Jan Strczewski
BRUSSELS (Reuters) – European Union finance ministers said on Monday that Europe’s investment needs in the green and digital transition of the economy, defence, and research should be met with private funds and public funds. said it is only useful for taking advantage of it.
The statement, a draft of which was seen by Reuters, is an EU statement on what the EU must do to effectively compete with the United States and China on new technologies while reducing carbon emissions to prevent climate change. become part of the discussion. Last month, former European Central Bank President Mario Draghi said in a report that the EU needs up to 800 billion euros ($868.48 billion) a year, or gross domestic product, to keep pace with its rivals economically. ) said that an investment of 5% is required. EU finance ministers will make it clear that they cannot provide such funds and that Europe needs to develop its capital markets so that private funds can flow more easily. “At a time when public finances are affected by multiple crises and require gradual and sustained fiscal consolidation, the necessary investments should be financed primarily from private sources,” the draft statement said. “Public funding is scarce, so it is best used as a catalyst to leverage private capital in areas that have positive spillover effects.”
Leverage in this case means covering the riskiest aspects of an investment project with a relatively small amount of EU funds, allowing private investors to flock to safer and more profitable parts of the project. Ministers will meet on Monday ahead of the EU Summit on Competitiveness to be held in Budapest on November 7-8, where EU leaders are expected to issue their own declaration on the topic. The ministers’ statement said they were prepared to jointly spend EU taxpayers’ money on EU public goods, services and infrastructure that cross borders and serve all of the EU’s 450 million citizens. states. “Private investment is essential, but public finance also has an important role to play. European funding should focus on areas where public goods can be jointly delivered more effectively,” the draft states. European funding means money from the EU budget, which currently amounts to around 1.2 trillion euros over seven years. Several EU countries, including Germany, have ruled out further collective borrowing for co-investment after EU debt was raised to deal with the coronavirus pandemic. Cross-border electricity grids are often listed as a public good in Europe. The minister’s draft statement said its development is essential to ensure lower and stable electricity prices to attract businesses. “This would reduce the need for energy subsidies, reduce fiscal pressures, and support economic growth by reducing costs for businesses and households,” the draft says. “A well-functioning European energy infrastructure is in Europe’s common interest and is crucial for the EU’s competitiveness,” the report said.
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(Reporting by Jan Strpczewski; Editing by Barbara Lewis)
