Jean-Claude Juncker, the newly installed head of the European Union, has unveiled a 315 billion euro ($392 billion) investment package to help kick start Europe's flagging economy, create a million jobs, and help growth and competitiveness.
Unveiling the package, called the European Fund for Strategic Investment (EFSI), in the European Parliament on Wednesday, Juncker said it offered a simple message to the world: "that Europe can offer hope to its future generations and to the rest of the world as a promising, attractive hub for jobs, growth and investment."
At the moment, he said, the region was in a "trap" and faced "a serious investment gap."
"When we talk to investors, they all agree that Europe is an attractive place to invest in but when I look at the figures they tell a totally different story. Investment levels in the EU are down to 370 billion euros below the historical, pre-crisis norms. While investment is taking off in the U.S., Europe is lagging behind. "
The package aims to boost jobs and growth through major infrastructure investment projects supported by a complex network of private and public funding. A small part of the funding will come from the EU budget and European Investment Bank - totalling 21 billion euros -- that will be used to attract a larger amount of private sector investment, according to Juncker.
"What we are going to do is to set up the right system that will use available public money to leverage additional capital that would have never otherwise been mobilized," said Juncker, who was took over from Jose Manuel Barroso as head of the European Commission, the EU's executive arm, in November.
"Every public euro mobilised can generate additional investment that would not have happened otherwise. And it can create jobs."
The new fund to boost growth would be guaranteed with public money from the EU budget and the European Investment Bank (EIB), he added, detailing how the fund's finances would work.
"The Commission has put up 8 billion euros from the EU budget. This backs up a 16 billion euro guarantee given to the Fund which will be topped up by another 5 billion euros from the EIB. That makes 21 billion euros," Juncker remarked.
"With a 21 billion euro reserve, the EIB can give out loans of 63 billion euros. That's 63 billion euros of fresh financing we've just injected into the economy. But the EIB will not be acting alone. The EIB will be financing the riskier parts of projects worth 315 billion euros, meaning private investors will be pitching in the remaining 252 billion euros," he added.
The fund has already faced criticism over the manner in which funds will be allocated to infrastructure projects. The EU has a long history of funding "white elephant" projects. Ciudad Real International Airport, south of Madrid in Spain, has not handled any flights since 2012. EU funds destined for infrastructure projects in Sicily have been siphoned off by organised crime.
"What we need is a smart use of public money geared to unlocking investment...We will need to look carefully at projects. Destinations for the fresh investment drive should be attractive, free of regulatory burdens and linked to economic reality, not political expedience," Juncker told EU lawmakers.
The latest investment package is a part of wider European efforts to reverse a slowdown seen across the region and even in Germany, the euro zone's largest economy. It comes amid the implementation of structural reforms by national governments and stimulus measures from the European Central Bank (ECB) . Juncker said that Europe needed more than structural reforms and debt reduction alone.
Edmund Shing, equity portfolio manager at BCS Financial Group, told CNBC Europe's "Squawk Box" that the package was "better than nothing."
"I think anything can help and really we do need some further Keynesian input into the euro zone economy because the ECB is nearly out of bullets," he told CNBC Wednesday.
"(ECB) President Mario Draghi has done what he can and we do need movement from the other side of the coin - fiscal, infrastructure investment etc. The EU sits on a mountain of cash which they don't invest."
"Juncker needs to push the EU to invest some of the cash that it's sitting on which will encourage the companies, in turn, to invest. You've got to create the demand to get the snowball effect."