Based on a agreement which was confirmed on Thursday, the European Union (EU) will establish a joint fund which could raise up to 315 billion euros in both the private and public sector. The fund will be used to enhance infrastructure, boost employment and stimulate the unions lethargic economy.
“The Junker plan” named after the European Commission President Jean-Claude Juncker who proposed the plan late last year aims to provide financial support for projects across Europe. According to Juncker, the plan will also lower unemployment rates as 1.3 million jobs are expected to be created.
The fund is also expected to attract investors who are still wary of carrying out new projects due to the 2008 financial crisis.
In order to reach a deal, the European Parliament and representatives of the EU states further discussed the amount of cash that would be taken out of the EU budget in order to back the funds “first loss guarantee,” which is expected to be the key driver for investors as initial losses will be covered if a project fails.
EU Vice President Jyrki Katainen urged EU leaders and the European Parliament to formally confirm the plan in June in order to have the European Fund for Strategic Investments (EFSI) “up and running in autumn.”
The project is set to use 21 billion euros from EU institutions.