EU recovery package

Written by Magdalena Sapała.

Updated on 24 April 2022.

If you are you looking for a comprehensive source of information, analysis and infographics explaining the recovery package for Europe, you are in the right place. This blog post will lead you through a collection of EPRS publications, financial data, legal acts and other interesting sources of information and analysis on the topic.

Content:

Section 1 – What is the recovery package for Europe?

Section 2 – How is the recovery package implemented?

Section 3 – How is the Recovery and Resilience Facility (RRF) implemented?

State of play

Section 4 – How are the other programmes financed under the Next Generation EU implemented?

Section 5 – Key EPRS publications and infographics

Section 6 – Other interesting sources of information

(1) What is the recovery package for Europe?

In December 2020, the European Union (EU) agreed the recovery package for Europe: the seven-year budget, known as the 2021‑2027 multiannual financial framework (MFF), and a special instrument aiming at helping the EU economy to recover in the aftermath of the Covid‑19 crisis – the European Recovery Instrument ‘Next Generation EU’ (Figure 1). While the MFF ensures financial means for the functioning of the European Union, for the investments and implementation of various EU policies, Next Generation EU provides an extraordinary, temporary instrument, created to address the exceptional consequences of and challenges posed by the Covid‑19 pandemic. Both elements of the financial package differ in their sources of financing. The MFF is financed from the EU’s own resources. Most of these (70 %) comes from direct payments from the Member States’ national budgets, calculated on the basis of gross national income (GNI). The rest comes from customs duties, contributions based on value added tax (VAT) collected by the Member States, and since 2021, from a national contribution based on non-recycled plastic packaging waste. The Next Generation EU recovery instrument, however, is financed from money borrowed by the Commission on behalf of the EU on the international capital markets (the first borrowing operations began in June 2021). Then, by 2058 at the latest, Next Generation EU should be repaid from the EU’s own resources. The EU budget will repay the grants and their borrowing costs, while the Member States that have taken loans will be responsible for their repayment. To help repay the borrowing, new sources of revenue for the EU should be in place by that time.

Links to useful legal documents

2021-2027 MFF – Council regulation 2020/2093
Interinstitutional Agreement on budgetary matters and own resources – 16 December 2020
2021-2027 MFF adjusted for 2022 (technical adjustment) – Communication COM(2021) 365 final
The system of own resources of the EU – Council decision 2020/2053
European Union Recovery Instrument Next Generation EU – Council regulation 2020/2094
Recovery and Resilience Facility – Regulation (EU) 2021/241

(2) How is the recovery package implemented?

In December 2020, the approval of the 2021-2027 MFF and Next Generation EU, followed by the completion of the ratification process of the own resources decision in May 2021, opened the way for the implementation of the recovery package for the EU (see the timeline in Figure 4) .

The MFF (€1 210.9 billion in current prices) covers the years 2021 to 2027, and is implemented through more than 40 programmes and funds under seven main EU spending priorities, known as headings (for details about the agreement on the 2021‑2027 MFF see the EPRS blog).

Next Generation EU (€806.9 billion in current prices) is implemented through seven programmes. The bulk of the instrument (90 %) was allocated to the Recovery and Resilience Facility (RRF), and the remaining 10 % to the programmes co-financed under the 2021‑2027 MFF, i.e. regional development (React-EU), rural development, Horizon Europe, the Just Transition Fund, Union Civil Protection Mechanism (RescEU), and InvestEU. In other words, up to 2023, these programmes will be partly financed and implemented under the MFF and partly under NGEU. The proportions of both components vary by programme. While the NGEU share in the total allocation on Horizon Europe is 6 %, it is 56 % in the JTF.

Under Next Generation EU, the legal commitments on spending have to be made during 2021‑2023, whereas the payments can be made until the end of 2026. Each year the amount to be used under the instrument will be entered to the EU budget as an external assigned revenue (read more about the external assigned revenue and the EU annual budget in the EPRS publication Economic and Budgetary Outlook 2021).

Most of the Next Generation EU resources have been pre-allocated to the Member States. Figure 2 illustrates the distribution of NGEU funding under the RRF, React-EU, JTF and rural development programmes per Member State and capita. Spending under the Horizon Europe, RescEU and Invest EU programmes will be distributed to different projects across the EU on a competitive basis.

Figure 2 – NGEU resources pre-allocated to Member States (RRF, REACT-EU, JTF and rural development) by Member State and per capita (€, current prices).

(3) How is the Recovery and Resilience Facility (RRF) implemented?

The Recovery and Resilience Facility (RRF) is the main building block of Next Generation EU. Its budget amounts to €723.8 billion (current prices) and is divided between non-repayable grants (€338 billion) and loans (€385.8 billion). The Member States’ maximum indicative financial envelopes under the RRF were decided in the RRF regulation (Annex I‑IV) and pre-allocated. However, the actual amounts to be transferred to the Member States (see Figure 3) and the calendar of payments depend on many conditions.

Figure 3 – Distribution of the Recovery Resilience Facility (grants) by Member State.

National Recovery and Resilience Plans (NRRPs)

Any Member State wishing to use the RRF must submit a national recovery and resilience plan (NRRP). This document should outline the national reform and investment package, referring to the areas specified under the six pillars (Figure 4) and to the challenges identified in the European Semester Country Specific Recommendations (CSRs). The preparation of the plans by the Member States, their positive assessment by the Commission, and approval by Council (implementing decision adopted by qualified majority), are the key preconditions for the first transfers from the RRF. Only once these are in place can the Commission conclude an operational agreement with each Member State. The document includes detailed and technical aspects of implementation, such as the timeline for instalments and monitoring, indicators relating to the fulfilment of milestones and targets and arrangements for providing access to the underlying data.

Figure 4 – Structure of the Recovery and Resilience Facility (current prices)

Summary of progress (as of 24 April 2022):

26 NRRPs have been submitted to the Commission (the submission of the NRRP of the Netherlands is expected in spring 2022);
24 national plans positively assessed by the Commission (the plans of Hungary and Poland are still in the assessment procedure);
22 national plans approved by the Council (the plans of Bulgaria and Sweden are awaiting the approval).

Table 1 – Implementation of the National Recovery and Resilience Plans: state of play as of 24 April 2022 (€ billion, current prices)

Member State	Submission date	Implementing Decision adopted (Council)	Maximum amounts		Approved amounts
			grant	loan	grant	loan
Austria (AT)	01/05/2021	13/07/2021	3.5	27.2	3.5
Belgium (BE)	01/05/2021	13/07/2021	5.9	32.8	5.9
Bulgaria (BG)	15/10/2021	Awaiting approval	6.3	4.2
Croatia (HR)	15/05/2021	26/07/2021	6.3	3.7	6.3
Cyprus (CY)	17/05/2021	26/07/2021	1	1.5	1	0.2
Czechia (CZ)	02/06/2021	06/09/2021	7.1	14.3	7.0
Denmark (DK)	30/04/2021	13/07/2021	1.6	21.9	1.6
Estonia (EE)	18/06/2021	28/10/2021	1	1.9	1
Finland (FI)	27/05/2021	28/10/2021	2.1	16.4	2.1
France (FR)	29/04/2021	13/07/2021	39.4	168.4	39.4
Germany (DE)	28/04/2021	13/07/2021	25.6	240.9	25.6
Greece (EL)	28/04/2021	13/07/2021	17.8	12.5	17.8	12.7
Hungary (HU)	12/05/2021	Undergoing assessment	7.2	9.7
Ireland (IE)	28/05/2021	06/09/2021	1	18.7	1
Italy (IT)	01/05/2021	13/07/2021	68.9	122.7	68.9	122.6
Latvia (LV)	30/04/2021	13/07/2021	2	2	1.8
Lithuania (LT)	15/05/2021	26/07/2021	2.2	3.2	2.2
Luxembourg (LU)	30/04/2021	13/07/2021	0.1	2.8	0.1
Malta (MT)	13/07/2021	0.305/10/2021	0.3	0.8	0.3
Netherlands (NL)	Postponed		6	55.3
Poland (PL)	03/05/2021	Undergoing assessment	23.9	34.8
Portugal (PT)	22/04/2021	13/07/2021	13.9	14.2	13.9	2.7
Romania (RO)	31/05/2021	28/10/2021	14.2	15	14.2	15
Slovakia (SK)	29/04/2021	13/07/2021	6.3	6.3	6.3
Slovenia (SI)	1/05/2021	20/07/2021	1.8	3.2	1.8	0.7
Spain (ES)	30/04/2021	13/07/2021	69.5	84.8	69.5
Sweden (SE)	28/05/2021	Awaiting approval	3.3	32.2

Payments

Table 2 includes detailed information about the progress of payments. Initial pre-financing, set at a maximum 13 % of the financial contribution (grants) and 13 % of the loan, could be granted only for the plans that had been approved by the Council before the end of the 2021. The Member States will implement their NRRPs and send the Commission requests for payment twice a year. The disbursements will be made once the relevant milestones and targets set out in the implementing decision have been reached. All payments must be made by 31 December 2026.

Greece, Spain, France and Italy were the first countries to submit their applications for disbursement based on milestones and targets achieved. In December 2021, the Commission, based on the fulfilment of 52 milestones and targets and after the positive opinion of the Economic and Financial Committee, paid out €10 billion to Spain (based on 52 milestones achieved by the end June 2021.

On 4 March 2022, the Commission disbursed €7.4 billion to France. For details on the following disbursements see table 2 (below).

Table 2 – Disbursed amounts (grants and loans). Updated on 24 April 2022

	Amounts approved	Amounts disbursed	Share of total allocation
Austria	3.46	0.45	13 %
Belgium	5.92	0.77	13 %
Bulgaria	Awaiting approval
Croatia	6.30	0.82	13 %
Cyprus	1.21	0.16	13 %
Czechia	7.04	0.92	13 %
Denmark	1.55	0.2	13 %
Estonia	0.97	0.13	13 %
Finland	2.09	0.27	13 %
France	39.37	12.52	32 %
Germany	25.61	2.25	9 %
Greece	30.5	7.53	25 %
Hungary	Undergoing assessment
Ireland	0.99	0.99	No request
Italy	191.48	45.89	24 %
Latvia	1.83	0.24	13 %
Lithuania	2.22	0.01	13 %
Luxembourg	0.09	0.29	13 %
Malta	0.32	0.04	13 %
Netherlands	Undergoing assessment
Poland	Undergoing assessment
Portugal	16.61	2.16	13 %
Romania	29.18	3.79	13 %
Slovakia	6.33	0.82	13 %
Slovenia	2.48	0.23	9 %
Spain	69.51	19.04	27 %
Sweden	Awaiting approval
Total	445.06	98.5	22.1%

Source: European Commission, Recovery and resilience scoreboard

European Parliament role in the scrutiny of the RRF

The European Parliament is not directly involved in the assessment of the national plans or adoption of the implementing decisions that authorise the financial contributions to the Member States. Those roles belong to the European Commission and the Council respectively. However, based on the provisions of the RRF Regulation (in particular Articles 25 and 26) and the Interinstitutional Agreement on cooperation on budgetary matters, the Parliament can scrutinise the work of the Commission. Special fora have been set up to assist the European Parliament in the execution of its role.

Interinstitutional cooperation

Interinstitutional meetings on the implementation of Next Generation EU (based on the Interinstitutional Agreement, Annex I, part H). These meetings include representatives of the Parliament, Council and Commission, and should take place at least three times a year (meetings took place on 29 April, 15 July, 14 October 2021 and 28 March 2022). They are not open to the public.
Recovery and resilience dialogue with the European Commission (based on Article 26 of the RRF Regulation). These meetings should take place every two months, are open to the public and live-streamed by the European Parliament (in 2021: 10 May, 14 July, 1 September ,13 December; in 2022: 7 March).

Parliament’s internal cooperation:

The two main committees dealing with the topic are the Committee on Budgets (BUDG) and the Committee on Economic and Monetary Affairs (ECON), but many others are involved in the discussions on different aspects of the RRF. Their meetings are open to the public and live-streamed.
The Standing Working Group (BUDG and ECON) on scrutiny of the RRF (based on the Conference of Presidents decision of 4 March 2021) serves as a preparatory and follow-up forum for the bi-monthly recovery and resilience dialogue. It consists of 27 Members of BUDG, ECON and associated committees, nominated by the political groups. Meetings are not open to the public.

Plenary debates and resolutions

In addition, the Parliament regularly debates the topic during plenary sessions. It has also adopted resolutions concerning the implementation process:

11 March 2021 – Plenary debate on respecting the partnership principle in the preparation and implementation of national recovery and resilience plans, and ensuring good governance of the spending.
18 May 2021 – Plenary debate on the right of information regarding the ongoing assessment of the national recovery and resilience plans.
20 May 2021 – Resolution on the right of information regarding the ongoing assessment of the national recovery and resilience plans.
8 June 2021 – Plenary debate on European Parliament’s scrutiny on the ongoing assessment by the Commission and the Council of the national recovery and resilience plans.
10 June 2021 – Resolution on the views of the Parliament on the ongoing assessment by the Commission and the Council of the national recovery and resilience plans.
6 October 2021 – Plenary debate on state of play on the submitted RRF recovery plans awaiting approval.

(4) How are the other programmes financed under the Next Generation EU implemented?

Regional development REACT-EU

Financial planning (commitments, current prices, billion):

	2021	2022	Total
REACT-EU	39 795	10 824	50 620

Source: European Commission, 2021

European Commission website on the implementation of REACT-EU