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IPE special report May 2018

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Juncker's investment plan gets lukewarm reception at AEIP event

Investment experts at a meeting organised by the European Association of Paritarian Institutions (AEIP) in Brussels have criticised the EU’s so-called Juncker plan, which they said would be of less use to pension funds than originally hoped.

Speakers at the event – entitled ‘Long-term Investment and the Juncker Plan: Which Roles for Pension Funds, Social Insurers & Other Institutional Investors?’ – pointed to the shortage of suitable projects in EU president Jean-Claude Juncker’s €315bn investment plan.

Dominique de Crayencour, secretary-general of the European Long-Term Investors Association, said there was plenty of money available for investment but not enough outlets.  

On the much-vaunted cross-border infrastructure development theme, he argued that “difficulties” were not fund-related but rather down the fact different countries too often failed to agree on a particular need.

And negotiations, he added, could take years.

What could help institutional investors, he suggested, was the establishment of a “pipeline” of suitable projects.

This could, for example, include small-scale energy-efficiency projects.

De Crayencour said this could make these projects more attractive for investors, as local authorities “do not have a clue” about the financial packaging of such deals.

Meanwhile, Michael Smyth, a member of the European Economic and Social Committee (EESC), said the European Commission – which “can’t afford a failure at the present stage” – was taking a big risk with the Juncker plan.

Smyth drew a parallel with the the Stability and Growth Pact (SGP), going back a decade or so.

“Does anyone remember [that]?” he asked.

The EESC recently published a draft “opinion” on the EU Investment Plan, as well as on the European Fund for Strategic Investments.

While the opinion welcomed the Plan as “as step into the right direction”, it also questioned whether a “pipeline of projects can be developed that offer returns that attract institutional investors”.

On the topic of shortage of good projects, Bruno Gabellieri, the AEIP’s secretary-general and chair for the meeting, argued that the European Commission’s approach had been “top down” and that a more “bottom-up” approach was needed.   

Further criticism of the EU policy came from James Watson, director of Business Europe, who raised the question of “additionality” related to the Juncker plan.

His point was that projects earmarked in the plan could well have attained the funding required anyway.

Not all speakers, however, took the critical line. 

Renato Guerriero, vice-president at the AEIP, listed points in favour of pension funds investing in infrastructure projects, citing employment and growth.

He also pointed to growing pressure for more of this type of investment, in line with Northern Europe, Canada and Australia.

Guerriero suggested that, where large infrastructure projects were concerned, small funds could join together in order to get involved.

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