Why do we need InvestEU for the post-coronavirus recovery?
InvestEU is the EU’s proposed flagship investment programme to kick-start the European economy. It is well-placed to provide long-term funding and to support Union policies in the recovery from a deep economic and social crisis. This has been shown with the successful implementation of the European Fund for Strategic Investments and other EU financial instruments in the wake of the past financial crisis.
In the current coronavirus crisis, the market allocation of financial resources is not fully efficient and perceived risk impairs private investment significantly. Deep uncertainty currently compromises the quality of financial market information and lenders’ ability to assess the viability of companies and investment projects. If left unchecked, this can create pervasive risk aversion towards private investment projects and contribute to a ‘credit crunch’. Under such circumstances, the key feature of InvestEU of de-risking projects to crowd in private finance is particularly valuable and should be utilised.
An enhanced InvestEU programme thanks to Next Generation EU will be able to provide crucial support to companies and to ensure a strong focus of investors on the Union’s medium- and long-term policy priorities, such as the European Green Deal and the digitalisation transition and greater resilience. To address all of these challenges, the Commission is updating its original InvestEU proposal from 2018 to make sure it can better respond tothe current economic crisis.
What are the main changes to InvestEU?
The new proposal contains two main changes to the InvestEU Programme as partially agreed between co-legislators in April 2019:
- An increase of the InvestEU budget to reflect the higher investment needs and an environment of increased risk. The financial envelope for the sustainable infrastructure window is doubled, in line with the President’s Communication “Europe’s moment: Repair and Prepare for the Next Generation”.
- A broadened scope through the addition of a fifth window – the strategic European investment window – in order to cater for the future needs of the European economy and to promote and secure EU strategic autonomy in key sectors.
What will the new strategic European investment window finance?
The outbreak of the pandemic has shown the interconnectivity of global supply chains and exposed some vulnerabilities, such as the over-reliance of strategic industries on non-diversified external supply sources. Such vulnerabilities need to be addressed, to improve the Union’s emergency response as well as the resilience of the entire economy, while maintaining its openness to competition and trade in line with its rules. The new strategic European investment windowwill focus on building stronger European value chains in line with the strategic agenda of the Union and the New Industrial Strategy for Europe, as well as supporting activities in critical infrastructure and technologies
This reinforcement is of particular importance in the post-crisis situation, as some Member States might not have sufficient financial capacity to support these projects with national State aid. Moreover, many of these projects are cross-border and require a European approach.
How will the new window complement the pre-existing windows?
In the current context, the strategic European investment window would bring value added to the original windows, as it focuses on recipients or projects based on their high European strategic importance.
The new window would both target specific projects (e.g. supporting large consortia or public-private partnerships aimed at developing a specific technology and building critical infrastructure) and provide diffused financing, for instance by supporting the emergence of whole ecosystems of entrepreneurs active in the targeted sectors (e.g. innovative SMEs working on technologies of potential relevance to industrial biotechnology and pharmaceuticals).
The additionality requirements under this window would also differ from those envisaged for the other windows. For instance, the additionality of the support under the new window to large corporates would be in maintaining and developing their production within the Union or under the control of European investors and in scaling up the deployment of innovative technologies, rather than in purely risk-related considerations of the InvestEU support.
What are the changes in budgetary terms?
The new proposal foresees an increase of the original financial envelope. This includes a doubling of the guarantee amount allocated to the sustainable infrastructure window under the InvestEU Fund as well as the allocation of an additional guarantee amount to the new window. More concretely:
- Sustainable infrastructure window: €20 bn
- Research, innovation and digitisation window: €10 bn
- SME window: €10 bn
- Social investment and skills window: €3.6 bn
- Strategic European investment window: €31 bn
The new proposal also foresees an increase of the financial envelope allocated to the InvestEU Advisory Hub by an amount of €200 million to cater for the needs of the new window as well as the increasing needs of the other four windows.
How will InvestEU work?
The main principle of how InvestEU will function does not change. The InvestEU Fund will mobilise public and private investment through an EU budget guarantee of €75 billion that will back the investment projects of implementing partners such as the European Investment Bank (EIB) Group and others, and increase their risk-bearing capacity.
Under the new proposal, the guarantee will be provisioned at 45%, meaning that €34 billion of the EU budget is set aside in case calls are made on the guarantee. The size of the provisioning is based on the type of envisaged financial products and the riskiness of the portfolios, taking into account the experience under the EFSI and current financial instruments, as well as the likely changes in market circumstances following the coronavirus crisis.
What is the role of the EIB Group in the new proposal?
Given its role under the Treaties, its capacity to operate in all Member States and the existing experience under the current financial instruments and the EFSI, the European Investment Bank Group will remain a privileged implementing partner for the InvestEU. It will implement 75% of the EU guarantee.
The EIB Group will also play a central role in implementing advisory support under the InvestEU Advisory Hub. Moreover, it will advise the Commission and perform operational tasks in relation to the Hub.
Is the new window open to other implementing partners than the EIB Group?
Yes. The new window is open to other implementing partners than the EIB Group, including national promotional banks and institutions, as well as international financial institutions such as the European Bank for Reconstruction and Development or the Council of Europe Development Bank.
The Commission will continue the discussions with potential implementing partners to ensure a swift and efficient deployment of the instrument, which is even more crucial under the current circumstances.
Are there any changes to the InvestEU governance?
An Investment Committee composed of independent experts will remain responsible for approving the individual requests. As the Investment Committee will operate in different configurations corresponding to the InvestEU policy windows, a fifth configuration has been added to the proposal.
Are there any changes to the InvestEU eligibility criteria?
The policy areas eligible for financing and investment operations under the existing four windows remain the same as proposed and negotiated in annex II to the InvestEU Regulation. However, for the strategic European investment window, new intervention areas are introduced, as referenced above.
In case a financing or investment operation proposed to the Investment Committee falls under more than one policy window, it will be attributed to the policy window under which its main objective or the main objective of most of its sub-projects falls. The Investment Guidelines will specify the criteria for the allocation of financial products (under which financing and investment operations will be submitted) to specific windows.
Coronavirus: EU Strategy for the development and availability of therapeutics
The European Commission is today complementing the successful EU Vaccines Strategy with a strategy on COVID-19 therapeutics to support the development and availability of much-needed COVID-19 therapeutics, including for the treatment of ‘long COVID’. Today’s Strategy covers the full lifecycle of medicines: from research, development and manufacturing to procurement and deployment.
It is part of the strong European Health Union, in which all EU countries prepare and respond together to health crises and ensure the availability of affordable and innovative medical supplies – including the therapeutics needed to treat COVID-19.
The Strategy includes clear actions and targets, including authorising three new therapeutics to treat COVID-19 by October 2021 and possibly two more by end of the year. Concretely:
- Research, development and innovation
- Invest €90 million in population studies and clinical trials to establish links between risk factors and health outcomes to further inform public health policy and clinical management, including for long-COVID patients.
- Set up a ‘therapeutics innovation booster’ by July 2021 to support the most promising therapeutics from preclinical research to market authorisation. It will build on current initiatives and investments in therapeutic development, working in a close cooperation with the European Health Emergency Preparedness and Response Authority (HERA) preparatory action on mapping therapeutics. It will therefore ensure the coordination of all research projects on COVID-19 therapeutics, stimulating innovation and boosting therapeutic development.
- Access to and swift approval of clinical trials
- Invest €5 million under the EU4Health programme to generate better, high-quality safety data in clinical trials, which will help produce robust results in a timely manner.
- Provide EU countries with financial support of €2 million under the EU4Health 2021 work programme for expedited and coordinated assessments to facilitate approval of clinical trials.
- Explore how to support developers of therapeutics to build capacity to produce high-grade material for clinical trials.
- Scanning for candidate therapeutics
- Invest €5 million to map therapeutics and diagnostics to analyse development phases, production capacities and supply chains, including possible bottlenecks.
- Establish a broader portfolio of 10 potential COVID-19 therapeutics and identify five of the most promising ones by June 2021.
- Supply chains and delivery of medicines
- Fund a €40 million preparatory action to support flexible manufacturing and access for COVID-19 therapeutics under the EU Fab project, which in turn will become over time an important asset for the future the European Health Emergency Preparedness and Response Authority (HERA).
- Regulatory flexibility
- Authorise at least three new therapeutics by October and possibly two more by the end of the year and develop flexible regulatory approaches to speed up the assessment of promising and safe COVID-19 therapeutics.
- Start seven rolling reviews of promising therapeutics by end-2021, subject to research and development outcomes.
- Joint procurement and financing
- Launch new contracts for the purchase of authorised therapeutics by the end of the year.
- Secure faster access to medicines with shorter administrative deadlines.
- International cooperation to make medicines available to all
- Reinforce engagement for the therapeutics pillar of the Access to COVID-19 Tools Accelerator.
- Boost ‘OPEN’ initiative for international collaboration.
The Commission will draw up a portfolio of 10 potential COVID-19 therapeutics and by June 2021, identify the five most promising ones. It will organise matchmaking events for industrial actors involved in therapeutics to ensure enough production capacity and swift manufacturing. New authorisations, rolling reviews and joint procurement contracts will be up and running before the end of the year.
The therapeutics innovation booster, matchmaking events and preparatory action to support flexible manufacturing and access for COVID-19 therapeutics under the EU Fab project, will feed into the HERA, for which a proposal is due later in the year. The pilot project on access to health data will feed into the European Health Data Space proposal expected later this year.
Members of the College said:
Vice-President for Promoting our European Way of Life, Margaritis Schinas, said: “The situation in many intensive care units across the continent remains critical. We need to focus both on vaccines and therapeutics, as two powerful and complementary ways to combat COVID-19. But currently we have only one authorised medicine to treat COVID-19. By acting on better availability of medicines today, we are making sure patients receive the treatments they need while also preparing our future biomedical preparedness. A coordinated strategy on quick access to therapeutics will boost our strategic autonomy and contribute to a strong Health Union.”
Commissioner for Health and Food Safety, Stella Kyriakides, said: “Vaccinations save lives, but they cannot yet eradicate COVID-19. We need a strong push on treatments to limit the need for hospitalisation, speed up recovery times, and reduce mortality. Patients in Europe and across the world should have access to world-class COVID-19 medicines. This is why we have set a very clear goal: by October, we will develop and authorise three new effective COVID-19 therapeutics that can have the potential to change the course of the disease. We will do so by investing in research and innovation, the identification of new promising medicines, ramping up production capacity and supporting equitable access. Our Therapeutics Strategy is a strong European Health Union in action.”
Commissioner for Innovation, Research, Culture, Education and Youth, Mariya Gabriel, said: “By increasing vaccine availability across Europe, more and more Europeans are now protected against COVID-19. In the meantime, the development of innovative medicines to treat coronavirus patients remains a priority when it comes to saving lives. Research and innovation is the first step to finding effective and safe therapeutics, which is why we are proposing to establish a new COVID-19 ‘therapeutics innovation booster’ and will invest € 90 million in population studies and clinical trials.”
The Strategy on COVID-19 therapeutics complements the EU strategy for COVID-19 vaccines from June 2020 and builds on ongoing work by the European Medicines Agency and the Commission to support research, development, manufacturing and deployment of therapeutics.
The Strategy forms part of a strong European Health Union, using a coordinated EU approach to better protect the health of our citizens, equip the EU and its Member States to better prevent and address future pandemics, and improve the resilience of Europe’s health systems.
EU defence gets a boost as the European Defence Fund becomes a reality
Commission welcomes the adoption of the European Defence Fund (EDF), following the European Parliament’s approval. The EDF, with a budget of €7.9 billion, is the Commission’s flagship instrument to support defence cooperation in Europe. EDF will co-finance collaborative research and capability development projects amplifying national investment. It will also foster an innovative and competitive defence industrial base. In doing so, it will enhance Union’s technological sovereignty and therefore its open strategic autonomy.
Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, said: “This is an important step for a stronger Europe. The Fund will play a key role to enable SMEs to participate in defence supply chains and widen cross-border industrial cooperation. Providing opportunities to companies all sizes helps achieving more innovative solutions, to foster an open internal market. So besides a stronger defence cooperation it contributes to our competitiveness.”
Thierry Breton, Commissioner for Internal Market, said: “Today marks a historic day for Europe. The idea of working together for promoting our Defence Union and for the security of EU citizens is now a tangible reality. In a global context where Europe needs to be stronger, more resilient and more autonomous in strategic areas, the European Defence Fund is a milestone and will significantly contribute to the security of EU citizens.”
A Fund to deepen EU defence industrial cooperation
Without substituting Member States’ efforts, the Fund will promote cooperation between companies of all sizes and research actors throughout the EU, in research and development of state-of-the-art and interoperable defence technology and equipment.
The Fund will support competitive and collaborative defence projects throughout the entire cycle of research and development, focusing on projects that have the potential to be game-changers for the armed forces of Member States. The Fund will foster innovation and incentivise the cross-border participation of SMEs. Projects will be defined based on defence capability priorities agreed by Member States within the framework of the Common Security and Defence Policy and particularly in the context of the Capability Development Plan. The projects will aim at contributing to the security and defence interests of the Union.
The EDF allows for the participation of European subsidiaries of third country companies and also for the cooperation with third country companies provided that their involvement ensure the security and defence interests of the EU, and meet the rigorous security conditions as set in the EDF Regulation.
A strong budget for ambitious and inclusive defence programmes
2021 constitutes the first year of the rollout of the new EDF, which will be operational for the period 2021-2027, in alignment with the Multiannual Financial Framework.
It will be endowed with a budget of €7,953,000,000 in current prices. This financial envelope will be divided into two pillars: €2,651,000,000 will be allocated to funding collaborative defence research to address emerging and future security threats and €5,302,000,000 to co-finance collaborative capability development projects.
Up to 4%-8% of the Fund budget is devoted to development or research for disruptive technologies (i.e. technologies that have the potential to create game-changing innovations). This budget represents an unprecedented opportunity to contribute to the development of a competitive and innovative European defence industry.
The complete establishment of the Fund both legally and financially will now allow the Programme Committee (PC), chaired by the Commission and composed of Member States representatives, to discuss priorities and confront topics with the aim to open calls for proposals in summer 2021. The Commission will directly manage the programme. The European Defence Agency (EDA) is invited to participate as observer and the European External Action Service (EEAS) will assist in the Committee.
The creation of a European Defence Fund was first announced in 2016. The Commission presented the first version of the European Defence Fund in June 2017, which has allowed defence cooperation at EU level to embark thanks to two pilot projects, the Preparatory Action on Defence Research (PADR) for 2017-2019 and the European Defence Industrial Development Programme (EDIDP) for 2019-2020.
The Fund is part of the priorities of the von der Leyen Commission for a ‘Stronger Europe in the World’.
A political agreement between the Member States and the European Parliament was found in December 2020 and today’s decision gives legislative effect to the EDF that will operate for the next 7 years.
Dual-use goods: what are they and why are new rules needed?
The EU is working on new export rules for so-called dual-use goods to prevent them being misused in human rights violations.
What are dual-use goods?
Dual-use products are goods designed for civilian use that in the wrong hands could be used to supress human rights or launch terrorist attacks. They can be anything from drones to chemicals.
Although these goods can improve people’s lives, they can be misused. Authoritarian regimes might use them to keep the population under control, while terrorist groups could use them to stage attacks.
Why are new rules needed?
To prevent dual-use goods being repurposed in ways that violate human rights , the EU wants to make sure strict export rules prevent them being sold to people or organisations wanting to misuse them.
The EU is currently working on an update of the existing rules to take into account recent technological developments, including new cyber surveillance tools, and beef up protection of human rights.
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