Sander, H. (2015) “The ‘Juncker plan’ does not offer a genuine route to boosting the Eurozone’s recovery“, LSE EUROPP, 19 March.
On 10 March, EU finance ministers agreed to roll out Jean-Claude Juncker’s flagship investment programme, commonly termed the ‘Juncker plan’. Harald Sander writes on the economic impact the plan could have in the Eurozone. He argues that while it has been portrayed by some observers as a route to helping the Eurozone’s recovery, it will require far more than the Juncker plan to stimulate growth in Europe’s ailing economies.
The €315 billion European investment initiative – the so called ‘Juncker plan’ – was accepted by EU finance ministers on 10 March and is expected to go operational as a new “European Fund for Strategic Investment” (EFSI) by mid-2015. Is this finally good news for Eurozone recovery? Unfortunately, the Juncker plan has been widely misunderstood as a recovery programme for the crisis-ridden Eurozone: it is in fact no more and no less than a (welcome) investment initiative for Europe.
The Juncker plan is not a Eurozone recovery programme
What is the official rationale for the investment initiative? The European Commission cites a lack of total (public and private) investment of about €230 billion to €370 billion below the historical norm for the EU28. This gap is viewed as the key reason for the slow recovery of both the EU28 and the Eurozone.
Consequently, the commission points out that the Investment Plan for Europe has three objectives: “to provide additional fuel to the EU’s recovery and reverse the drop in investment; to take a decisive step towards meeting the long-term needs of our economy by boosting competitiveness in strategic areas; and to strengthen the European dimension of our knowledge, human capital and physical infrastructure, and the interconnections that are vital to our Single Market.”
- Blome, N., Pauly, C., Peter Schmitz, G. & Schult, C. (2014) “Mr. Europe? The Ghosts of Juncker’s Past Come Back to Haunt Him“, Der Spiegel Online, 10 November.
- Schweiger, C. (2014) “Juncker, Tusk, Mogherini and the EU’s credibility crisis“, Ideas on Europe Blog, 07 September.
- Lannoo, K. (2014) “Juncker raises high expectations with ambitious agenda“, Politics and Institutions, CEPS Commentaries, 16 July.