Transcript Economic divergence in Europe What has been done and what

What Contributions to the Solution of the Crisis from
the EIB Group?
Debora Revoltella
Director
Economics Department
European Investment Bank
European Investment Bank
Outline
Economic divergence in Europe
What has been done and what needs to be done?
Role of the EIB Group
Conclusions
European Investment Bank
Outline
Economic divergence in Europe
What has been done and what needs to be done?
Role of the EIB Group
Conclusions
European Investment Bank
Very different economic prospects among countries
GDP growth 2012-2013 (avg)
Per capital GDP Euro, 2011
GDP per capita 2011 vs 2008
80
Lithuania
Lithuania
Latvia
Estonia
Poland
Slovakia
Romania
Luxembourg
Malta
Austria
Denmark
Sweden
Ireland
Germany
Bulgaria
Finland
United
Kingdom
France
Czech
Republic
Belgium
Hungary
Netherlands
Cyprus
Slovenia
Italy
Spain
Portugal
Greece
-3.0
Lithuania
Latvia
Estonia
Poland
Slovakia
Romania
Luxembourg
Malta
Austria
Denmark
Sw eden
Ireland
Germany
Bulgaria
Finland
United
France
Czech
Belgium
Hungary
Netherlands
Cyprus
Slovenia
Italy
Spain
Portugal
Greece
-1.0
1.0
3.0
Latvia
Estonia
Poland
Slovakia
Romania
Luxembourg
Malta
Austria
Denmark
Sw eden
Ireland
Germany
Bulgaria
Finland
United
Kingdom
France
Czech
Republic
Belgium
Hungary
Netherlands
Cyprus
Slovenia
Italy
Spain
Portugal
Greece
0
50000
European Investment Bank
90
100
110
120
Clear divergence in terms of cost of risk (and cost of
funding)
10-year benchmark bond yields (in %)
50.0
40.0
30.0
20.0
10.0
Austria
France
Ireland
Portugal
Belgium
Germany
Italy
Spain
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
0.0
Finland
Greece
Netherlands
Source: Datastream
European Investment Bank
Outline
Economic divergence in Europe
What has been done and what needs to be done?
Role of the EIB Group
Conclusions
European Investment Bank
What has been done?
Financial Support programs in Greece, Ireland, Portugal
Greek PSI
Structural reforms all across the EU Periphery
ECB and EBA
ESFS and ESM
EU institutional development, including the Fiscal Compact
and work in progress towards more fiscal discipline
European Investment Bank
What needs to be done?
Implementation of the structural reform in the periphery
Greek dilemma
Banks
Sovereign-banks nexus
Pan-European regulation, supervision, resolution, safety
net
Re-start growth
Create an environment for investment (sovereign / bank
crisis)
Public policies for investment (with long term goals as
drivers)
Fiscal and structural policies (growth friendly public
expenditure, investment friendly tax system, proper
structural policies to allow economic dynamism)
European Investment Bank
Outline
Economic divergence in Europe
What has been done and what needs to be done?
Role of the EIB Group
Conclusions
European Investment Bank
EIB contribution in the crisis context
Gradual return to pre-2008 signature volumes to protect EIB traditional
business model and high-standard credit quality, but the proposed
capital increase might change the situation
29/03/2016
European Investment Bank
10
The EIB – The EU bank
LENDING
Loans
Guarantees
Equity
participation
16/02/2012
BLENDING
ADVISING
Combining EIB
loans and EU
grants
Strong in-house
expertise
Leveraging EU
and Member
States budget
resources
European
European
Investment
Investment
Bank
Bank
Group
Technical and
financial advice
Technical
assistance
initiatives
11
Preserving the EIB group support to
the real economy
Viable projects for long term growth, with potential frontloading for
more short term effects
Better targeting of strategies
EU periphery – to support macroeconomic rebalancing and
export oriented sectors
Core-Europe – towards more value added activities
Areas of expertise remain:
Infrastructure, R&DI, SMEs, Climate action
Potential new focus to address clear bottlenecks due to the
crisis (Trade Finance)
29/03/2016
European Investment Bank
12
Preserving the EIB group support to
the real economy
Infrastructure
Projects with long term effects, potentially being frontloaded
TENs and Broadband
Projects in the EU periphery to support macroeconomic
adjustment (export) and in NMSs to address existing
bottlenecks
Consider increasing the share of EIB financing
R&DI
Direct companies financing (potentially expanding scope)
Human capital and education
Venture capital, Risk sharing mechanisms
29/03/2016
European Investment Bank
13
Preserving the EIB group support to
the real economy
SMEs – via banks, with clear constraints
Climate action
Trade Finance
With new instruments for risk sharing
or leveraging
Using EU Funds as first loss guarantee
Project Bonds
29/03/2016
European Investment Bank
14
Outline
Economic divergence in Europe
What has been done and what needs to be done?
Role of the EIB Group
Conclusions
European Investment Bank
Conclusion
European economic situation remains challenging
Steps have been taken, but more Europe is needed
Restarting growth is imperative
The EIB can play a role
European Investment Bank