Your Excellencies, ladies and gentlemen,
I am delighted to be back in Riga today to share with you my views about the role of the European Investment Bank in rebooting the EU’s economy. As you know, Latvia played a major role during its EU Presidency last year in the establishment of the European Fund for Strategic Investments. This fund, EFSI, is now being implemented at the EIB.
I thank our Latvian colleagues for the excellent cooperation in this process.
Ladies and gentlemen, Europe’s competitiveness suffers from a history of underinvestment in important areas, inefficient and fragmented financial markets, and institutional barriers. Seven years of crisis undermined confidence, lowered aggregate investment, and further aggravated structural investment gaps.
In the EU, the level of investment in 2015 was still about 3% below the pre-crisis level (of 2008). For Latvia in particular the figure is even more alarming. Here, the level of investment in 2015 was 30% below the pre-crisis level.
The overall European investment requirement is massive. A recent study by EIB economists shows that we need:
• an additional EUR 130 billion a year to meet the EU’s target of spending 3% of GDP on research and development, which would take us close to the R&D investment ratios of other leading economies;
• EUR 35 billion a year to match US venture capital financing;
• EUR 10 billion a year for state-of-the-art education facilities;
• and tens of billions of euros a year to upgrade Europe’s energy, transport and telecommunications infrastructure.
If anyone wonders why Europe needs to integrate further, the scale of this challenge is the answer. No European country could meet it alone. And that is where the EIB comes in and can make a difference.
A look at European investment figures shows us how. In 2015, overall European investment was around EUR 2.8 trillion. EIB lending (in terms of signatures) was almost EUR 70 billion, which is about 2.5% of overall investment.
As the EU bank, we have continued to increase our financing to contribute to Europe’s economic recovery and meet the investment need. EIB lending as a share of total European investment increased from 1.3% in 2007 to 2.5% in 2015.
In 2015 alone, the EIB provided EUR 70 billion in finance for European projects and companies in our four priority areas: SMEs and midcaps, innovation, infrastructure and the environment. This supported investment of over EUR 208 billion.
However, it is a time of great change at the European Investment Bank. New challenges have been presented to us in the form of the Investment Plan for Europe. EFSI is one of the Investment Plan’s three pillars.
EFSI will enable the EIB Group to step up its provision of much-needed risk-bearing financial products. Through EFSI, the EIB will encourage the launch of economically valuable but risky projects. This will make the projects attractive for wary investors and give recovery a boost at a critical junction.
And the EIB has acted rapidly. We launched the first investments under EFSI last April, even before the EFSI structures were in place. As of today, the EIB Group has approved 145 EFSI loans and guarantees.
We plan to continue launching new products and tools in the course of this year to ensure that EFSI stays on track and achieves maximum impact in all 28 EU Member States.
With regard to Latvia, we are in active discussions with potential beneficiaries for EFSI-backed financing. We aim to report this year on the first EFSI deals in Latvia.
However, it is crucial to remember that the Investment Plan for Europe is more than just EFSI.
Higher-risk investments will only make a real difference if the other aspects of the Investment Plan for Europe also succeed: First, the establishment of additional advisory capacities and, second, the removal of regulatory barriers to investment at national and EU levels.
Strengthened advisory services, through the European Investment Advisory Hub, are critical so that more innovative projects can attract funding. The Hub is under the responsibility of the EIB. It is now fully operational, to provide quality advice to project promoters, both public and private.
But we also urgently need regulatory reforms and the completion of the internal market to make Europe truly investment-friendly.
Europe’s problem is not cash, but a genuine market failure in risk-taking. We can only cure this by removing regulatory redundancy and fragmentation of the internal market.
On its own, financing from the EIB will not be enough to cover Europe’s investment gap – no single entity or plan can do that.
What we need is momentum behind new investment and risk-taking to make sure money is put to work.
We look forward to playing a significant role in this effort that is crucial to the future well-being of all Europeans.
Thank you for your attention.