Title page 1

Contents 4

SUMMARY 5

1. INTRODUCTION 5

2. THE EU BUDGET AS AN INVESTMENT CATALYST: AN OVERVIEW 7

3. THE LEVERAGE CAPACITY OF THE EU BUDGET: DIRECT EFFECTS 9

4. EMPIRICAL ANALYSIS: EVIDENCE FROM THE RRF AND ESIF 16

4.1. The Recovery and Resilience Facility: a powerful private investment stimulus 18

4.2. European Structural and Investment Funds (ESIF): crowding in private and public investments 21

5. CONCLUSIONS: IMPLICATIONS FOR THE NEXT MFF 22

REFERENCES 23

ANNEX 1. SOURCES AND EXPLANATIONS FOR TABLE 1 CALCULATIONS 25

ANNEX 2. SOURCES AND EXPLANATIONS FOR TABLE 2 CALCULATIONS 27

ANNEX 3. DETAILED METHODOLOGY AND RESULTS OF THE RRF AND ESIF ANALYSIS 28

Table 1. Direct leverage effects from internal programmes MFF 2021-2027 and NextGenerationEU, EUR million 12

Table 2. Direct leverage effects from internal programmes, 2028-2034 MFF proposal 13

Table 3. Increase in private investment in the EU27 and EU5 due to RRF 20

Table 4. Multiplier effect based on instrument variable approach of ESIF funding 21

Figure 1. The EU budget investment channels (intra-EU) 8

Figure 2. 2021-2027 MFF and NextGenerationEU investment spending 10

Figure 3. 2028-2034 MFF investment spending proxy as per the Commission's proposal, EUR million 13

Figure 4. Private investments in the EU versus counterfactual scenario (% of GDP) 19

Figure 5. Private investments in the EU5 group versus counterfactual scenario (% of GDP) 20

Boxes 14

Box 1. Indirect effects: a review of studies on InvestEU, Horizon and ESIF 14

Box 2. Two methods explained - Synthetic Control (RRF) & Local Projections (ESIF) 17