Juncker’s top-down investment plan reveals Commission’s skewed priorities

Stimulus needs to be targeted at the bottom

The 315bn euro investment package unveiled this week by the Jean-Claude Juncker, is too complex and not targeted at those who need it most. Europe-wide basic income schemes would be far more efficient.

Press release – november 27th 2014

Juncker’s investment plan is not only poorly designed, it is a smokescreen for further indebtedness.

By resorting to a leveraged fund scheme instead of prioritising tax avoidance and fiscal harmonization, the EU Commission is pandering to private interests.

It relies on private investment – mainly in the form of loans backed by EU guarantees – to kick in over 15 times the 5 billion euros of seed money actually provided by the EIB. This approach is not only unlikely to be realised in full, by focussing on jobs it underestimates the problem of in-work poverty and does nothing to improve the bad quality of many jobs.

Wrong priorities

In the meantime, child poverty is rising in the European Union (1), and more than 25% of the population is at risk of poverty (2). In this context, Europeans need bold measures which directly relieve poverty and increase wellbeing.

Juncker and the European Commission would do better to close loopholes which allow companies to avoid tax and provide all Europeans with a basic income. This would launch a far more effective stimulus for the European economy as well as relieving the misery felt by millions, which is threatening to pull the EU apart.

“Deploying such a complex and top-down plan to stimulate European business when the social emergency is reaching critical levels, reveals a lack of imagination and the skewed priorities of the new Commission.” said UBI-Europe’s Chair Barb Jacobson.

Building a welfare system without the bureaucracy

“We need to tackle the EU’s problems directly, without resorting to the kind of complex scheme which in the past was plagued by misallocation, if not corruption. Plus in this case there is a huge amount of wishful thinking. In that sense, basic income is a more practical idea, although it would be ambitious.” she added.

A basic income would be distributed automatically without conditions to every individual, securing people’s livelihoods without creating more European bureaucracy.

A small step in this direction would cost less. For instance, a UNICEF (3) study showed that it would take only 18bn euros to fund a monthly 50€ basic income for every child in the EU below 6 years of age. Such scheme has the potential to reduce child poverty by at least 7%, and would constitute a strong economic stabilizer for the Eurozone.

UBI-Europe demands that the EU Commission examine possibilities that would truly benefit those who need it most right now. Basic Income would be a real investment in the future.

References:
(1) Child poverty on the rise, even in rich EU countries – Euractiv
(2) More than 120 million persons at risk of poverty or social exclusion in 2013 – Eurostat
(3) Simulating the costs and benefits of aEurope-wide Basic Income scheme for Children – UNICEF

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