NextGenerationEU - The temporary recovery instrument
BUDGETS & BUDGETARY CONTROL
Following the Coronavirus pandemic, the EU has decided to intervene by providing financial resources to help repair the economic and social damage caused, to support the European recovery and to protect and create jobs.
This huge recovery plan and presented by the European Commission in May 2020 is based on exploiting the full potential of the EUbudget and raising capital on the financial markets.
On 10 November 2020, the European Parliament and the EU Member States in the Council reached an agreement and confirmed the allocation of € 750 billion for the NextGenerationEU and on 11 December 2020 the EU Leaders confirmed their agreement.
The NextGenerationEU is composed by 2 financial instruments:
Recovery and Resilence Facility: a temporary contribution to member countries, consisting of grants and loans to achieve precise objectives in six areas: Green transition, Digital transformation, Smart, sustainable and inclusive growth, Social & territorial cohesion, Health, Policies for next generation
Temporary funding to reinforce existing o new programmes: React-EU, Rural development, Just Transition Fund, InvestEU, RescEU, Horizon Europe
The Recovery and Resilience Facility
On 17 September 2020, the EuropeanCommission unveiled the next steps for the EUR 672.5 billionRecovery and Resilience Facility (RRF) under the 2021 Annual Sustainable Growth Strategy. The RRF is the main recovery tool of the NextGenerationEU fund, designed to help the EU emerge stronger and more resilient from the current crisis.
With the publication of the ASGS, the EU Commission launches the 2020 European Semester cycle.
Last year the Commission launched the growth strategy, known as the "European Green Deal", and introducing the concept of competitive sustainability.
This year's ASGS continues this strategy, confirming the four dimensions of environmental sustainability, productivity,equity and macroeconomic stability. The guiding principles underlying Member States' recovery and resilienceplans and national reforms and investments remain. These dimensions are at the heart of the European Semester and ensure that the New Growth Agenda helps lay the foundations for a green, digital and sustainable recovery.
How to benefit from this facility
To benefit from the Recovery and Resilience Facility, Member States have to present their projects by designing their nationalinvestment and reformprograms based on the above-mentioned EU strategic criteria.
The recovery and resilience plans need to address the economic policy challenges set out in the country-specific recommendations of recent years and, in particular, the 2019 and 2020 cycles. The plans should also enable Member States to enhance their economic growth potential, job creation and economic and social resilience; as well as responding to green and digital transitions.
The Facility is operational as of 1 January 2021. The deadline for submission of the Recovery and Resilience plans is 30 April 2021. However, Member States were encouraged to submit their preliminary draft plans from 15 October 2020.
The EU Commission strongly encourages Member States to include in their plans investment and reforms in the following flagship areas:
Power up– The frontloading of future-proof clean technologies and acceleration of the development and use of renewables.
Renovate – The improvement of energy efficiency of public and private buildings.
Recharge and Refuel– The promotion of future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and refuelling stations and extension of public transport.
Connect – The fast rollout of rapid broadband services to all regions and households, including fiber and 5G networks.
Modernise– The digitalisation of public administration and services, including judicial and healthcare systems.
Scale-up – The increase in European industrial data cloud capacities and the development of the most powerful, cutting edge, and sustainable processors..
Reskill and upskill– The adaptation of education systems to support digital skills and educational and vocational training for all ages.
A EU Commission task force will coordinate the implementation of the Recovery and Resilience Facility, in close cooperation with the Directorate-General for Economic and Financial Affairs (DG ECFIN).
A steering committee chaired by President Ursula von der Leyen will provide political guidance to the task force to help ensure that the arrangement is implemented consistently and effectively.
The three pillars of the fund
1. Supporting Member States to recover (financial resources to Member States, of which €405 billion as grants and €250 billion as loans) - Recovery and resilience facility: €560,0 billion - React-EU: €50.0 billion (€55.0 billion with EU budget financing) - Rural development: €15.0 billion (€90.0 billion with EU budget financing) - Just transition Fund: €30 billion (€40.0 billion with EU budget financing)
2. Kick-starting the economy and helping private investment - Solvency Support Instrument: €26.0 billion (€31.0 billion with EU budget financing) - InvestEU: €15.3 billion (€16.6 billion with EU budget financing) - Strategic Investment Facility: €15.0 billion 3. Learning the lessons from the crisis - Health programme: €7.7 billion (€9.4 billion with EU budget financing) - rescEU: €2.0 billion (€3.1 billion with EU budget financing) - Horizon Europe: €13.5 billion (€94.4 billion with EU budget financing) - Neighbourhood, Development and International Cooperation: €10.5 billion (€86.0 billion with EU budget financing) - Humanitarian Aid: €5.0 billion (€14.8 billion with EU budget financing)