The move is aimed at enticing private investors to finance European infrastructure, writes Peter Spiegel.
The €300bn programme, to be spread over three years, is the first major initiative from Jean-Claude Juncker, the commission’s new president, who has invested significant political capital in it.
“This will be a major credibility test,” said one person involved in the talks.
The package would amount to under 0.8 per cent of EU gross domestic product over three years. But struggling economies within the bloc are counting on it as one of the few sources of investment spending available at a time they are having to cut budgets to meet EU-mandated deficit targets.
The exact structure of the new funds, which would be unveiled before next month’s summit of EU leaders, is still being worked on. But officials aim to maximise the chances that money from private investors will help fund riskier projects which are finding it hard to raise cash.
According to officials, and documents seen by the Financial Times, the structure most favoured by the commission would use public money as a “first-loss tranche” in new special purpose vehicles. The EU would take most of the downside risks from any investment, while allowing private investors to benefit from any financial gains. Several funds with different risk profiles could be offered.
Commission officials said the plan has faced intense scrutiny from within Brussels institutions and some EU capitals, particularly Berlin. They warned that the exact structure of the initiative could change in response to the concerns being raised – particularly the amount and source of the EU funds to be used.
© Financial Times
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