EU to announce €50 billion investment in new infrastructure projects

We now find ourselves in the digital age, where most business operations are conducted using technological advancements and applications that have simplified and made performing such tasks easier and more convenient. There is also the fact that there is huge money to be found in such investments.

In fact, the European Union (EU) is planning to announce a €50 billion infrastructure investment in the digital, energy, and transport sectors this Wednesday. This multi-billion investment will be able to modernise and introduce further developments to digital, energy and transport networks, creating hundreds of thousands of jobs in the process.

This yet-to-be-announced EU scheme envisions utilising bonds backed by the European Investment Bank (EIB) for added funding that member governments cannot provide. The EU also hopes that the project will be able to attract private investors as well.

Philippe Maystadt, the president of the EIB, stated: “Infrastructure finance in Europe has suffered since the financial crisis and banks face new constraints on long term lending. Project bonds could be a way to attract capital from other investors, such as pension funds and insurance companies, and be a useful addition to traditional financing options.”

The infrastructure development would require funds of up to €1.5-2tn for trans-European transport networks, energy sector projects, and telecommunication technologies development. Approximately €32 billion of the funds will go to funding the transport projects, while €9 billion will be set aside for the energy sector, which includes smart grids and broadband infrastructure and network developments.

Neelie Kroes, the digital agenda commissioner of the European Commission, has stated that the allocated €7 billion that will go into funding high-speed broadband services will be enough to leverage over €50 billion in private and public investments. The amount will be released between 2014 and 2020.

Kroes said that the credit rating of the project will be improved, as the money will be released in the form of equity, debt, or guarantees as provided by the EU and EIB. This comes as good news amid the recent announcement by Ofcom that the 4G spectrum auction is going to be delayed further next year, which has been predicted to cause a negative impact for UK residents and businesses.

Source – The Guardian