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Daniel Gros, "The Juncker Plan: from €21 to €315 billion, through smoke and mirrors"

What is the precise problem to be solved by the ‘Juncker plan’? It is the ‘investment gap’, which is estimated by the European Commission to be around €300 billion. On the face of it, the €315 billion euro announced by Juncker as additional investment, even if distributed over three years, should make a material difference.

However, we should also be careful not to compare apples with oranges, or rather pumpkins with oranges, in this case. Total investment constitutes the pumpkin, which amounts to about €2,600 billion per annum for the EU28. But the Juncker plan mainly targets infrastructure investment, which is comparable to an orange because it accounts for only about 10% of all investment (the remaining 90% is private) and runs to about €260 billion per annum. If the aim of the Juncker plan is to increase public investment by €315 billion over three years we should see infrastructure spending increase by €100 billion per annum, oralmost 40% above its present level. This would appear to be wishful thinking, however, because all large projects require years of planning and the main obstacles are not usually financing but the ‘NIMBY’ complex, in all its various forms.Continue reading here.

CEPS Commentary The Juncker Plan D Gros.pdf618.36 KB