There are a number of funding options underway in the EU which will play a major role in its economic recovery.

The main initiative will derive from the EU Budget itself. The European Council and the European Parliament have agreed on the Multi-annual Financial Framework, covering the EU Budget for the programming period 2014 – 2020, which will serve as the main EU budgetary tool to lift Europe out of the crisis, fostering economic growth and opportunities for business expansion.

“The breakthrough in the negotiations on the 2014-2020 financial period (MFF) is a source of immense relief and satisfaction for me.

“… As Europe is working its way out of the crisis, we need a financial framework for the next seven years, a good financial framework, to help Europe regain confidence in its economic future and find its way back to growth,” EU Budget Commissioner Janusz Lewandowski said.

“The proposed financial framework includes new initiatives to help young Europeans find jobs, to help small and medium enterprises gain access to badly needed investment funds.”

The EU Budget, worth almost €1,000 billion, is intended to be a catalyst for growth and jobs across Europe, notably by leveraging productivity and human capital investment, in line with the Europe 2020 strategy.

The European Commission is giving particular importance to the usage of financial engineering instruments to leverage EU funds with private financing to address market failures in the area of access to finance. The advantage of financial engineering instruments is that they create a significant multiplier effect; for example, for every €1 of EU taxpayers’ money, over €6 of private funds is made available. Usually, the multiplier effect can be much larger.

The European Investment Bank has also got an enhanced role. Under the umbrella of the Growth and Employment Facility, up to €60 billion will be added to the lending activity of the EIB in the period 2013-2015, representing a 49 per cent increase compared to lending that was planned for the EU before the capital increase. The additional volume hinges on continued significant access to capital markets, relying on the sustained ability to cater to both EU and non-EU investors.

In recent years, the Commission and the EIB Group have developed a number of joint financial instruments, where EIB Group financing is blended with EU budgetary resources and advisory services are provided.

The blending of EU budget funds and EIB own funds to support priority objectives under the Europe 2020 strategy creates high value-added as it generates a leverage effect on EU budgetary resources, implying a greater impact for final beneficiaries.

The EU Budget, worth almost €1,000 billion, is intended to be a catalyst for growth and jobs across Europe

Lack of finance is only one potential barrier to investment and employment in many countries and sectors. Weak administrative and project management capacity can often impair projects preparation and delay investment implementation. Technical and financial advice is an efficient means to help project delivery, speeding up disbursements and real investment. Enhanced advisory services therefore support the EIB’s lending in key countries and regions that require such support.

The EIB’s additional activity is expected to unlock around €180 billion of additional investments across the EU.

The additional lending will support viable projects in all member states with a particular focus on innovation and skills, SME access to finance; resource efficiency; and strategic infrastructures.

The third boost to the European economy should come from the European Regional Development Fund (ERDF). In the publication entitled Integrated Sustainable Urban Development Cohesion Policy 2014 -2020, the European Commission states that as a basic principle, the ERDF should support sustainable urban development through integrated strategies that tackle the economic, environmental, climate and social challenges of the urban areas.

Why urban regeneration? Some 68 per cent of the EU population lives in a metropolitan region, and these regions generate 67 per cent of the EU’s GDP. However, they are also the places where persistent problems such as unemployment, segregation and poverty are at their most severe.

The policies pursued in relation to urban areas therefore have a wider significance for the EU as a whole.

A minimum of five per cent of the ERDF resources allocated to every member state will be invested in integrated actions for sustainable urban development implemented through the Integrated Territorial Investment (ITI) tool, with the management and implementation delegated to cities.

Based on a list of cities prepared by member states, the Commission will establish an Urban Development Platform comprising 300 cities throughout Europe, which will stimulate a more policy-oriented dialogue on urban development between the cities at European level and the Commission.

In order to foster new and innovative solutions in sustainable urban development, at the initiative of the Commission, the ERDF may support innovative actions subject to a ceiling of 0.2 per cent of the total ERDF allocation.

The innovative urban actions shall be urban pilot projects, demonstration projects and related studies of European interest.

Peter James Sant is head of Research and EU Affairs at Bank of Valletta plc. He is also the chairman of the Financial Services section of the Malta Chamber of Commerce, Enterprise and Industry.

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