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The European Commission presented recently an interim evaluation of the EU-wide main investment program called InvestEU, which is designed to facilitate better access to finance both for companies and the Union’s common priorities. Halfway through its lifetime, the InvestEU program has already revealed €218 billion in additional investments: i.e. this way the InvestEU plays a key role in “unlocking investments” paradigm.
Background
The evaluation assesses the functioning of the InvestEU Fund, the use of the EU guarantee, as well as the activities of the InvestEU Advisory Hub and the InvestEU Portal from the launch of their operations until the end of last year; it was concluded in September 2024.
The evaluation was conducted based on such criteria as relevance, effectiveness, additionality, efficiency, the EU added value and coherence.
The interim evaluation confirms the program’s essential role in bridging investment gaps in strategic EU policy priorities and mobilizing private and public investments. InvestEU has provided robust support to the EU economy through a broad range of financial and advisory solutions across all main EU policy areas, such as investments in renewable energy production, clean industrial manufacturing and SMEs competitiveness.
The evaluation has also shown flexibility in response to various crises, addressing emerging policy priorities and investment needs.
Present interim evaluation will be followed by a final evaluation at the end of the InvestEU Program delivery; the final evaluation must be delivered by the end of 2031.
More in: https://commission.europa.eu/about-european-commission/departments-and-executive-agencies/economic-and-financial-affairs/evaluation-reports-economic-and-financial-affairs-policies-and-spending-activities/interim-evaluation-investeu-programme_en
Invest EU program
Launched in 2021, the InvestEU program “unifies” 14 formerly independently managed EU-wide financial instruments and advisory initiatives into a single, cohesive program to give an additional boost to investment, innovation and job creation in the member states.
The program aims to trigger more than €372 billion in additional public and private investment by 2028 using an EU budget guarantee of €26.2 billion to help finance the green, digital and social transition.
This guarantee backs the investments of InvestEU Implementing Partners such as the European Investment Bank Group and other international and national public banks, increasing their risk-bearing capacity.
The program consists of three components: the InvestEU Fund, the InvestEU Portal and the InvestEU Advisory Hub.
Interim evaluation: key findings and lessons learnt
The key findings and lessons acquired from the interim evaluation of the InvestEU Program are covering the following issues:
= Positively advanced implementation: about 90% of the available EU guarantee has been allocated to the 16 implementing partners, including the European Investment Bank (EIB) Group, International Financial Institutions and National Promotional Banks and Institutions. Almost 80% of the allocated guarantee has already been approved. However, the evaluation also finds that the available budget is insufficient compared to the high market demand and significant investment needs, calling for budgetary reinforcements.
= The program is having a meaningful crowding-in effect: i.e. by the end of 2023, it has mobilized around €218 billion in investment, of which 65% came from private sources, with a solid anticipated multiplier effect.
Note on multiple effects: government spending intends to stimulate the economy and causes increase in private spending that additionally supports the economy; hence, the government spending is multiplied by private spending. Basically, it is the Keynesian multiplier’s theory that states’ support for the economy will flourish the more the government spends, and the net effect is greater than the exact amount spent. The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s GDP. In general, economists define fiscal multipliers as the ratio of a change in output to a change in tax revenue or government spending.
More in: https://www.sciencedirect.com/science/article/pii/S0164070423000848
= The program provides clear added value and the EU budget guarantee features high additionality. InvestEU Implementing Partners can engage with higher risk counterparts, deploy riskier financial products or conditions, and finance activities with inherently higher risk, enabling investments that could not otherwise secure market financing on reasonable terms. This enables InvestEU to address significant investment needs and market demands, such as support for the development of innovative technologies and pioneering start-ups.
= InvestEU contributes to building and shaping new markets by investing in emerging technologies (e.g. space, semi-conductors, the blue economy or quantum computing) and European start-ups. It also pioneers new financial products in the market (equity and debt), including guarantees for sustainable SMEs, clean industry as well as affordable housing. InvestEU is thus not only supporting immediate investment needs but laying the ground for the EU’s long-term competitiveness. For instance, InvestEU has increased its support to EU companies in line with strategic EU initiatives such as the European Wind Power Action Plan, the Net-Zero Industry Act and the Critical Raw Materials Act. Furthermore, an Export Credit Guarantee Facility was launched to support exports by European companies to Ukraine.
= The market-based approach of InvestEU, implemented in indirect management across Member States and third countries contributing to it, allows addressing EU policy priorities while aligning interests of Implementing Partners and leveraging private sector finance.
= The program has shown flexibility in addressing emerging policy priorities and investment needs, deploying public funds to de-risk and catalyze investments for SMEs, innovation and digitalisation, sustainable infrastructure and social sectors.
= The support of the InvestEU Advisory Hub, helping project developers with the preparation, development, structuring and implementation of investment projects, was considered crucial for generating project pipelines, including for innovative projects for the green and digital transition, building client capacity and developing new markets, with clear targets for projects that align with EU policy objectives. Beneficiaries of advisory support include SMEs, other corporate entities and public authorities in all EU member states.
= The InvestEU Portal, the online platform connecting EU companies and global investors, has the potential to add value to the wider investment ecosystem through EU funded matchmaking and pitching events.
Citations
= “InvestEU has already proven highly effective in addressing investment gaps and mobilizing public and private investments that boost our competitiveness and growth, promoting innovation and job creation across the EU. This programme adds particular value in achieving our objectives, fostering digital and green transitions, while its flexibility allows us to respond quickly to new and emerging challenges. By aligning private investment with EU policy priorities, InvestEU brings high EU added value and maximizes the impact of EU taxpayers’ money to benefit our businesses and people.”
Valdis Dombrovskis, Executive Vice-President for the EU social-economy.
= “The mid-term evaluation shows that InvestEU has been driving investment, innovation, and job creation across Europe, particularly in the green and digital transition. With €218 billion in public and private investment already mobilized at the end of 2023, we are well on track to deliver on our goal of €372 billion in additional investment by 2026. The success of InvestEU highlights the need to further strengthen and expand this initiative to boost public and private investment and support our common goals.”
Paolo Gentiloni, Commissioner for economic development
Reference and citations from: https://ec.europa.eu/commission/presscorner/detail/da/ip_24_4888