EU leaders have approved an ambitious plan that will see some €315 bln pumped into the European Union, to prop up employment initiatives and revive investments that in turn will make the 28-state economy more competitive.
However, the deal came with reservations and differences from among EU leaders.
European Council President Donald Tusk said on Thursday that there had been agreement on three areas: the establishment of a European fund for strategic investments; a renewed commitment to intensify structural reforms; and, continued efforts to ensure sound public finances.
"The three together form our strategy to speed up the recovery," Tusk said, who also tweeted that leaders would not reconvene as planned on Friday, but would conclude the summit after a discussion over dinner on Russia and Ukraine.
The summit, which closed just before midnight, was intended to be shorter than usual and avoided the demonstrations in the heart of Brussels.
Tusk wanted to break with the tradition of two-day summits which bear the hallmark of protracted EU negotiations.
According to the proposed “Juncker plan”, governments contributing to the new European Fund for Strategic Investment (EFSI) would not get into trouble if their contributions resulted in their deficits breaching EU budget rules set out in the Stability and Growth Pact, that is, a 3% deficit limit.
This key feature seemed to calm centre-left governments, such as those in France and Italy, which have demanded more flexibility with EU budget rules.
Germany’s Chancellor Angela Merkel and French President Francois Hollande revealed how far apart their visions of the €315 bln plan are during their post-summit press statements.
While Merkel acknowledged that member states' contributions to the plan would be treated with flexibility, she stressed that the “golden rule” would still need to be observed.
The Chancellor insisted that the plan must retain a strictly economic decision-making process in picking projects, in line with European Investment Bank guidelines.
Hollande, on the other hand, emphasised that investments must be accounted for within the Stability and Growth Pact, without specifying exactly how.
The French leader said education and training should benefit from the investment plan.
Commission President Jean-Claude Juncker said national contributions to the EFSI would be “neutralised,” which could be interpreted either way.
While a formal Commission interpretation of how EU budget rules should treat such investment will only come in January, Commission Vice President Jyrki Katainen was quoted by Reuters as saying on Thursday that fund contributors would not face negative consequences in budget assessments.
The fund will be launched next year with €21 bln of EU seed money. It is intended to attract 15 times more private capital for financing projects in energy, transport, education and research.
The EFSI, that is expected to commence in June 2015, is designed to help boost feeble European growth and create jobs, without inflating public debts.
