At the Macroeconomic Dialogue, CEEP called today for boosting private and public investment in Europe.
CEEP and the EU social partners welcomed the renewal and empowerment of the European Fund for Strategic Investments (EFSI). “However, it will not be enough to attract investments into what has proved to be the “Cinderella” of the Plan in its first phase: the investment in social infrastructures”, explained CEEP General Secretary Valeria Ronzitti.
“There is no natural appetite for private investors to go there. It calls for a stronger political and public intervention. We encourage Members States to think outside of the box”, continued Ms Ronzitti. Social impact bonds, where private investors provide capital to support the provision of social services with public value, are very good examples of such innovative approach.
Boosting public investment has many positive long-term effects. “An increase in public investment has positive effects, as it can contribute to the economy’s potential output by increasing the stock of public capital. But for that, the fiscal rules need to be adapted”, said Ms Ronzitti. As such, expenditure in education and health care directrly contributes to reinforcing human capital stock, enhancing the supply side of the economy and contributing to growth. Despite this, it is currently considered to be an expenditure rather than an investment.
“We therefore must take a step back and decide collectively which form of expenses are indispensable to our relaunch and should accordingly be supported by the EU and its Member States. This implies an honest and non-dogmatic review of Stability and Growth Pact”, concluded Ms Ronzitti.