission President.
Once this new president has been approved, work starts on setting up the new Commission. Parliament’s committees will hold hearings with each of the commissioners-designate to assess their suitability for the portfolio to which they are assigned, before MEPs vote on the Commission as a whole.
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