EU agreement on the Next Generation EU fund

Only a couple of days ago Germany’s presidency announced that an agreement between the EU Council and the European Parliament was finally reached. On 10 November last, the spokesman for European Council, Sebastian Fischer, said on twitter: “A deal for Europe — Council and European Parliament negotiators reach political agreement on the EU budget & recovery package. Main elements: Targeted reinforcement of European programs while respecting European Council conclusions”.

Europe’s next long-term budget, which will cover the period 2021-2027, will amount to €1.8 trillion. This is the largest package ever financed through the EU budget. And this time the financing will be closely linked to the temporary recovery instrument for a post-Covid Europe, that is the NextGenerationEU (i.e. a fund for the recovery of European countries). 750 billion out of the total 1,800 billion will be allocated to this fund.

The European Commission President, Ursula von der Leyen, said: I welcome today’s agreement on our Recovery Plan and the next Multiannual Financial Framework. We now need to move forward with finalising the agreement on the next long-term budget and NextGenerationEU by the end of the year. Help is needed for citizens and business badly hit by the coronavirus crisis. Our recovery plan will help us turn the challenge of the pandemic into an opportunity for a recovery led by the green and digital transition.”

Europe’s priorities will in fact remain Green Deal, the set of initiatives aimed at achieving climate neutrality by 2050, and the digital agenda which aims to foster innovation, economic growth and progress offered by promoting a digital single market. However, the huge crisis unleashed by Coronavirus has shifted the interest of member countries, and citizens, especially to the recovery fund.

The “pillars” of NextGenerationEU, as indicated on the official website of the European Commission, are three:

  • provide instruments to support Member State efforts to recover.
  • launch a series of measures to boost private investment and support ailing companies.
  • reinforce EU programs in order to make the single market stronger and accelerate both green and digital transitions

The 750 billion expected will then be used for these goals and will be divided into 390 billion of grants and 360 billion of loans. The financing money comes from borrowing on the financial markets, the amounts of which will then be redistributed by the EU to each country. 

In order to access the funds, governments will have to send Recovery and Resilience Plans to Brussels by April 2021. The European Commission will negotiate the plans with the EU authorities and will have up to 8 weeks to discuss them with the Ecofin Council. The latter will finally have 4 weeks to approve the Plan. 

Theoretically, funds could be disbursed as early as 1 January 2021, but since countries will have the chance to send the plans until 30 April 2021, the timeframe is likely to be longer. So, if a country presents its NRRP at the beginning of next year, money could already arrive by next spring. Otherwise, if the plan is to be presented in April, funds will not arrive until next autumn.

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