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EU leaders agree investment package to boost economy

European Council chief Donald Tusk prepares to address journalists as he arrives ahead of the European Union summit at the EU headquarters in Brussels on Dec 18, 2014.

[BRUSSELS] European Union leaders endorsed a new investment programme intended to kick start economic growth in the bloc at a summit in Brussels, which its chairman said would end late on Thursday, half a day earlier than planned. "We agreed three things: one, we call for the urgent establishment of a European fund for strategic investments; two, a renewed commitment to intensify structural reforms; three, continued efforts to ensure sound public finances," European Council President Donald Tusk said in a video statement. "The three together form our strategy to speed up the recovery," added Tusk, who also tweeted that leaders would not reconvene as planned on Friday but would conclude the summit after a discussion over dinner on Russia and Ukraine.

Tusk, the former Polish prime minister hosting his first summit in his new role, did not go into details of the agreement on the economic plans.

But draft conclusions of the meeting showed that governments contributing to the investment fund would not get into trouble if such contributions resulted in their deficits breaching EU budget rules set out in the Stability and Growth Pact. "The European Council takes note of the favourable position the Commission has indicated towards such capital contributions in the context of the assessment of public finances under the Stability and Growth Pact," the text read.

While a formal Commission interpretation of how EU budget rules should treat such investment will only come in January, Commission Vice President Jyrki Katainen told Reuters in an interview on Thursday that fund contributors would not face negative consequences in budget assessments.

The fund, called the European Fund for Strategic Investment (EFSI), will be launched next year with 21 billion euros (US$25.8 billion) of EU money. It is intended to attract 15 times more private capital for financing projects in energy and transport infrastructure as well as education and research.

The EFSI, whose final go-ahead to start operations is to come in June 2015, is designed to help boost feeble European growth and create jobs without inflating public debts.