The European Investor State: Its characteristics, genesis, and effects

Abstract

In the wake of financial, sovereign debt and health crises, public interventions in the European economy have taken on a new level of breadth, marking a reentry in force of the state in economic life that goes beyond the regulatory state. Yet, these interventions do not follow the old Keynesian interventions neither, being shaped through a particular logic of investment that link public and private actors in a particular configuration. The introduction to this special issue lays out this configuration for the case of the EU and its Member States through the concept of “European Investor state.” By this concept, we refer to the redefinition of the role of European states in the economy as an “investor,” in reference to private investment funds, which the state seeks both to imitate and to enroll. The paper embeds this redefinition of state intervention in the context of the 2010s in Europe, characterized by worries about “secular stagnation” and growing concern about an “investment gap,” interpreted as the failure of financial markets to invest in productive sectors, especially when risky. The budgetary constraints and the ideological outlook then shaped the specific financial and off-balanced sheet tools of the investor state. Finally, the paper explores the implications of the Covid-crisis on this intervention model. It concludes that despite major changes in fiscal policy at the EU level, this approach is likely to persist, because of the lasting interpretation in terms of “investment gap,” which only public-private collaborations are seen to be able to fill.

Off-balance-sheet policies to the rescue: The role of statistical expertise for European public–private partnerships

“…Only a year later, a novel ‘Guide to the Statistical Treatment of PPPs’ (hereafter ‘the PPP Guide’) gave fresh impetus to the off-balance-sheet use of PPPs and the Liège City Council could finally sign a PPP contract with a consortium led by the French train-maker Alstom, which included 200 million euro financing from the European Investment Bank (EIB) earmarked via the ‘Investment Plan for Europe’ (hereafter ‘Juncker Plan’) (European Investment Bank, 2019). The Tram de Liège is an example of a new configuration of European economic governance, the European Investor State, in which public actors attract private investors and leverage public funds to stimulate economic growth without incurring new debt (Lepont & Thiemann, 2024). Moreover, the bumpy road to the Tram’s realization highlights two important but understudied features of the European Investor State: the role of off-balance-sheet policies and the technical expertise required to define them as such.…”

“…First, off-balance-sheet policies have become a publicly accepted solution to the investment-consolidation conundrum plaguing the EU since the sovereign debt crisis (Streeck 2014; Lepont & Thiemann, 2024, this issue). To support economic growth while consolidating public finances, the Commission chose the EIB as the Juncker Plan’s implementing partner, with extensive experience in public–private projects (Liebe and Howarth, 2020).…”