Report from the Commission to the European Parliament and the Council on financial instruments supported by the general budget according to Art.140.8 of the Financial Regulation as at 31 December 2014

As most EU Member States experience positive growth rates, Europe is recovering from the economic and financial crisis, but structural and crisis-related weaknesses are still limiting the pace of overall recovery. In particular, high private-sector debt levels and a high ratio of nonperforming loans are restricting banks’ lending capacity, thus hindering economic growth and financial stability. These challenges require prompt action, since the European economy depends heavily on lending by the banking sector and access to equity funding, especially for small businesses, remains limited.

In this economic climate, public finance institutions and private investors are very reluctant to lend to the real economy and in particular to SMEs, whose investments are considered high-risk. The scale of financing demand, combined with the limited supply of public resources, means that additional capital flows need to be leveraged to fill the gap. The Union is therefore called upon to unlock additional investment from its budget through the use of financial instruments.

SMEs are the main target of EU support through financial instruments: they account for two thirds of private-sector employment and almost 60% of real added value in the EU. Particular attention is devoted to enterprises and other target groups in strategic sectors, notably research and innovation, infrastructure and energy efficiency, social entrepreneurship and education.

From its experience, the Commission is convinced that financial instruments are an effective way of dealing with the financing needs of the real economy and boosting growth and employment. Implemented in partnership with public and private institutions, they address market failures in the provision of external financing, while avoiding the crowding-out of private investors.

The Commission submits this report on centrally managed financial instruments for internal and external EU policies supported by the Union budget, as required under Article 140(8) of the Financial Regulation. The report shows the substantial effect of these instruments as at 31 December 2014. It provides an overview of how taxpayers’ money has been used and of the progress made in implementing the financial instruments.

EUR-Lex: SWD(2015)206: Activities relating to financial instruments http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2015:206:FIN

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