Since the 2008 economic crisis, Europe has undergone, and is undergoing, a remarkable change in its political fabric. The political world, especially people's outlook on what were basic western tenets of democracy, has been shaken to the core. The spread of new ideas fuelled not just by the economic crisis but also by an immigration onslaught, has led people and some politicians to become more inward looking with the resultant rise of dangerous demagoguery. Extreme ideas which used to belong to the lexicon of the fringes suddenly became more acceptable, with people who spout these thoughts becoming electable and elected.
The core problem has remained economic: stagnation in economies, in job creation and wealth, leading to loss of faith in the political status quo, in the traditional ruling classes and in values and ideals people previously took for granted.
The new political reality will hardly go away no matter what measure - even if outrageously successful - is taken. The political class has suffered major blows and the EU was rocked to its foundation with a barely-avoided Grexit but with a looming Brexit which will drag it and most other Europeans into unchartered, unknown seas. The fear is that Brexit will not only cause irreparable harm but will be toxic, with other countries following Britain's lead.
This is why it was salutary and most welcome to see the EU come up with a very strong programme to channel funds to projects throughout Europe. The EU, often touted as the reason for our problems by the new demagogues and even some traditional politicians, has, since 2015, pushed its agenda for a turnaround in the economic situation. Moreover, this time these are certainly not just words but action. The EU will also provide reassurance to other financiers who offer co-financing.
One of the biggest problems the EU faces is dissemination of its ideas, ideals and available funds and schemes. Adopted in 2014 and launched in July 2015, the Investment Plan for Europe aims to mobilise €315 billion in additional investment until 2018. The Junker plan for economic revival is excellent news and the commission is doing its utmost to reach out not just to the public in general but also to entrepreneurs, big and small, and financial institutions.
A Maltese delegation, consisting of the heads of Malta Business Bureau (MBB) and the Malta Chamber of Commerce, Enterprise and Industry, a cross-section of representatives from business, banks, business advisories, public agencies, government officials and journalists, was hosted to a familiarisation tour at the EU Commission.
The visit was organised by the European Commission representation in Malta in collaboration with MBB and most ably led by Ivan Ebejer from the European Commission representation and Joe Tanti from MBB. A lunch meeting with Karmenu Vella, the EU Commissioner in charge of Environment, Maritime Affairs and Fisheries, was also organised. The day and a half visit was packed with meetings and discussions and the objectives of the economic plan were explained in detail to ensure that the message is passed on to the Maltese.
It was noteworthy that one of the speakers' first words was that the EU is going through a tough time and that what is usually seen as an ivory tower is really trying to change and reach out.
The man-in-the-street sees the EU as a mammoth impossible to understand or tame. It has a language all of its own, with myriad acronyms bandied about rather like an esoteric mantra which makes the ones who do not understand feel part of the unwashed. (See box for glossary of acronyms).
The biggest success of the Investment Plan for Europe has been the take-up by SMEs. This is very encouraging news and makes the European dimension of the economic future look more positive - after all a whopping 99 per cent of businesses in Europe are SMEs, the major contributors to economic growth and job creation in Europe.
Malta too is mainly SME-based but unfortunately lags behind in take-up of available funds and it is disheartening to see that in all tables of take-up of schemes we are always at the bottom even when the tables are worked on a per-capita basis. Malta of course has smaller SMEs than most other countries. These micro-companies usually lack the resources to research what is available.
This is where organisations like the MBB and the Chamber of Commerce can be a great help by finding not just the right scheme or fund to tap into, but also sourcing local or foreign entities which could group together to share resources and future plans for growth and expansion.
The Investment Plan for Europe also looks at better dissemination of its own resources and has launched a portal, the European Investment Project Portal (EIPP). This portal provides a pipeline of investable projects in the EU where investors can see what opportunities exist and project promoters can submit projects to be matched with relevant investment opportunities. The plan has also strengthened advisory services by launching the European Investment Advisory Hub (EIAH), providing a single access point in support of project identification, development and implementation, access to finance and other useful resources.
Operations already approved under the EU plan represent a total financing volume of €25 billion. These are expected to trigger total investments of €140 billion.
The search for investment and growth is all encompassing but the main impetus will be on sustainable growth, with a further aim to help transition to a resource-efficient, circular and zero-carbon economy.
In today's world, borrowing costs remain supportive to growth due to exceptionally monetary policy but the overall feeling is that investors with liquidity lack faith in projects. They are afraid to take the plunge in new or relatively new areas and the EU is doing its utmost to turn this around, to get all on board to fight the economic malaise that only generates instability. It might not be enough but it is a great step in the right direction.
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