€315bn Juncker plan endorsed by EU leaders

Leaders of the European Union gathered yesterday in Brussels endorsed a new €315 billion investment programme intended to kick-start economic growth.

According to European Council President Donald Tusk, the leaders agreed to an urgent setting up of a European Fund for Strategic Investment (EFSI), a renewed commitment to intensify structural reforms and continued efforts to ensure sound public finances.

"The three together form our strategy to speed up the recovery," Tusk said.

The summit was concluded just before midnight, with a discussion over dinner on Russia and Ukraine. The summit was intended to be shorter than usual, marking a symbolic change in Tusk’s leadership who wanted to break the tradition of two-day summits.

The €315 billion investment package was proposed by European Commission President Jean Claude Juncker. The Commission’s proposal has fuelled discussion on how barriers to private investment can be reduced across Europe. The European Union has already prepared a list of almost 2,000 candidate projects, with a total value of €1.3 trillion which could benefit from Juncker’s investment plan.

Juncker said national contributions to the EFSI would be “neutralised”.

Prime Minister Joseph Muscat told journalists in Brussels that the Juncker plan should not be hindered by excess red tape. Malta has proposed five projects with Muscat insisted that the European Commission must give added importance to small countries, such as Malta, who are on the periphery.

He also suggested that a development bank should be set up in Malta.

But divisions about the Juncker plan are already visible. According to the proposal, governments contributing to the EFSI would not get into trouble if their contributions resulted in their deficits breaching EU budget rules set out in the Stability and Growth Pact.

German Chancellor Angela Merkel said that member states' contributions to the plan would be treated with flexibility, stressing that the “golden rule” would still need to be observed, referring to the 3% deficit limit obligation set by the Maastricht Treaty.

French President François Hollande emphasised that investments must be accounted for within the Stability and Growth Pact.