Experts: Billions missing for the EU’s green and digital transformation
Published: Wednesday, Jan 24th 2024, 00:31
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The Brussels think tank Bruegel sees a huge investment gap in the EU in the transition to a green and digital economy and society.
The experts put the annual investment gap for the two transitions at a total of at least 481 billion euros by 2030, according to a report published on Wednesday. Closing this gap depends on the efficient use of public resources and the mobilization of private investment.
In general, the experts believe that more continuous investment is needed to bring about change. Existing investment programs were sporadic and limited in time, with different sources of funding and overlapping objectives. As a solution, the experts advocate a fund for strategic investments.
Fund for strategic investments
"We propose the establishment of a dedicated and permanent fund for European Strategic Investments (ESI)," say the authors. This could be fed in the first instance from the EU's long-term Community budget. The multi-annual EU budget for the years 2021 to 2027 comprises around 1.1 trillion euros.
According to the experts, such a fund should be managed by the European Investment Bank (EIB). The EIB is the EU institution for long-term financing. The owners are the member states. The bank should finance investments that contribute to achieving the EU's political goals.
Further own funds required
Furthermore, the EU would have to raise additional own funds over and above the current funding or otherwise generate income for the EU budget. This is necessary in order to repay the debt taken on for the coronavirus aid fund. Further new own resources could be used for the ESI fund at a later date. "This would ensure continuity in the pursuit of the strategic objectives," the authors say.
For the approximately 750 billion euro coronavirus aid fund ("NextGenerationEU"), the EU raised very large sums as joint debt for the first time and awarded debt-financed money as a grant to EU countries. The money is intended to promote growth and jobs, while at the same time making the European economy more modern and environmentally friendly. The program expires in 2026.
France in favor of Eurobonds
Further possible joint borrowing is controversial in the international community. French President Emmanuel Macron recently expressed his openness to this. "We need more public investment in Europe. And that's why we need to embark on a phase of new reinvestment, as we did during the Covid crisis, and perhaps venture Eurobonds for priorities again," said Macron last week at the World Economic Forum in Davos.
Eurobonds are European government bonds. The states borrow money together on international financial markets and are jointly liable.
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