September 10 ,2014 | by Hari Sri

Germany and France to kick-start €300 billion European investment push

In line with plan outlined by European Commission president Jean-Claude Juncker, Germany and France are joining forces to push towards a European investment programme.

The eurozone’s struggles have been well-documented over the past few years since the financial crisis, but a new push from France and Germany could see a renewed period of investment across the European Union.

Bloomberg reports that government officials have confirmed that France and Germany are working together on proposals to involve the European Investment Bank (EIB) in granting loans to businesses. Apparently, the initiative is due to be presented to a meeting of finance ministers from across the bloc’s member states on Friday, 12 September.

 

It is believed the plans would then pave the way for an ambitious €300 billion investment plan that was outlined by European Commission president Jean-Claude Juncker in July.

EU leaders are due to meet on 6 October discuss how they can stimulate growth, with the aim of signing off on the new investment plan by the end of that month.

According to Bloomberg’s sources, those proposals will highlight areas where there are widening investment gaps across Europe, in sectors such as transport, broadband and energy. They will then set out a road map for EIB to begin granting investment loans as part of Mr Juncker’s project.

France and Germany have not always seen eye to eye on how best to stimulate growth across Europe. As the EU’s largest economy, Germany has withstood the financial crisis and its aftermath much better than its neighbour and has generally been averse to many of the ideas put forward in the past to kick-start the economy.

 

Both France and Germany are anxious to avoid a round of quantitative easing from the European Central Bank (ECB), though speculation is rife that this could be ECB president Mario Draghi’s next move.

They definitely don’t plan to guarantee any asset purchases. Yet with low inflation and fairly weak economic prospects in the union, it’s clear that something has to be done.

For Angela Merkel and Francois Hollande, investment is preferable to bond-buying as a means of getting Europe up and running again. Berlin and Paris are also both working separately on plans to attract private sector investment. But any moves to increase investment and promote growth across Europe are sure to be welcomed by businesses.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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