As the President of the European Commission has presented the “Juncker Plan” for boosting activity in Europe through investment, which sectors could these investments focus on?
The comprehensive analysis of the investment lag in the eurozone has confirmed the need for a European effort in macro-economic recovery through investments, public or private, initiated very quickly, even though this diagnosis varies by country.
What investment potential can be envisaged in transport, energy, and digital, the three key sectors, under the Juncker plan?
The existing investment potential in these key sectors could reach 120 billion euros per year, over three years, and exceed, by itself, the forecasts of the Juncker plan.
This maximalist amount mainly corresponds to the implementation of an ambitious energy-climate policy.
Thus, regardless of the choices made, the projects will need to undergo a rigorous selection. Given current budget constraints, carefully selecting the sought-after investments, whose social utility must be validated, is imperative: socio-economic evaluation constitutes the appropriate tool, particularly to consider the environmental externalities that justify them today.
The realization of these investments also assumes a good identification of the current obstacles to investment.
The levers of a European investment strategy are both fiscal and regulatory, financial, and based on the selection of future projects.
In the case of public investment, the budget constraint on most European countries is the major obstacle.
For private investment, beyond the overall demand deficit, it may be a lack of available capital or credit for risky investment. Finally, there are regulatory obstacles or those related to the absence of a credible trajectory, such as uncertainty about the carbon price, which weigh on the investments required to combat climate change.
In regulated sectors, the ability of public authorities to credibly engage in the regulatory framework and pricing conditions is essential for businesses to make investments.
A good use of price signals (carbon), standards (building, pollution), and public guarantees could massively trigger investments in the various sectors, without necessarily increasing the reliance on public financing.
