The EU’s handling of the recent ﬁnancial crisis gives much more weight to ﬁscal consolidation than to growth stimulus. Because the ﬁscal multipliers during crisis periods are signiﬁcantly higher than previously estimated, the consolidation policy requires a second pillar for growth to avoid a vicious downward spiral. The ﬁrst elements of this second pillar were adopted by the EU summit in June 2012, but the scope of the programme for growth and employment is not sufﬁcient nor has it been implemented with the necessary speed and scope. This article calls for a systematic approach to increase the public intervention capacity to ignite sustainable growth. The main public ﬁnancial instruments are the budget and the promotional bank at each level in Europe. The contribution of the promotional banks has grown since the eve of the great crisis. Volume and impact can be increased further. The main objectives are revolving funds, combined ﬁnancial products bringing together loans and budget, focusing on viable projects and attracting private capital for projects where suitable. An optimisation of the budget for better leverage, better allocation efﬁciency and viable projects improves the impact signiﬁcantly within given volumes. Even more enforcement seems possible if the budget grows to some extent to enlarge the anticrisis capacity.
Growth is essential for the EU to recover so a policy for growth is needed.
Its rather small budget gives the EU limited means. However, it can still play a role because a high share of the budget is geared to investments and a promotional bank is well established.
The budget impact improves with an orientation towards viable projects for sustainable growth and leverage including private capital and innovation.
The impact of the promotional bank improves with additional capacity to lend, with well-structured new ﬁnancial instruments and with a combination of its activities with new funds and budgets at EU level.