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Report identifies €1.3tn ‘pipeline of potential investment projects’ for EU

Out-Law News | 16 Dec 2014 | 11:40 am | 2 min. read

A new report has identified 2,000 potential infrastructure and related projects for investment worth around €1.3 trillion, the European Commission has said.

A new report has identified 2,000 potential infrastructure and related projects for investment worth around €1.3 trillion, the European Commission has said.

According to the 'EU Task Force on Investment' report, unveiled on 9 December, “there is significant potential for investment in Europe”. Some €500 billion worth of projects “could potentially be implemented over the next three years”, the report said.

The Commission said the aim of the report is to create a “pipeline of trustworthy projects which will restore investor confidence and unlock private sector investment to complement finance” from EU member states and the bloc as a whole.

“This is an essential measure to restore confidence and encourage investors to invest and build expertise in Europe. The lack of credible and transparent information about projects is currently a major barrier to investment,” the Commission said. “Projects may successfully access funding from the private sector alone, through member states or other sources of EU funding, including the newly created European Fund for Strategic Investments (EFSI).”

However, the Commission said the lists of projects are only “a starting point” and “do not exclude other potentially viable investments from being included at any given time”. Any project identified by the Task Force “will have to be assessed thoroughly before being considered for finance”.

Infrastructure expert Richard Laudy of Pinsent Masons, the law firm behind Out-Law.com, said: “The EU Task Force report is very much to be welcomed. One of the great frustrations for investors is the absence of a credible pipeline of potential projects and if this report does what it sets out to do, then it has the potential to provide a real boost to EU Infrastructure. “

Laudy said: “With much of the EU suffering from varying degrees of fiscal challenge, investment from sources other than government sources is increasingly necessary. However, even if the investors can be found, there will still be questions around how the investment is to be funded.”

“Investors want a return on their money and this means funding the investment through taxation or increased prices,” Laudy said. “With EU households still largely cash strapped, governments will face a dilemma as to how to fund the investment they desperately need. So whilst the report itself is to be welcomed, a sustainable solution will require some careful thought around funding models and the addressing of some potential political sensitivities.”

The Commission said there are “no automatic financing commitments” for any of the projects identified, which it said are “not entitled to preferred access to national or European resources”.

EU commissioner for jobs, growth, investment and competitiveness Jyrki Katainen said the report “shows there are huge investment needs and viable projects that could lift economic growth and open up more job opportunities in Europe.”

Katainen said: “There has been a severe disconnect between the available investment and credible projects on the ground. We are now taking a big step to restore investor confidence and connect the two.”

The report follows Commission plans announced last month for the creation of a new investment fund “to mobilise at least €315 billion of additional investment over the next three years”.

The new fund will be largely “guaranteed by public money” to support strategic investments in infrastructure, “notably broadband and energy networks, transport in industrial centres, as well as education, research and development, renewable energy and energy efficiency”, the Commission said.