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InvestEU: the new overarching EU investment platform

If we kept some money inside a box, it is obvious that after a period of time we would have exactly the same amount that we kept- provided that we do not make use of it to buy something, which is the most difficult part.But if we don’t spend it, that money will not increase its value; however, if it is invested in the appropriate companies, it can greatly multiply its value. Organizations are completely aware of this fact, that is why they offer financial instruments to promote innovation and favor the development of enterprises. In the case of the EU, we find the InvestEU Fund, which has been created to provide long-term funding to support and promote a sustainable recovery.

What is InvestEU?

The InvestEU Fund is the combination of thirteen centrally managed EU financial instruments and the European Fund for Strategic Investments (EFSI) into one instrument. 

€26.2 billion will be allocated to InvestEU aiming at mobilising public and private investment, and it will also back the investment projects of the European Investment Bank (EIB) Group and other financial partners, as well as increase their risk-bearing capacity. This budget will be distributed across four windows

  1. Sustainable Infrastructure (sustainable energy, digital connectivity, transport, etc.): €9.9 billion. 
  2. Research, Innovation and Digitisation (digitisation of industry, scaling up larger innovative companies, artificial intelligence, etc.): €6.6 billion. 
  3. SME (Facilitating access to finance SMEs, small mid-cap companies, etc.): €6.9 billion. 
  4. Social Investment and Skills (projects in skills, education, training, social housing, etc.): €2.8 billion. 

At least 30% of the investments will contribute to climate objectives, and, within the sustainable infrastructure window, no less than 60% of the investment shall contribute to meeting the Union objectives on climate and environment

What makes InvestEU important?

Figure 2

This program makes funding for investment projects in Europe simpler, more efficient and more flexible since it covers several EU financial instruments aimed at supporting investment in the EU.

It helps mobilise private investments for the EU’s policy priorities, for instance, the European Green Deal and the digital transition. Furthermore, it provides support to companies, which is a decisive factor in view of the ongoing crisis.

The main goal is for InvestEU to be an asset in the post-crisis recovery, since EU businesses can struggle to obtain the necessary funding and the Member States may not be able to provide this support. Also, companies affected by the crisis will be supported as well, and those SMEs that had to face significant risks because of the Covid-19 pandemic may receive capital support.

What do SMEs need to benefit from InvestEU?

Potential projects aiming at benefiting from InvestEU must address market failures or investment gaps and be economically viable. In addition, they also need EU backing to start. Another condition is that they need to achieve a multiplier effect and where possible crowd-in private investment. Finally, it is necessary that they help meet EU policy objectives.Both European and non-EU countries can take part in this initiative, as long as they are members of the European Free Trade Association. InvestEU is also open to EU-acceding countries, candidates and potential candidates, countries covered by the European Neighbourhood Policy and other countries following the conditions between the Union and those countries. These third countries must provide their full contribution to financial products in cash.

Long-term objective

Thanks to this new fund, the EU intends to promote and boost cooperation in the fields of research and innovation, as well as support SMEs, to move towards a more sustainable future.

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