SMEs in Juncker's Investment Package
At the end of 2014 the new European Commission under Jean-Claude Juncker announced its plan for an investment package in order to "to get Europe growing again and get more people back to work" (please find the EC's press release and factsheets here).
The most important element of the plan consists in investment guarantees issued by the EU (EC, EIB, EIF) of € 21 billion, which are supposed to leverage approx. € 315 billion of other public and mainly private investments. Of these it is estimated in the plan that € 75 billion shall go to SMEs and mid-cap companies. And this excluded other crucial sectors for investment, like infrastructure (notably broadband and energy networks, transport infrastructure in industrial centres), education, R&D, renewable energy and energy efficiency.
But for which purposes and how would these investments reach (or involve) SMEs?
Up today, the released documents are quite vague on this behalf. They talk about "a partnership" between the EC, the EIB and SMEs to attract investments "fostering EU competitiveness", or "viable projects" with "investments boosting employment, in particular through SMEs (...)". The only more concrete point to be found at this stage is that (the package / the investments) "will also support risk finance for SME and mid-cap companies across Europe".
European Entrepreneurs CEA-PME welcome basically the idea of the Investment Package proposed by Juncker, and especially approve the priority sectors set out. But inevitably as representatives of Europe's Mittelstand (SMEs) we are concerned that:
- the burocratic burdens for SMEs to join the investment plans also with own funds might not be made easier than they are today, what could lead to the fact that only some of the medium sized companies and maybe mid-caps can afford to participate, and that investment conditions (framed by commercial banks in many cases) will not differ from the current ones. In truth, the current situation is that we have an enormous quantity of liquidity on financial markets, but few banks that invest in SME business development project. Risk finance does nearly not exist in Europe, particularily not in nowaday's post-crisis situation.
- credit protection tools of the EIF - as already today - will go mainly to start-ups and promising high technology projects, but "normal" business development or up-scaling projects in traditional sectors will not be taken into account, although they are probably those that assure more employment and stable growth.
- strategic infrastructure projects based on EU investment guarantees and equity, mainly in the hands of national and regional governments might be planned "over the head" of SMEs, that could benefit as contractors, and name the needs of a region or sector more precisely than any public planning offices and local governments would do. The risk is, that only bigger companies will benefit as contractors and might have more chances to influence local, regional or even national governments in the project design. It would therefore require also new legal instruments to pool SMEs that are ready to invest into a sector or a territory, as co-investors/co-owners, as well as the immediate involvement in infrastructural planning of SMEs in the areas or sectors concerned.
(Source: European Commission)
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