Juncker investment plan may fall short

The European Union’s vaunted investment plan, due to be formally blessed by the bloc’s 28 leaders at a summit this week, may be a day late and several euros short to revitalise a stagnant economy.

Because of Europe’s mountain of public debt, the initiative outlined by European Commission President Jean-Claude Juncker contains no new public money and relies on financial engineering to turn €21bn in existing EU and European Investment Bank funds into a putative €315bn in project funding. Whether it can revive sagging public and private investment will hinge largely on the choice of shovel-ready infrastructure projects that boost Europe’s growth potential, and on the way that national contributions are treated by the EU bean counters.

Investment in the EU in 2013 was, on average, 15% below pre-crisis levels, according to an EU task force report, with a plunge of more than 60% in the worst affected southern countries.