Squaring the circle – Improving European infrastructure financing
Public sector investment in European infrastructure has been falling for years in the wake of the sovereign debt crisis, with the governments of the EU's 28 Member States investing some 11 percent less in 2013 than they did in 2010. That's not to say that there isn't an urgent need for investment in a range of infrastructure projects. In fact, infrastructure investment needs amount to approximately one trillion euros in key areas such as the expansion of broadband networks, energy grids or transport infrastructure in the period to 2018.
What Europe needs is more private investors who can put their capital into the financing of infrastructure projects to enable even heavily indebted EU countries to make investments in the near term. In spite of high levels of liquidity in the capital markets, private sector investments in EU infrastructure have been very limited so far. This is where the European Commission's initiative to set up the European Fund for Strategic Investments (EFSI) comes into play. The EFSI is the European Commission's new vehicle to provide EUR 21 billion in public funds to mitigate risks for investors in order to catalyze private financing. Its intention is to activate at least EUR 315 billion in private investments by 2017 – some EUR 240 billion of it for infrastructure projects and the remaining EUR 75 billion for investments in SMEs and mid-cap companies.
In this study, Roland Berger Strategy Consultants and United Europe examined the obstacles hindering the private financing of infrastructure in Europe and developed hands-on recommendations for a comprehensive European investment model. It aims to support the successful realization of the EFSI.