Europe Ahead: EPP’s Poptcheva on taking the edge off private investment

***The Europe Ahead series will cover views from MEPs in charge of economic files for the main political groups in the run-up to the June EU elections

Europe must leverage EU-level public spending to jump-start strategic cross-border business and  “take the edge off” private investments that might otherwise be deemed too risky, said member of the European Parliament’s Committee on Economic and Monetary Affairs Eva Poptcheva.

In an interview with Euractiv, Poptcheva, a candidate for the centre-right European People’s Party (EPP) in the European elections after serving as an MEP for the liberal Reform group in the current legislative term, stressed that the EU should step up public funding to crowd in investments in research and development and other strategic areas.

“The real strategic investments are cross-border,” said the Bulgarian-born Spanish MEP. “If we want to have really big factories for microchips, let’s do it. But then it has to be a strategic European decision, and then it doesn’t matter if it’s in the Netherlands or in France, or wherever.”

“We believe in a real market economy,” she added. “What we want is that public investment takes this edge off, so [it] makes it easier [to] attract private investment.”

Echoing previous estimates by top EU officials and think tanks, Poptcheva suggested that Europe’s current “investment gap”—or the funds required to facilitate the green and digital transitions and adequately boost defence spending—amounts to over €750 billion annually, or close to 5% of the EU’s annual GDP.

“[This] would be basically a Next Generation EU per year that we would need,” she said, referring to the bloc’s post-pandemic funding programme, which centred around its flagship €723.8 Recovery and Resilience Facility (RRF).

Poptcheva, however, suggested that one major problem with the current NextGenEU scheme, which is set to expire in 2026, is that disbursements are allocated nationally rather than at the EU cross-border level. That means member states will apply for domestic projects and then handle the implementation fully within national boundaries.

“It cannot be that we take on common debt that you spread completely nationally because this is not strategic,” she said.

She also said that, despite its “historic” importance, the RRF “didn’t modernise [European] economies the way it was supposed to”.

Meanwhile, Spain, the second-largest national recipient of RRF funds after Italy, would almost certainly still require financial help from other member states if was hit by another major COVID-like shock.

“I think people sometimes forget [the RRF] is not only called ‘Recovery’, but also ‘Resilience’,” she said. “And the resilience part, actually, I think was kind of left empty.”

Legislators should not be scared of doing things ‘the European way’

Poptcheva repeatedly emphasised that the sheer magnitude of Europe’s investment gap means that much of the funding will inevitably have to be provided through the private sector.

Moreover, she stressed that deeper integration of the Capital Markets Union (CMU)—the object of increased focus by EU leaders in recent months—will be key to leveraging the needed inflows of private financing.

“It’s impossible for this kind of investment gap to be closed only through public investment,” she said. “[With] the private investment, there are no magic solutions. We all know we basically have no Capital Markets Union [but also that that’s] the one and only solution.”

The MEP, however, condemned the “lack of political will” and “vision” of European leaders who have failed to make progress on the CMU since plans for it were first announced in 2015.

She also criticised member states’ bureaucracies for attempting to “hold onto the old and known” rather than trying to do things differently.

Poptcheva noted that she witnessed such bureaucratic inertia first-hand when she worked as Renew’s shadow rapporteur on the Listing Act, a measure that is part of the CMU package and aims to facilitate access to private financing for small and medium-sized enterprises (SMEs) by making it easier for them to list on stock exchanges.

One of the key concerns voiced by policymakers during recent CMU discussions revolved around the long-lasting trend of European start-ups moving to foreign markets to access capital to scale up.

“[They say]: ‘We’ve always done it this way or [are] afraid of doing it the European way,” she said.

Poptcheva, however, expressed optimism about the prospects for working with her new EPP colleagues following the June elections—in what is expected to be a strongly pro-business legislative mandate.

Her shift in group, she said, was triggered by her and two other Spanish MEPs’ recent decision to move from the liberal Ciudadanos party to the centre-right Partido Popular.

“We have been working together on a lot of things,” she said. “So it was very clear for us that it’s a cooperation that can work well, because we have worked in the last five years very well together. So it was very natural for us to unite.”

Poptcheva said Spain’s internal political situation—where she saw a rising “authoritarian” tendency from Prime Minister Pedro Sanchez’s left-wing government—had made her see more value in participating in a proactive opposition formed by “all the Spanish constitutionalists.”

“With all [the current] background, it’s just extremely important that we build a strong constitutional front […] and be very united. And this is going to be also extremely important in the European Union.”

Asked whether any of her views have changed, she replied: “Exactly the opposite. Because I have exactly the same balance of principles, I have taken this decision.”

[Edited by Anna Brunetti/Alice Taylor]