France says the EU must inject up to 80 billion euros of “real money” into the flagging European economy, warning that a big investment plan being drawn up in Brussels risks flopping if enough hard cash is not used to stimulate demand, reports The Financial Times.
Jean-Claude Juncker, the new head of the European Commission, is next week expected to unveil a 300-billion-euro investment programme for the next three years aimed at boosting growth through infrastructure and other projects.
“I fear that [the plan] could end up being disappointing. I don’t have any evidence of that, but I am worried,” said Emmanuel Macron, France’s youthful economy minister and a key figure in President François Hollande’s efforts to fire up the country’s faltering economic performance.
“I am not pessimistic, but the natural tendency of a tired ecosystem is to under-deliver,” the former Rothschild banker told the Financial Times during a visit to London. “We can’t afford to under-deliver. The political and economic situation demands some sort of shock.”
Mr Macron said France wanted the EU to come up with 60-80 billion euros in cash as part of the overall plan – far more than is currently under consideration – to directly finance investments or provide equity capital for projects. “I’m convinced we need real money and we need to use it in an effective way,” he said.
He proposed a new independent entity to oversee what some are calling a “New Deal”. The overseer would increase the fund’s firepower by raising debt on the markets to fund investments in projects such as fibre optic networks and renewable energy. It would also set up panels of European experts to select projects after a competitive process.
But EU officials briefed on Mr Juncker’s plan said there was unlikely to be any new money. Instead, only existing public resources will be used, with the hope that this will attract private capital to bolster the fund.
Although the commission is touting a 300-billion-euro investment plan, officials say this refers to its expected impact on the overall economy – not the amount of public and private money that will be raised.
Mr Macron, who sought British chancellor George Osborne’s backing in a meeting on Tuesday, said current plans risked being too reliant on “fake money”. He said a 2012 EU growth plan based on soft loans – strongly backed by Mr Hollande at the time – had not been fully effective.
Mr Macron, 36, is the main figure spearheading Mr Hollande’s belated reform effort, along with Prime Minister Manuel Valls. Formerly the president’s top economic adviser at the Elysée Palace, Mr Macron was moved to the economy ministry in late August following the ouster of his predecessor, the fiery leftist Arnaud Montebourg.
Firmly on the liberal wing of the ruling Socialist party, he is preparing legislation to loosen restrictions in areas of the economy ranging from retail opening hours to labour market rigidities. These will complement Mr Hollande’s three-year plan for 40 billion euros in business tax relief and €50bn in public spending cuts.