The European Commission (EC) has presented new guidance for the “NextGenerationEU” programme designed to help member states recovering from the havoc of the COVID-19 pandemic. Yesterday, the EU executive unveiled its strategy for implementation of the Recovery and Resilience Facility detailed in its 2021 Annual Sustainable Growth Strategy (ASGS).
In brief, the Recovery and Resilience Facility will provide a total of 672.5 billion euros to support investment and reforms in the form of grants and loans. Grants worth a total of 312.5 billion euros will be provided to member states, with the remaining 360 billion euros being delivered in the form of loans.
The ASGS will launch the new cycle of the European Semester, the framework for coordinating economic policies across the European Union. This will allow EU countries to discuss their economic and budget plans and monitor progress at specific times throughout the year. The European Semester and the Recovery and Resilience Facility are intrinsically connected.
Under the Recovery and Resilience Facility, member states will be encouraged to submit their National Reform Programmes and their resilience and recovery plans. For those who submit their plans, there will be no need for the Commission to propose country-specific recommendations in 2021. While the deadline for submissions is 30 April 2021, member states are invited to present their draft national reform and investment plans by 15 October.
What are the Recovery and Resilience Plans?
Essentially, member states can prepare recovery and resilience plans in line with a coherent package of reforms and public investment projects to be implemented up to 2026. The plans should demonstrate how the investments and reforms would address challenges identified in the context of the European Semester, particularly the country-specific recommendations adopted by the Council.
The Commission will take into consideration whether member states will address challenges to do with their green transition plans. In fact, each recovery and resilience plan will have to include a minimum 37% of overall expenditure linked directly to the climate issue. Additionally, the EU executive will consider investments in digital transitions taking into account whether they contribute to strengthening member states’ growth potential such as job creation and economic and social resilience.
According to the EC, member states are recommended to include in their recovery plans, investments and reforms that will accelerate the development and use of renewables and clean technologies, improve the energy efficiency of public and private buildings and accelerate the use of sustainable smart transport. As for digital transition, the Commission welcomes investments in the fast roll-out of rapid broadband, including fiber and 5G networks, the digitalisation of public administration and services, including judicial and healthcare systems, the increase in European industrial data cloud capacities and the adaption of education systems to support digital skills and educational training for all ages.
Next steps
The Commission has passed the ball now to the European Parliament and the Council to agree as quickly as possible on this legislative proposal so that the Facility becomes operational as of 1 January 2021.
