EUROPEAN UNION leaders have agreed a €120 billion stimulus package in an effort to kickstart economic growth in the continent.
The European Investment Bank will be given more cash to lend out, while other unused funds will be redeployed, under terms agreed by leaders last night – a move overshadowed by the later developments on Ireland’s bank debt.
The European Investment Bank’s lending capacity will be increased by around €60 billion through a €10 billion injection of new capital, bringing its total capital up to €242 billion and its lending power to around €1.5 trillion.
Another €60 billion will be redirected from other areas, with €55 billion being directed from unspent youth employment schemes and €5 billion being invested in ‘project bonds’, a model which had been keenly supported by Enda Kenny.
“We have prepared the ground on how to stimulate growth earlier this year,” European Council president Herman van Rompuy said, adding: “It is not just about injecting money.
Growth is the overriding concern in every aspect of our work – be it improving the single market, tackling unemployment or promoting trade and innovation. The growth agenda is a sign of our unrelenting commitment.
Van Rompuy said that although the investment package was the equivalent of only 1 per cent of European Union GDP, it would “make a real difference” because it would directly finance thousands of investments across the continent to help people gain employment or upgrade their skills.
The EIB’s investments affect all 27 EU member states, and not just the 17 who use the euro.
The prospect of the stimulus package had been virtually guaranteed after the leaders of France, Germany, Spain and Italy had agreed to lobby for the plan in a mini-summit last week.