Ms Barbara Nolan:

I thank the Chair for inviting us. We are a double act. I will begin with the investment plan before passing the floor to Mr. O'Riordan to present the second point, which is the European semester and the annual growth survey.

I would like to start with a few introductory words about the new Commission. As members know, 2014 has been a year of major change in the European Union. The ball started rolling with the European Parliament elections in May. We had changes at the helm of the European Council, the European Parliament and the European Commission and have basically had a major overhaul of the main personalities driving the EU agenda.
The new European Commission President, Jean-Claude Junker, has made it clear that he does not intend it to be business as usual. He wants to make a fresh start and to focus the European Union's activities on the key challenges faced by its citizens. He has put together a ten-point agenda, concentrating on the areas in which he believes concrete action should be taken during his term of office. The key message from the new Commission is that the European Union needs to be bigger and more ambitious on the big things and smaller and more modest on the small things. Basically, a stricter application of the principle of subsidiarity should be applied. That is our leitmotiffor going forward.
What are the priorities? We are going to discuss the first big priority today - a new boost for jobs, growth and investment. The investment plan is central to this. The biggest challenge is the economy. We have low growth and high unemployment across the EU. Youth unemployment, in particular, is of major concern. The second priority is to have a more connected digital single market. The third priority is to have a more resilient energy Union, with a forward-looking climate change policy. The fourth priority is a deeper and fairer Internal Market with a strengthened industrial base. The fifth priority is to have a deeper and fairer economic and monetary union.
I would like to underline to the committee that President Junker has been clear in the importance he attaches to the social agenda. The social agenda has not perhaps been to the fore over recent years as Europe has tried to manage the crisis, but it is very much back in vogue. The President has told the European Parliament that the stability of our single currency and the solidity of public finances are as important to him as social fairness in implementing the necessary structural reforms. He has, on a number of occasions, underlined that he is a strong believer in the social market economy. I would like to send that message very clearly because it is an important highlight of the new Commission.
Another priority is a reasonable and balanced free trade agreement with the US. Justice and fundamental rights based on mutual trust is another priority. Developing a new policy on migration is another priority as migration issues are of major concern. Another priority is for the EU to be a stronger global actor. Creating a Union of democratic change is another priority. That is a broad brush of the new priorities, the new Commission and where the emphasis lies.
I will move on to the investment plan, adopted by the Commission two weeks ago. After years of stagnation, there are still major challenges to get Europe back on the road to prosperity. The investment plan is designed to help to address this. The new Commission only took office on 1 November and three weeks into its term, it has already launched its new €315 billion investment plan. The aim is basically to kick-start investment, growth and jobs in Europe.
This plan has been developed in close co-operation with the European Investment Bank, which is the largest multilateral lender and borrower in the world. With the sovereign debt crisis over, there is a need for a fresh impetus to unlock investment. While investment is taking off in the US, Europe is lagging far behind. Despite the fact there is ample liquidity in Europe, investment levels are €440 billion below their peak in 2007. This is holding the EU back and is leading to sluggish recovery and only very marginal changes in the high unemployment levels we have currently.
The investment plan is taking a new approach. Its focus is mainly on capturing riskier projects that would not normally attract support. This is an innovative approach going beyond what we normally do in existing EU programmes and also going beyond the traditional activities of the European Investment Bank. In essence, it changes the way public money is used. Public money will not be used as grants in this particular plan but rather it will be used to leverage private funds. It will provide a guarantee to investors to help to tap into the liquidity that is already there. This block of funding aims to remove the fear factor or the reticence private investors have in funding major projects. It aims to remove that fear factor in order to help unlock the funds they have available.
The plan is built on three strands. The first is the creation of a European fund for strategic investments, guaranteed with public money. This is to mobilise the €315 billion of additional investment by 2017. The fund will be hosted by the European Investment Bank and co-funded by the European Investment Bank and the European Commission. It will provide partial risk protection and will complement current activities by focusing exclusively on strategic investments that are necessary for Europe's return to growth but investments that have a different risk profile to projects currently funded by the European Investment Bank. We are not trying to displace one sort of funding with another but are trying to tackle or open up a new seam of projects that would never be funded without giving some kind of guarantee to get them off the ground.
The fund is supposed to be operational by the middle of next year. The EU will provide a budget of €16 billion in funding while the European Investment Bank will contribute an additional €5 billion in risk-bearing capacity. However, this is only the beginning. Based on prudent assumptions and historical experience, we expect this seed funding to turn into a €315 billion investment in the real economy because the multiplier effect is calculated as 1:15, so for every €1 of public funding mobilised in the fund, we anticipate that €15 of total investment which would otherwise not have happened will be generated. The advice the Commission has had from the European Investment Bank and other banking and investment experts is that it is a reasonable assumption to make and that this could be the multiplier effect of the initial investment.
The second part of the plan, which I think will be particularly interesting to members, is the establishment of a pipeline of projects in areas of strategic importance, such as broadband, energy networks, transport infrastructure, education, research and innovation and energy efficiency.

They are the broad areas which obviously cover a whole swathe of activity.
Investment in small and medium enterprises and mid-cap companies will be a particular target. SME investment in Ireland took a big hit during the crisis and this plan has the potential to help to address that issue. The first list of potential projects is due to be announced later this month. This list is currently being developed by a task force chaired by the European Investment Bank, EIB and the European Commission with the member states feeding into this. As I understand it, it is primarily officials from the Department of Finance who are feeding in the Irish element of this. I must stress, however, that being on the list is not a guarantee of funding and not being on the list does not mean a project is ineligible either. However, we hope the list will provide relevant and transparent information about projects that may be of interest to investors.
On the question of how projects are selected, funds will be channelled to viable projects with real added value for the European social market economy. Such projects are in areas like digital technology, energy, education and so forth and have the potential to boost employment. There are three key criteria used in the assessment of projects. The first is the potential for EU-wide added value and whether the projects support EU global objectives. The second is economic viability and value which means projects with high socio-economic returns will be prioritised. The third criteria is whether the projects are shovel ready, that is, ready to start within the next three years at the latest. There must be a reasonable expectation of capital expenditure in the 2015 to 2017 period. Projects must have the ability to leverage funds and draw in private investment. The money provided by us is only the initial funding. The projects must be able to stand on their own two feet, so to speak, and be able to attract private sector investment to achieve the multiplier effect to which I referred.
The fund will have a dedicated committee consisting of experts who will validate every project from a commercial and societal perspective. The identification of specific projects will be carried out by those close to the situation on the ground, for example, by regional and local authorities and those operating in a particular market. The fund should be operational by the middle of 2015. The fund does not foresee any division or pre-allocation by member state or sector. There is no a priori earmarking as would be the case with, for example, Structural Funds. Projects will be chosen according to their viability and the process is not political but technical in nature.
The final strand of the investment plan is a roadmap to make Europe more attractive to investors by removing bottlenecks and establishing a more stable business-friendly and predictable regulatory environment. The establishment of a genuine single market in energy, the digital sphere, capital, public procurement and services is part of this. The new emphasis on promoting investment is a key element of the broader economic strategy of the European Commission which is based on the three inter-related elements of the investment plan, structural reform and fiscal responsibility. Mr. O'Riordan will focus on the second and third elements when he addresses the semester and annual growth survey.