The European Union sought ways on Saturday to marshal billions of euros into its sluggish economy without getting deeper into debt, considering options from a pan-European capital market to a huge investment fund.
With Europe's economy struggling to recover from the worst financial crisis in a generation, EU finance ministers tasked the European Commission, the EU executive, and the European Investment Bank (EIB) to draw up a list of projects that would create growth and decide how to finance them.
"We have given a mandate to the Commission and the EIB to swiftly present an initial report on practical measures that can be taken, on profitable investment projects that are justifiable," Italy's economy minister, Pier Carlo Padoan, told a news conference.
Ministers are expected to discuss the projects and investment tools at their next meeting in Luxembourg in October.
There were no details of what those projects might be.
To finance them, the ministers discussed four ideas: an Italian paper on new financing tools for companies, a Franco-German proposal on how to boost private investments, a Polish proposal on creating a joint EU fund worth 700 billion euros ($907 billion) and a call from incoming European Commission President Jean-Claude Juncker for a 300-billion euro investment program to revive the European economy.
The European Central Bank's plan to resurrect a market for asset-backed securities would be another financing tool.
"We don't have a magic wand but we need growth, we need to stimulate demand without taking on debt," France's finance minister, Michel Sapin, told reporters after the gathering in Milan. "We need the right mix of public and private money."
The European Union's economy, which generates about a quarter of global output, grew by just 0.1 percent last year and its jobless rate is almost double that of the United States, with around 25 million people unemployed.
Investment is the new buzz word among ministers, overriding the German mantra of budget cuts. Germany is under pressure from France and Italy to loosen the fiscal reins and use its overflowing government coffers to ramp up public investment.
German Finance Minister Wolfgang Schaeuble strongly supports the search for investment, but this week rebuffed calls for Berlin to spend more to boost the euro zone economy, which showed no growth in the April-to-June period.
The euro zone will grow again in the third quarter but full-year growth will be below 1 percent, ECB Vice President Vitor Constancio said after the meeting.
In a speech to the EU finance ministers in Milan on Thursday, ECB President Mario Draghi described business investment as "one of the great casualties" of the financial crisis, saying it has fallen 20 percent since 2008.
"We will not see a sustainable recovery unless this changes," he said.
'MINIBONDS' FOR ORGANIC JAM
Unlike in the United States, European companies rely on banks to provide 80 percent of loans, but banks are reluctant to lend following the worst crisis in a generation.
In Italy, Europe's fourth-largest economy, credit to companies has shrunk by more than 70 billion euros since mid-2011 and is still contracting, central bank data shows.
That problem is mirrored across Europe, holding back the recovery because smaller companies provide two out of every three private-sector jobs in the European Union.
Indebted countries like Italy and France have little public money for businesses. Another hangover of the crisis is the differing cost of financing across the euro zone in a currency area that aimed to create the same financing conditions for all.
Spain's Economy Minister Luis De Guindos cautioned against expecting a big spending spree, saying investments must go hand in hand with reforms, such as tackling labor rules that make it hard for young people to get into the workplace.
"The package on investment is not only a figure of how much you're going to invest, it's something that goes beyond that," he told reporters. "We have to identify and complete investments that foster also productivity and competitiveness," he said.
Poland wants a 'European Fund for Investments' that would be able to finance, through leveraging its own capital, 700 billion euros worth of investment. The fund could be a special-purpose vehicle under the umbrella of the European Investment Bank, the EU bank owned by European governments.
Italy's proposal is a pan-European market, where smaller companies can raise capital, building on its "minibond" legislation in 2012 that allows unlisted companies to issue.
That could be part of a EU capital-market union, building on the euro zone's banking union, but that will need to closely involve London, the leading financial center in Europe.
Twenty-six Italian family businesses, including one that makes organic jam, issued bonds in the past two months, raising 1 billion euros combined, according to the Italian treasury.